Text marketing to mobile phone users can help ecommerce merchants. mobileStorm is a marketing company that focuses on such text, or SMS, marketing services. mobileStorm’s CEO is Jared Reitzen, and we spoke with him about what, exactly, SMS marketing is and how it can assist ecommerce firms. Reitzen launched mobileStorm in 1999 and prior to that, he was CEO of Catalyst Music Group, an independent record label and new media company.
PeC: What is SMS marketing?
Reitzen: SMS stands for short message service and it was invented by Telenor, the global communications company, as a way to alert its customers about billing situations. It's 160-character, plain text message that gets delivered over the SMTP protocol, which is a protocol that carriers use, the carriers such as AT&T and Verizon, to deliver these messages. Initially, it started out really more as a functional thing for carriers to be able to deliver that billing information to phones. Now, it's used around the world for commerce, it's used for marketing and it's just exploding right now, especially here in the United States.
PeC: Your company, mobileStorm, provides SMS marketing services. Tell us how that works.
Reitzen: In a nutshell, you build a database of mobile phone numbers and you could do that through various ways. People could fill out a form online. People can text in. I'm sure we've all seen American Idol and you can text the word Vote to a five-digit short code to vote for your favorite American Idol. That's really a way that people can acquire and build a database. You could have a keyword. Maybe you're a job recruitment firm and you're recruiting waiters and you could text the word "waiter" to a short code. That's one way to get people into your database.
So, what we provide at mobileStorm is a very easy, do-it-yourself platform that enables you to build your database through those various ways and then once you've built that data, be able to market to those people and because text messaging is to cell phones and cell phones can really be anywhere at any time, you can really have a very powerful message.
PeC: How much does your service cost?
Reitzen: We have two types of services. One is for our small business customers and that starts at 20 bucks a month and gives you around 200 messages. We also have our full service, start-up professional platform, if you will, and that starts around $500 a month for larger customers with larger databases and maybe some integration needs can sign up with that service. So, it really just depends on what you want, but we really can cover a large spectrum of different size of companies.
PeC: Is the fee based on the number of messages sent or the size of the database or both?
Reitzen: We charge for the amount of messages sent. The carriers charge us for the amount of messages sent, so we in turn have to charge our customers. We also have other services we provide, additional services above and beyond the messaging costs. We have different levels of support depending on your organization's needs.
PeC: Our readers are mainly ecommerce merchants. Let's assume one of our listeners sells, say, running shoes. Walk us through how that online running shoe merchant can use text marketing, SMS marketing, to help its online business of selling running shoes.
Reitzen: For one, you can use text messaging is used for security purposes. For instance, if I'm making a purchase on line, some ecommerce companies right now are saying, "Hey, we're going to go ahead and before any purchase can be made, we're going to send a message to your phone and it's going to have a 4-digit PIN. In order to complete this purchase, you have to put that PIN number in." So, now, nobody can steal my credit card. Nobody can try to purchase things for me online at eBay, let's say, because eBay won't allow the transaction to go through unless a message gets sent out to my cell phone with a 4-digit PIN and I have to put that 4-digit PIN on the form online. So, I can't complete my transaction. So, you see it being used for security purposes and fraud prevention.
The next sort of commerce piece that text messaging can do right now and this actually is using text messaging to facilitate the purchase and that's called premium SMS. I'm sure a lot of us have purchased a ring tone or wallpaper and that $2.99 charge shows up on our cell phone bill and we pay our cell phone bill. Well, the content producer of the ring tone or wallpaper is getting paid, is getting a check cut to them, a similar company like mobileStorm who then is of course getting paid by the carrier. Now, I can facilitate purchases of content right over my phone just simply by sending in a text message. Sometimes people charge for joke of the day or horoscope and all that can be billed right through my carrier. So, we're really starting to see carriers become more like credit card agencies and I think that's the way the future is going to start moving and using SMS to really facilitate those purposes.
PeC: You mentioned that SMS marketers must first collect cell phone numbers ideally in a double opt-in manner. What are the most cost effective ways for merchants who want to collect cell phone numbers and get the approval of those cell phone users to send them SMS messages?
Reitzen: It really depends upon the channel that you're trying to market your service. Each channel has a different value to it. Here's the great thing about mobile. It's that one rare channel that can be integrated into every other channel. For instance, a billboard, you're driving down the street, you could say, "Hey, text word so and so to my short code," let's say it's a Gap ad, "and become a Gap mobile member and get 10% off." So, I have to pay now for the billboard, so that might be a higher cost because a billboard cost money versus I might already be buying media online, on television and I might be able to integrate that call to action on a television commercial and radio or I might be able to do it online. I might be able to utilize my current email database and send an email out promoting this new mobile club.
It really depends on where you're currently buying media, what avenues you're advertising and then from there you could figure out, "Well, hey, this billboard costs us X amount of money per month and we've been able to acquire SMS subscribers," and you can really do a simple ROI on that matter, but again, just acquiring a subscriber doesn't necessarily mean they're worth a dollar to you. As an organization, you got to figure out what that person is worth and I think a lot of companies have done that with email, especially the ecommerce companies. When you build an email database and send an email to a thousand people and I roughly get a 10% conversion rate and my average product cost is 100 bucks, I know pretty much I'm going to make $1000 from each campaign. So, then you could put a number to say, "Hey, each one of these users are worth $1 or $2." So, I think you got to figure those messages out internally on SMS as well and from there you'll be able to figure out as you're placing SMS in these various channels what your ROI is.
PeC: How does a cell phone user opt out of an SMS marketing campaign?
Reitzen: It's simple. Per the carrier requirements and also the Mobile Marketing Association, which is the governing body of mobile marketing, the best practice is that you have the word "stop." Anybody with any message can send a reply with the word "stop," although there are some other messages, other words that also can be used such as end, quit, unsubscribe, or remove. Any one of those messages should actually get the person off a list very, very easily and then you should get a message back confirming you've been removed and you no longer will receive messages.
PeC: Anything else you'd like to say to ecommerce merchants as it applies to SMS marketing?
Reitzen: Ninety-five percent of cell phones now have text message capabilities and 87% of the United States population has a cell phone. So, the penetration rates are unbelievable. People keep saying, you know, text is next or it's just around the corner. I totally disagree. I think it's now. When we started mobileStorm in 1999, it was very hard to get people to pay for text messages, let alone know what the heck it was and the adoption rate wasn't there, but it's here and one of the most important thing that people can take away from this is if you think about how long somebody keeps their cell phone number versus how long somebody keeps an email address, email addresses change on a yearly basis, 33% of a database, email database, is going to churn out, but a cell phone number, now that I can take my cell phone from Verizon to AT&T and AT&T to T-Mobile, people are really keeping this number and they're going to keep it for life and they're actually replacing their home phones.
So, by getting their cell phone number, it's like getting that individual's IP address. I cannot stress enough how important it is that even if you don’t have a mobile strategy now, you at least recognize how critical it is, how long people keep their cell phone numbers and you start building your database.