How to increase sales using SMS Marketing

Seattle Sun Tan was spending big bucks on email marketing. But they weren’t getting the results they wanted, so they called Derek Johnson for help.

“Email marketing used to be super powerful, and it still is, but it’s become less powerful,” says Derek, founder SMS marketing software Tatango. The average open rate is 13%, and it continues to decrease, he says.

So Derek proposed something different: A text message campaign. “Instead of getting a 13% open rate, you’re going to get a 99% open rate,” he says.

The strategy was a huge success. “[Seattle Sun Tan] generated…about $200,000 in revenue in the first 30 days of running their SMS campaign,” he says. “During the first month, 4,750 subscribers opted in.”

In his Mixergy course, Derek shows you how to increase sales with SMS marketing. Here are three highlights from the course.

1. Make Them an Offer They Can’t Refuse


No one wants to “receive mobile offers.”

“That’s a very standard text messaging call-to-action,” says Derek. “What we realized, though, is [that it’s] not very attractive.” And without an attractive call-to-action, customers aren’t going to give up their phone numbers.

So how do you convince them to opt-in?

Do a service for them

Create a compelling offer.

“You’ve got to give them something,” says Derek. It could be a coupon code, but with today’s smartphones, there are a lot of possibilities.

For instance, let’s say you run a dating site, and you want people to sign up for your weekly text message dating tips. “You could offer a special video for people who sign up,” he says, and include a link to the video in the first text message.

2. Find the Sweet Spot


Text your customers too much, and they’ll unsubscribe. Don’t text them enough, and you’ll lose out on sales.
“You’ve got to really look at where the threshold is of being annoying [versus] actually adding value,” says Derek.

Take car dealerships, for example. “Sending a text message every week about buying a new car is going to get very, very frustrating,” he says. There’s no value for customers, especially if they just bought a car from you three months ago.

So how do you figure out how and when to contact them?

Analyze your game

The right frequency and timing are different for every business. “[It] depends on the company, depends on the content, depends on who you’re targeting,” says Derek.

For instance, if a barber knows that his average client gets a haircut every month, he could send a text every three weeks to get them in a little sooner.

“And when you look at the numbers…within a year that’s 12 haircuts times $10 per haircut, it’s $120 of revenue,” says Derek. “If I can scoot that up to every three weeks…because [I send] this awesome text message discount…[then that’s] more haircuts, which equals more revenue.”

3. Choose Your Words Wisely


A lot of phones only show the user the first line of a text, so you have to open it to see the entire message. “Maybe the first 30 to 60 characters may be displayed…depending on what operating system you’re on,” says Derek.

That means that the first few words in your texts will make or break your marketing success. “You don’t want to say, ‘Buy a burger…’ and that’s what they see,” he says. Customers will ignore it. They don’t want to buy anything.

So how do you get them to pay attention?

Make it about them

Lead with the value for the customer.

“If you look at any McDonald’s ad, it’s always, ‘Get 20% off’ and then the qualifications are below,” says Derek, “You’ve got to hook them. You want to see, ‘Get a free burger…’”

It may seem like a small tweak, but it “can influence open rates and redemption rates significantly,” he says.

Tweetable Insights

“Email your customers to make money, but text them to make a fortune.” Click to Tweet

“Want a 99% open rate? Send texts to customers.” Click to Tweet

Get the rest of the course here.

Written by April Dykman. Production notes by Jeremy Weisz.

Share

  • Susie Romans

    Interesting post! Do you think text still works if you’re selling info products?

  • http://www.tatango.com Derek Johnson

    If email works for selling info products, I don’t see why SMS wouldn’t work. SMS is just a more powerful version of email marketing, when it comes to click through and open rates.

  • Mark Michuda

    Text(SMS) is a way to communicate. Right now, I don’t know of any technology with a 99% read rate. So yes…its a sin not to use it to sell info products! Start building your list ASAP! – CEO of TextHub

  • http://runnersconnect.net/ Jeff Gaudette

    Interesting course. I’ve gotten about half way through it so far and I see a lot of parallels to email marketing. Offer incentive to signup, don’t over send/sell (or at least establish expectations) and subject lines are key. Definitely some great takeaways.

    Not to veer too far off what was covered in the course, but texting solutions/providers seem awfully expensive (at least in comparison to email marketing). I by no means understand the economics behind the industry, but I would find it difficult for a startup to fork over 400-1000 dollars a month for a texting platform (in addition to email marketing).

    Obviously, if it works and provides a high roi (as it did the tanning salon) then it doesn’t matter how expensive it is to get started.

  • Susie Romans

    Derek, the issue I see is that people dont consume info programs on mobile devices as often as on their laptops… think of training type programs…

  • http://www.tatango.com Derek Johnson

    Is that just a hypothesis, or are you able to tell via Google Analytics what type of devices your customers are consuming your content on? To be honest, I have no hard data regarding this, but it would be very interesting. It would be interesting to see how Mixergy videos are consumed… I would bet mobile has significantly grown over the last few years, but as to percentage of people that watch these videos on their mobile devices as compared to a computer, or even a tablet I have no clue. Maybe Andrew would like to share what he’s seeing… I’ll ping him.

  • http://mixergy.com Andrew Warner

    Yup. Mobile is getting much bigger here. The on site analytics doesn’t even begin to describe it because of the different ways people consume it.

    Podcasts is an easy example. But if you download today’s interview and upload it to dropbox to listen to later, chances are good that you’ll be listening to it on mobile.

    My best indicator of the shift is in our help desk. A few years ago mobile accounted for a small % of feedback and the biggest issues were around podcatching the latest episodes. And anyone who did that was using an Apple product.

