Practical Ecommerce

Should Online Retailers Embrace SMS Marketing?

Texting ads and promotions to customers is an excellent way to announce sales and drive foot traffic to brick-and-mortar stores, service providers, and restaurants. But can text messaging drive site traffic to online retailers, too?

Dutch Bros. is a regional, drive-through coffee shop chain in the Western United States. The franchise store in Caldwell, Idaho has built a significant following by sending out one or two text message ads each month offering a deep discount to customers on their short message service (SMS) list.

On a recent morning Dutch Bros. announced via text that all lattes, cappuccinos, espressos, coffees, and the like were just $1 regardless of size. The result was a traffic jam with dozens of vehicles waiting to take advantage of the special. Although Dutch Bros. was probably not making a lot of money selling $5 drinks for $1, it was rewarding loyal customers and building the kind of relationship that will lead to long-term growth.

Dutch Bros. Coffee uses SMS marketing to generate drive-through traffic.

Dutch Bros. Coffee uses SMS marketing to generate drive-through traffic.

The SMS Marketing Opportunity

SMS is the technical protocol for sending a text message to and from a mobile handset or similar communications device. Anyone familiar with texting is familiar with SMS. As far as marketing is concerned, SMS uses a model similar to email. Customers opt to receive discounts or other communications via text message, and marketers send messages as promised. The customers should be given a clear opportunity to opt out at any time too.

According to a July 2010 Pew Internet & American Life Project report, 72 percent of mobile phone users in the United States send or receive SMS, text messages. Given estimates of about 234 million American mobile phone users, it may be the case that there are nearly 170 million Americans texting. The size of this audience makes SMS a significant marketing channel.

Extrapolating from a Pew Internet study, nearly 170 million Americans use text messaging.

Extrapolating from a Pew Internet study, nearly 170 million Americans use text messaging.

SMS is actually even more popular outside of the United States, with some estimates stating that there are 2.4 billion active users worldwide.

Ecommerce’s Particular Opportunity

Mobile handsets are also changing, as increasingly consumers are choosing smartphones like any of the Android-based devices or the iconic iPhone, which are capable of voice, SMS, and Internet-based communications.

In fact, a Merrill Lynch report cited by Smaato, stated that in just two years, smartphones would replace personal computers as the most common means of Internet access worldwide.

The relationship between SMS capabilities and Internet capabilities in these devices creates a particular opportunity for ecommerce merchants who can send SMS messages to interested consumers with a link that those consumers may act on. In fact, Todd Davenport writing on the iMobile Marketing Direct blog said that “over the past two years, Sears and eBay have adopted SMS text messages to promote their sites via the URL embedded within text messages, thus driving customers back to abandoned mobile shopping carts.”

Separately, a published report said that 34 percent of consumers who have opted to receive SMS marketing would, in fact, respond.

Getting Started with SMS Marketing

In most respects, SMS lists can be built in the same way as email lists. Online merchants will want to include opt-in offers on-site and encourage shoppers to join by offering discounts, special offers, or even rewards. For example, when a shopper is checking out, a store may offer a $1 off coupon code for joining an SMS list. The customer enters a valid mobile phone number, and the coupon code is sent via text messages for use on the current purchase.

In general, SMS marketing will likely take one of three common forms: coupons or discounts, surveys, or reminders.

  • Coupons or discounts. Text message coupons are simply offers that shoppers receive on their mobile phones as SMS messages. The coupon may be a reward for joining the SMS list by texting something like “join” to a specific number or as a motivation to get shoppers to visit the site. The message should include the coupon code and a link to a landing page.
  • Surveys. Surveys are a direct way to get feedback from shoppers.
  • Reminders. Reminders come in many forms. For example, a merchant that sells gift baskets could offer a texting reminder service that notified customers of upcoming birthday, anniversaries, or similar.

Summing Up

SMS marketing is relatively unproven for ecommerce but the size of the potential audience, the ease of clicking on a link in a text message, and the various way to engage shoppers, seems to make SMS an intriguing channel for ecommerce marketers.

Armando Roggio

Armando Roggio

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  1. Dan May 30, 2011 Reply

    Great piece for e-marketing professionals – nice one.

    To emphasise a few points: SMS does provide a chance for you (the business) to start the engagement rather than waiting for the customer to come to you. Therefore, start collecting mobile numbers of your customers today.

    I’d recommend by sending a order confirmation, a personalised "thank you" or even a follow-up message a week later – all by SMS – personality has somewhat been lost in emails now. This will not only give you credibility with fantastic customer service, but the customer will welcome further messages such as promotions etc. This whole process can even be automated. Many SMS companies (such as us, Firetext.co.uk, in the UK) offer an API to connect the sending of SMS with your online store.

    Think engagement rather than bombardment!

    Dan Parker
    Director
    FireText Communications Ltd (UK)

  2. dickgoldsmith May 31, 2011 Reply

    In the U.S. you have to first have permission from the owner of the phone before you can start sending text messages to it.

  3. smsguru June 28, 2011 Reply

    I don’t think the above statement is entirely true. I believe you allowed an opt in text. However you can not spam people. This is just to my understanding. I use DKText.com and they used to offer a way to send a message to phone numbers asking if people would like to opt in. While they don’t currently have that feature they did say they were going to bring it back at some point.

  4. Michael Ehalt September 7, 2011 Reply

    Great article! I truly believe that SMS and MMS technology is transformational and offers businesses the opportunity to take an active role in ensuring sales growth. I have seen it used very effectively in the U.S. restaurant industry. The ability to connect with customers and potential customers real-time where ever they are located is "powerful stuff." I am proud to say that my company, Globatext, provides an affordable top-of-class online platform that combines this capability with email and social media integration as well. I look forward to opening the eyes of business owners to this powerful tool!

    Michael Ehalt, Regional Manager, Globatext
    Orlando, Florida
    http://www.globatext.com