Introduction to SMS notifications

SMS is a great channel for teams needing to send critical and/or time-sensitive messages, such as 2FA codes, order confirmations, appointment reminders, and delivery updates.

These messages boast exceptional engagement, and for good reason. They can reach users anytime, anywhere, with or without internet access. SMS open rates typically hover around 98%, and 90% of texts are read within minutes (source).

But because they are an entirely different system from the regular web, implementation of SMS notifications is also more challenging. Some of the things you’ll have to deal with include:

• Carrier restrictions.
• Message formatting limitations.
• Delivery reliability across different networks.
• Compliance with regional regulations like TCPA and GDPR.
• Properly handling opt-outs and consent management.
• International number formats and country codes.
• Managing costs that scale with volume.
• Integrating with SMS gateways or providers that each have their own APIs and quirks.

In this guide, we’ll introduce you to the concepts you need to consider when building SMS notifications into your product, and explain the easiest way to deal with some of these challenges.

What are SMS notifications?

SMS (an abbreviation for Short Message Service) notifications are text messages sent programmatically to users' mobile phones through cellular networks. SMS messages work on any mobile phone with cellular service, making them universally accessible.

SMS notifications are typically categorized into two types, Transactional and Promotional. Products and services will likely have to send both, but each needs to be treated differently from both a technical and regulatory perspective.

What is transactional SMS?

Transactional SMS notifications are triggered by user actions or system events and contain time-sensitive, critical information specific to that user, including authentication codes (OTPs), password resets, order confirmations, shipping updates, appointment reminders, payment confirmations, and account alerts.

An effective transactional SMS message:

• Is directly tied to a specific customer action, such as scheduling a delivery.
• Provides essential service information, such as a delivery window.
• Includes actionable next steps, often providing a phone number or link to click.
• Avoids any promotional language, such as "Check out our sale!"

If an SMS message follows this format above, it’s considered transactional and it can bypass opt-in requirements. But be careful – if you start to blur the lines between transactional and promotional content, it can result in a carrier blocking you as a sender and potential regulatory violations.

For example, to send the above transactional notification, Best Buy would need to:

1. Trigger SMS when delivery is scheduled for next day in their order management system.
2. Pull customer's mobile number from order record and validate format.
3. Pass data like the delivery date, time window, and phone number to SMS gateway API.
4. Send through a dedicated transactional route for priority delivery.
5. Store delivery receipt and handle any failed sends with retry logic.
6. Log message for customer service reference.

Since these messages are often essential, they usually get priority routing through carrier networks and achieve 95%+ delivery rates within seconds, making them ideal for time-sensitive information like authentication codes or fraud alerts.

What is promotional SMS?

Promotional SMS notifications are marketing messages designed to drive engagement, sales, or brand awareness, including special offers, product launches, event invitations, loyalty program updates, and seasonal campaigns.

An effective promotional SMS message:

• Creates urgency, such as temporary deals.
• Provides clear value, such as sales discounts.
• Includes actionable next steps, often providing a link.
• Includes a unique trackable code for attribution.

Success for promotional SMS depends on the same factors as other marketing: timing, relevance, and frequency. Sending too many messages or sending outside acceptable hours will drive opt-outs and potentially trigger carrier filtering.

Promotional SMS also requires explicit prior consent in most jurisdictions (with penalties up to $1,500 per message under TCPA in the US) with clear opt-out instructions. However, these can be provided in the initial opt-in flow rather than in every message.

To send the above promotional campaign, Bonobos would need to:

1. Verify explicit SMS marketing opt-in for each recipient.
2. Check suppression list and remove any opted-out numbers.
3. Schedule send for appropriate time (8 AM - 9 PM local time).
4. Generate unique promo codes for each recipient or campaign.
5. Create shortened tracking link for the landing page.
6. Send through promotional/marketing route via SMS gateway.
7. Monitor for STOP replies and automatically process opt-outs.
8. Track delivery rates, link clicks, and code redemptions.

The technical infrastructure is similar for both transactional and promotional SMS, but the business logic, compliance requirements, and success metrics differ significantly between transactional and promotional use cases.

How SMS notifications work

At its core, sending an SMS notification involves your application communicating with the cellular network infrastructure through a series of intermediaries. The journey from your server to a user's phone involves multiple systems, each playing a crucial role in reliable message delivery.

The basic flow:

1. Your application triggers an SMS (i.e. user requests a password reset).
2. Your server calls an SMS gateway's API with the message and recipient number.
3. The gateway routes the message to the recipient's carrier network.
4. The carrier's SMS Center (SMSC) delivers the message to the phone.
5. Delivery receipt travels back through the same chain to your application.

