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Retailers Build Better Customer Engagement With Text Messaging

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Retailers and brands have focused on real-time communications to customers in order to provide a better consumer experience. According to a Deloitte study, brands at the forefront of real-time engagement with customers are not only increasing the speed of their reaction time, but they are also fundamentally shifting the culture and organizational structure to support real-time customer engagement. An area of concentrated effort during the pandemic, when many customers are focused on contactless shopping environments, is SMS (short text messaging) technology. While SMS is one of the oldest texting technologies (limited to 160 characters and no images), it is widely used by retailers and brands to connect directly with customers. 

Jeremy Goldman, principal analyst of eMarketer, in a recent podcast discusses the growth of SMS marketing, stating that many brands are moving towards more text messaging and migrating from email to SMS to reach customers where they are in the shopping journey. Goldman said about SMS, “It is one of the best ways to reach customers.”

Uncommon Goods uses SMS to better connect with customers

Uncommon Goods, a popular online marketplace for crafters and makers, uses push automated campaigns to personalize texts with notifications like back-in-stock alerts.

Brian Hashemi, head of marketing & analytics at Uncommon Goods, stated, “SMS has helped us engage a different segment of our most loyal shoppers. We’ve been pleasantly surprised at how quickly we’ve been able to scale our program – we got to 100,000 subscribers much faster than we anticipated.” Hashemi noted that the SMS audience is much younger than the typical customer, so it’s providing a new way for the company to drive loyalty with a segment that it typically struggled to reach. As Hashemi stated, “We see that reflected in the type of content that is successful, too – for example, our campaign centering around the Black makers we partner with was much more successful on SMS than on other platforms.”

According to Hashemi, the holiday season certainly represents the bulk of profits in a normal year for Uncommon Goods, however, the pandemic has helped to drive unprecedented results outside of the holiday season this year, resulting in a dramatically improved profit picture through the first three quarters.

TULA skincare investments in digital marketing have paid off in a big way

TULA Skincare, a direct-to-consumer (DTC) beauty brand, has grown its revenue by more than 250% due to the rise in popularity of organic/natural skincare and its investments in digital marketing. Zack Abbell, vice president digital and e-commerce of TULA skincare, said, “We launched our SMS program at the beginning of this year and have seen dramatic growth out of the gate.” TULA’s shoppers are mobile-first, with 80% of shopper traffic and 70% of transactions happening on mobile devices. Abbell discussed TULA’s efforts to grow the number of customers who opt-in for SMS and to convince existing email subscribers to sign up for SMS communication. TULA has seen SMS revenues grow to 10-20% of email revenue for the past quarter. Abbell stated, “The ROI has been strong across all programs and we're seeing that our most loyal customers are our first adopters of the SMS program, so it's provided another cost-effective outreach channel for us to drive engagement.”

SMS provides brands an opportunity to go beyond selling products and services to create a community for customers around social issues. TULA recently launched an initiative called #embraceyourskin around its vision to inspire confidence and help the community by engaging its customers with a weekly self-affirmations texting service. Abbell said, “We see it as both a sales and customer relationship channel where we can drive engagement for the purpose of sales and brand loyalty.” 

SMS is used to communicate task-oriented factors

Target TGT , Walmart WMT t, Container Stor TCS e and Home Depot HD , among other retailers, are using SMS to send notices to customers about order confirmation, curbside pickup and orders ready for store pick-up. They are also taking incoming texts that allow customers to notify the retailer when they have arrived at the store for order pick up. Updates on e-commerce shipments and discount pricing are widespread use cases for SMS across many retailers and brands. 

Comparing email and SMS marketing 

Email messaging is an overall lower cost method of communication for retailers, however, SMS provides a higher return on investment. Goldman said, “Customers are responding to text messages at a rate of 100% as compared to email marketing where messages may never get opened all.” 

Hashemi believes both types of marketing programs are effective, stating, “We’ve spent a fair amount of time analyzing the relative performance of email versus SMS.  Email is hard to beat in terms of profitability – the cost to send is low and you can maintain a fairly high frequency without seeing serious degradation in performance.” The problems with SMS, as Hashemi discussed, are the greater expense and the lower frequency of messages that can be sent to customers without annoying them to the point of unsubscribing. Uncommon Goods still prioritizes email marketing, but Hashemi said, “We see the programs as complementary, but it’s not necessarily an either/or – we’re giving customers a choice of how to engage with us, and if we can get a customer to opt-in to both lists, they’re that much more valuable.”  

SMS  becomes one of the main marketing strategies for 2021

Retailers will begin more wide-scale uses for SMS going into 2021 including building rapport with the target market, creating feedback opportunities from customers, and using SMS as a quick-response to service-related questions.  

While some consumers don’t want to be texted by retailers and brands, most appreciate real-time messaging from brands they care about. Goldman discussed long-term predictions about SMS becoming more useful and robust by adding features such as sorting and by migrating to RCS (rich communications services) that provide more interactive and engaging elements like images. SMS may even evolve to look like live chat as a service feature. 

The return on investment was very high for SMS marketing in 2020 and its future as an increasingly valuable tool for retailers and brands looks very bright.

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