    Now mobile is taking up a bigger % of the feedback. People want everything to be mobile. And the issues are more diverse because the listening options are more diverse.

  • http://www.tatango.com Derek Johnson

    Great question Jeff, and I question I definitely don’t mind answering.

    In regards to your first question about the economics of SMS as compared to email, there’s just a ton more cost in SMS. SMS providers like Tatango have to pay a per message fee to what we call an “Aggregator” to be able to transmit messages via the wireless carrier networks. These per message fees are usually more than what you would pay an email marketing provider like MailChimp, ConstantContact, etc. to send an email, so already just because of the cost of sending a message, we’re going to be priced higher. This doesn’t take into account the cost of the phone numbers, which run about $1,000/month, and all the additional fees charged by aggregators and wireless carriers.

    In regards to your comment about a startup forking over $400-$1,000 per month to run an SMS campaign, I completely agree. If a company can’t make back at least the cost of operating a marketing campaign, then they shouldn’t do it, and I feel there’s a sweet spot as to the size of company that SMS marketing really makes sense for you. You can actually read about my thoughts on this subject here: http://www.mobilemarketingwatch.com/small-business-sms-marketing-just-isnt-practical-34537/

    Good questions, let me know if you have any more.

  • Pingback: Mobile tips you shouldn’t overlook.. | Social Media Systems Manager

  • Ryan Ehler

    A work around could be using a company phone and having an assistant send the texts through a mass email app and then they can reply to responses. Thoughts on this approach to reduce monthly costs?

  • ZachJex

    I don’t know a single adult that has opted in to SMS marketing. Anyone have any stats on the age ranges that actually opt in for this stuff?

  • Darren O’Connor

    Check out mobilemixed.com

    Greg has a ton of mobile oriented stats. Bet you’ll find some there

  • http://www.mobilemixed.com/ Greg Hickman

    Thanks Darren! Much appreciated. :)

  • http://www.tatango.com Derek Johnson

    Here’s the numbers you’re looking for by age and gender http://www.tatango.com/blog/sms-marketing-statistics/ Let me know if you have any questions.

  • http://www.tatango.com Derek Johnson

    Yea, but that’s like using Outlook to send your mass emails, rather than using an ESP like MailChimp, etc. SMS software providers are built for mass text messaging, where as what you’re suggesting may work for 1-50 recipients, that majority of our clients have hundreds of thousands of recipients.

  • ZachJex

    Thanks Derek. This would confirm what I was referring to…. 6-7/10 “adults” 35+ have NEVER opted in to an SMS marketing campaign. I’m a savvy tech user and I never have. Of the 3-4 who have, I’d be interested to see 1) how many actually stayed opted in for more than a couple weeks and 2) how many opted in to more than one company’s messages at once. The user experience for SMS marketing just leaves a lot to be desired.

    Full disclosure: I own a company that uses push notifications to communicate rather than text messages. (http://pushlocal.com)

  • http://www.tatango.com Derek Johnson

    Do you know how many people that are 35+ have a smartphone? Lets say it’s 40-50% http://pewinternet.org/Reports/2013/Smartphone-Ownership-2013/Findings.aspx Then how many of those consumers have push notifications on their apps enabled? No clue, but man it’s starting to become a small sliver of consumers that can/will engage with a brand’s push messages, where 98% of all cell phone users can text message with a brand.

  • ZachJex

    You’re entirely correct that the total market is much smaller, but it’s growing as more people buy smartphones. No one I know wants to receive texts from businesses (texting is a personal communication medium). Push is highly cutomizable (can customize by current location, interests, sound, and much more) and I believe in the long term it’s a more consumer-friendly medium.

    Again, I’m obviously biased Derek, I just see more potential and longevity in “smarter” modes of communication.

  • http://www.tatango.com Derek Johnson

    Yea, I just look at the market as a whole, rather than individual person experiences. When you look at how consumers want to receive mobile offers on their phones, only 11% of consumers want offers send via a push notification, where 33% want them sent via text message. http://www.marketingcharts.com/wp/direct/sms-most-popular-for-mobile-offers-20711/ If you’re a brand right now, why would you send mobile offers via a channel that only 11% of consumers want their offers delivered that way? The only other way to alienate your consumers more is by sending them a voicemail :)

  • ZachJex

    Couple things:

    1) First, I think there is a big difference in who is sending the message. A big brand like Coca-Cola can probably get away with SMS marketing. A small restaurant (our typical clients) most likely can’t. It would be a hellstorm in my town if the local pizza place was spamming it’s customers with texts.

    2) The quality of an SMS vs. a push is very different. An SMS message almost HAS to be some sort of deal (since the company has to pay to send it). With push, the message can really be anything, which we encourage. Sending only stuff that says “buy my product” is a bad user experience and annoying over time.

    3) In the digital age, context is king. 11% vs. 33% is very important if you’re only looking at the sheer numbers. But how many people out of that 11% would find the push more appealing (based on their current context?) vs. the text that is a “dumb” message? I think that’s the question we have to start answering. In the long run, I think push can be more successful in this area.

    If you want to continue this conversation, I’ll be the guest on #mobilechat on Twitter November 13th. I think it starts at 8PM CST. You are welcome to ask me these tough questions. :)

    Thanks.

  • ZachJex

    Derek -

    Would very much appreciate your comments on this: http://digitalmarketer.com/fcc-sms-regulations-preparation/

  • David Shipper

    People will easily opt in for Hotel stays, situational opportunities like proximity related campaigns (Disney Land for example)and others where the target feels a real immediate reason to opt in.
    As technology improves, more geographically proximity related uses will emerge that “real” adults will opt in.

  • Pingback: How to increase sales using SMS Marketing