SMS gateways and aggregators act as the bridge between the internet and telecommunications networks. You hand them your message, and they handle the complex routing to get it delivered. Popular gateways like Twilio, Vonage, or MessageBird provide REST APIs that accept HTTP requests from your application and translate them into the protocols that telecom networks understand.

These gateways connect to carriers through either SMPP (Short Message Peer-to-Peer) connections for high-volume sending or HTTP/REST APIs offered by carriers themselves. SMPP is the industry-standard protocol that allows systems to exchange SMS messages at high throughput.

The SMS Center (SMSC) is the carrier's message processing hub. When a message arrives at the SMSC, it:

• Validates the recipient number exists on the network.
• Checks if the recipient's phone is currently reachable.
• Attempts immediate delivery if the phone is online.
• Stores the message for retry if the phone is offline (typically for 24-72 hours).
• Generates delivery receipts to confirm successful delivery or failure.

Message encoding and segmentation affect both delivery and cost. SMS uses two main encoding standards:

• GSM-7: Default encoding supporting 160 characters (basic Latin alphabet, numbers, common symbols).
• UCS-2/UTF-16: Unicode encoding supporting 70 characters (emojis, non-Latin scripts like Chinese or Arabic).

Longer messages get split into segments (153 characters for GSM-7, 67 for Unicode) with special headers that tell the recipient's phone how to reassemble them. Each segment is billed separately, so that friendly 200-character message costs you for two SMS sends.

Delivery routes determine speed and reliability. Carriers maintain different quality levels:

• Direct routes: Straight connection to the carrier, highest reliability, best for transactional messages.
• Grey routes: Messages pass through multiple networks to find the cheapest path, slower and less reliable.
• OTT routes: Over-the-top delivery through internet services, cheapest but least reliable.

Most developers don't choose routes directly. Instead, your SMS provider handles this based on whether you're sending transactional or promotional content. But understanding routes helps explain why some messages arrive instantly while others take minutes, and why transactional messages cost more than promotional ones.

Top use cases for SMS notifications

SMS notifications excel in scenarios where immediate attention and high reliability are paramount. The channel's high open rates and device-native delivery make it ideal for critical communications that can't afford to be missed.

Authentication and security

SMS notifications for authentication and security purposes are the most common transactional use cases. Two-factor authentication codes, password reset links, and login verifications all leverage SMS's direct tie to a phone number as an identity verification method. While not the most secure option (compared to authenticator apps), SMS remains the most accessible second factor for the broadest user base.

The following SMS demonstrates best practices for an authentication notification by clearly identifying the sender (Coinbase), stating the purpose upfront, and including both a security warning and fraud prevention contact number. The reference number provides additional verification while the message stays within the 160-character limit.

This SMS notification from Lyft alerts users to potentially unauthorized access to their account, with specific details (time, date) and an immediate action link for users to secure their account. SMS works great for these types of notifications, where every second counts in preventing unauthorized activity.

Purchase and shipping updates

Another popular use case for SMS notifications is keeping customers informed about important updates related to an order, including order confirmation details, shipping updates, delivery updates, and payment confirmations.

Appointment and booking management

Using SMS to send important updates about appointments or bookings can help reduce no-shows and improve operational efficiency. Appointment reminders, booking confirmations, and rescheduling options are all used heavily by healthcare providers, salons, restaurants, and service businesses, and the bidirectional nature of SMS allows customers to confirm or cancel by replying, streamlining operations.

This NHS appointment reminder uses an international sender format. It includes all critical information, such as service, date, time, and location, while providing clear action options (ATTEND or call to reschedule). The use of a recognizable shortcode (5825) and clear formatting makes it easy for patients to quickly understand and respond.

Critical alerts and emergency notifications

Emergency alerts demand the reliability of SMS. System outage notifications, emergency broadcasts, safety alerts, and compliance notifications need to reach users regardless of internet connectivity. Schools use SMS for closure announcements, utilities for outage updates, and governments for emergency alerts.

Customer support and engagement

These use SMS for case updates, support ticket resolutions, and satisfaction surveys. The asynchronous nature of SMS allows customers to respond at their convenience while maintaining context. Some businesses enable full conversational support over SMS, meeting customers in their preferred channel.

Marketing and promotional campaigns

Promotional messaging leverages SMS's intimacy for high-value offers and exclusive deals. Flash sales, limited-time offers, loyalty program updates, and VIP early access campaigns see higher conversion rates through SMS than email. The key is maintaining exclusivity and value. SMS marketing works best when it feels like a privilege, not spam.

This promotional SMS effectively combines urgency (expiration date), clear value ($5 free), and a memorable code (89187) while including the required T&Cs in a shortened link (pspmkt.co) to save valuable characters.