‘SMS text messaging has been around for decades and is generally considered low-tech compared to the complex state of the art technologies used today by many retailers like artificial intelligence inclusive of machine learning and virtual reality.
However, SMS text messaging’s advantages are simplicity of use for both customers and retailers and high return on investment for companies that use it to communicate with their target customers.
SMS Text messaging provides many benefits to customers
Ross Kramer, CEO of Listrak, a company that provides the software infrastructure for SMS text messaging to work, explains why this technology is a favorite with customers and retailers. The customer benefits include early access to sales or special deals and new product release notifications (a good example is footwear brands notifying customers of new sneaker releases). Some retailers use SMS text messaging to engage customers beyond selling products and services by providing opportunities to engage in community conversations like social issues. TULA skincare recently launched an initiative #embraceyourskin around its vision to inspire confidence and help the community by engaging its customers with a weekly self-affirmations texting service.
SMS text communication is a highly regulated industry
Throughout the pandemic text messaging was used heavily by retailers to send customers shipping updates, curbside pick-up information, and order processing details. Loyalty programs can include text messaging as part of a holistic approach to the shopping experience. One of the main reasons that customers have had largely positive responses to this type of communication is that, unknown to most of them, SMS texting is a highly regulated communication process unlike email marketing or telemarketing. As Kramer explains, “The industry wants to make sure that it does not get tarnished by bad actors.”
There are currently no regulations limiting the number of emails that can be sent to customers. However, advertising campaigns that rely on text messaging have to be approved by telecommunication carriers down to the reason, frequency and content of the messages being sent. If companies do not comply with the approved communication plan, there are strong penalties. Applications of campaign usage vary by region so the regulations may be different based on where communications are being sent. For example, a U.S. retailer that wants permission to use a text messaging campaign in both the U.S. and Canada would have to apply for two different approvals from different carriers. The stringent regulations keep text messaging to customers at a reasonable cadence, unlike the robocalling that bombards mobile phones.
A step-change in behavior has increased text usage by customers
There has been a step-change in behavior since last year with customers relying more on text messaging when communicating with retailers, but also with appointment scheduling (doctor’s offices is a good example). According to Kramer, while the communication for appointments is person-to-person and highly transactional, the commercial traffic broadcast messaging is highly monitored. From a customer perspective, the procedures to sign up for text messaging and to stop it are simple, immediate and effective. Many retailers use “tap” buttons to make signing up easy and by texting STOP, customers can immediately unsubscribe from future messages. When email marketing was deployed years ago, the industry was not regulated and the cost to create email campaigns was very low which allowed many unscrupulous companies to annoy customers by flooding them with emails. SMS text messaging requires a higher barrier of entry and a greater cost for retailers, deterring the bad actors.
Retailers build deeper relationships with their customers
Text messaging is a high disruptor and prompts users to stop what they are doing to answer the message creating an intimate channel for retailers to communicate with their customers. The high engagement with customers has turned into revenue for many retailers. Kramer states, “SMS text messaging can create 25 cents per dollar in revenue earned from customers as compared to 5 cents per email.” Kramer adds the other component that makes this type of communication highly responsive is that text messages are delivered immediately (even through a locked screen) and are not buried in a junk mail folder like email.
The benefit is on the customer side
In summary, SMS text messaging is one of the fastest-growing channels for retail communication according to Kramer, due to the impressive return on investment for retailers, positive customer response, and the immediacy factor. By comparison, the disadvantages to retailers are minor, including the higher cost of entry and less frequent cadence as compared to emails. But these are actually advantages for customers, holding communications below the annoyance level and also keeping less reputable companies at bay.’
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