Article

SMS = Your New Secret Weapon

Advertising Data SMS

May 7, 2023

I’ve spent an inordinate amount of time thinking about SMS/MMS messaging and the role it should play in the modern brand’s customer journey – both today and tomorrow. And I’ve come to the conclusion that most brands are (1) missing out on a paradigm shift, (2) thinking about SMS/MMS in the wrong ways and (3) missing out on a massive greenfield of opportunity in the process.

Before we dive in, let’s define SMS/MMS as: an owned channel (you control the list…unless you use Attentive) that leverages informational, promotional, transactional and relational text messaging to achieve a desired outcome (sales, leads, loyalty, whatever).

My position on SMS has evolved from three principles:

Marketing is most effective when it integrates existing routines & disrupts in the right way
Growth becomes more difficult & more expensive over time
Relationship-building is fundamentally a 1-to-1 activity

Let’s take those in order:

Marketing (writ large) is most effective when it is personal, integrates with existing routines and disrupts in just the right way

People watching is one of my favorite pastimes. It’s one of those things that is both endlessly entertaining and incredibly insightful (especially when your day job is as a marketer). This morning (Monday) I worked at a cafe for a few hours – and during that time, I watched 46 customers come and go. Each one of them – yes, every single one – checked their phone multiple times. Almost half never put it down – coffee in one hand, phone in the other. For the entire duration of their stay. There were (by my count) 6 tables of two people “getting coffee” – while both were on their phones, including at least 2 that appeared to be (very awkward) dates.

The point? Most people’s most intimate relationship is with their phone. That’s backed up by science – a recent study showed the average person checks their phone 344 times per day – that’s nearly 3 times every waking minute.

In fact, we (collectively) are so attached to our phones that there’s a term for ignoring people who are physically present in favor of checking a mobile device: phubbing.

It’s no wonder that there were over 2.3T (yes, trillion, with a “T”) text messages sent in 2022, in the US alone. And unlike emails, SMS/MMS are direct – they go directly to the messages inbox (limited spam filters) and trigger on-screen notifications, a one-two punch that results in sky-high open rates (~98%) and response rates (~45%).

We live on our phones. And that level of attachment (a routine) creates an incredible opportunity – especially if it can be used as a launchpad for masterfully-crafted disruption.

This is where I firmly believe SMS can shine for just about every brand. A well-timed SMS message is a compelling catalyst that can impact users at each stage of the marketing maze – and do it *better* than email, because of the direct, insanely intimate nature of the medium:

Discovery: push relevant products or offers directly to subscribers who haven’t purchased previously; provide personalized story-telling or product discovery features (i.e. quizzes or memes).
Consideration: showcase relevant content, reviews/testimonials, facts/infographics, etc. to potential customers who have an identified need, but have not taken action.
Purchase: remove barriers to conversion (lead form submission, purchase, sign-up, registration, whatever) by prompting a user with a simple, one-click option.
Post-Conversion: provide timely updates on next steps – whether that’s an appointment reminder, shipping/delivery confirmation, installation instructions, follow-up notes, whatever.
Loyalty Building: deepen one-to-one relationships with your existing customers via dedicated support channels, exclusive offers/opportunities, etc.

If you need a more compelling proof point, consider that among the world’s top retailers (both Shopify Top-1000 stores AND big box retailers), adoption ranges from 66.7% to 90%. Put another way: the retailers most likely to be “in the know” about what’s driving results have overwhelmingly pivoted to SMS.

Given that, it’s mind-boggling to me that more upstart/growing brands haven’t adopted it, especially in ecommerce (only ~11.7% of the Shopify top-150,000 stores have an active SMS plugin installed; that declines among other B2C segments like home services to the low single digits).

Growth Becomes More Difficult & Expensive Over Time

I think it’s helpful to think about platform adoption & performance in terms of S-curves: adoption of new tools/platforms/technologies tends to be slow at first, with those early adopters reaping outsized rewards (“high surplus value”). As the channel/tactic matures, that surplus value declines, to the point of non-existence, and the cycle repeats with new tools/platforms/technologies.

For SMS, adoption data shows we are firmly in the lower-left quadrant of the below graph: adoption is certainly increasing as more brands realize incremental growth. But the vast, vast majority have not adopted it. And therein lies an opportunity.

Whether you’re a marketer, owner, investor or operator, you know that growth is becoming more expensive each day. Auction-based media (Meta Ads, Google Ads, etc.) necessarily mean that each subsequent click is more expensive than the last. Economic contraction, rising interest rates & a looming recession are throttling consumer spending (especially consumer discretionary spending) from pandemic highs back to (and in some sectors, below) pre-pandemic levels.

Combine those two things and we’re all faced with a less-than-ideal reality: growth is getting more difficult, more expensive, and less predictable. In response, marketers/businesses are going back to “tried-and-true” channels like email or direct mail.

I think that’s the wrong approach.

Email can still be an incredible driver – but with more stringent and sophisticated filtering (looking at you, promotions tab), increasing employee turnover (meaning many of those corporate emails you have aren’t good anymore!) and an ever-increasing barrage of noise (again, we’re all sending more emails) – it isn’t what it once was.

Direct mail has the advantage of avoiding the pre-set SPAM filters (well, until the USPS decides to add “junk mail filtering” as a service), but it comes with high fixed costs ($0.48 to mail a post card, plus the costs of printing + design). Tack on increasing volumes, wildly volatile delivery times and limited control over who actually gets the message, and you have a recipe for a very expensive boom-or-bust channel.

This is, again, where SMS shines:

Low adoption – there just aren’t that many brands sending SMS/MMS, vs. the number doing direct mail or email.
Reasonable Costs – there’s no denying that SMS is more expensive than email on a per-send basis; but adjusted for open rates + action rates, SMS is a bargain. Direct mail costs can be 100x SMS/MMS on a per-send basis.
Direct + Personal – no spam filters, no filtered inbox, no need to worry when it’s delivered, no hoping the kids don’t throw away the mail…just a message delivered directly to the device your prospect/customer touches every ~3 or so waking minutes.

Put simply: SMS’s current adoption rates + unique capabilities offer a compelling opportunity that I wish more brands would explore. It certainly isn’t right for everyone, but if you’re relying on email or direct mail to drive growth, you should consider SMS/MMS.

The criticism of SMS I hear most often is that it isn’t a true “growth” channel – you need a prospect to give you their phone number first, and only then can you deploy SMS.

That’s true. It’s valid. And it’s also applicable to email.

But I think this takes a wildly narrow view of “growth.” Instead, I prefer to look at the overall lift a given channel provides – the marginal impact of using it.

Recart, my favorite SMS platform for ecommerce, recently ran a study across their client portfolio and found SMS produced an incremental 14% increase in revenue. Among their largest customers, it was 33%.

I’m sure if other SMS providers ran that, they’d see similar results. Speaking for most business owners I know, a 14% increase in revenue would be a welcome boost right now.

Relationship Building is Fundamentally a 1:1 Activity

The final principle that leads me to be bullish on SMS is a simple one: it’s an incredibly intimate channel. It is truly a direct, one-to-one communication media.

That unlocks a ton of possibilities:

Maximize the value of paid media by nurturing prospects + avoiding having to continually pay to re-engage (i.e. remarketing) as they go through the buyers’ journey. SMS/MMS creates a softer entry point than a sale, and allows you to build a personal relationship with each prospect over time.
The ability to rescue lost deals / sales (abandoned carts + stalled journeys) at a staggeringly high rate.
Precise customer/prospect segmentation (based on sales, lead stage, total lifetime value, product/service purchase history, etc.) that can be layered with user-level behavioral data (what time each person is most likely to view + respond) to deliver personalized experiences at the precise moments that are most likely to result in a positive outcome.
User-level personalization that activates the Cocktail Party Effect (in short: we pay more attention when we think someone is talking about us).

And the beauty of SMS/MMS is that most of this can be automated by your platform – so you’re creating personal connections with your audience, at scale, and for a relatively low cost. That (essentially) means that once you’ve set it up, it runs on autopilot (with occasional adjustments + optimizations).

The bottom line:

SMS is a channel I’m incredibly bullish on for just about every brand. In most industries/verticals, it is wide-open greenspace; and for those where it is ubiquitous (think: big box retailers), they do it horribly.

I firmly believe this is the time to invest in getting your SMS off-the-ground. The brands that make investments now will position themselves to win over the next 3-5 years; those that don’t will be playing a very, very expensive game of catch up.

PS. If you weren’t aware, phone numbers are also usable as unique identifiers for both Google & Meta advertising – so collecting that information is doubly valuable (it allows for better conversion tracking + campaign optimization, along with more accurate lookalike/similar audiences). SMS/MMS isn’t just a retention play – it’s a “build a better business” play.

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