SMS Marketing: The Guide to Modern Text Message Marketing for 2020
Table of Contents
Introduction: What is SMS marketing and who uses it?
You’d be hard-pressed to find a business that hasn’t had to pivot some aspect of their marketing strategy in 2020. The impact of COVID-19 spans across industries.
Take restaurants, for example. While many have closed their dining rooms to help flatten the curve of the coronavirus pandemic, they still are working to find ways to bring in revenue. For a lot of them, that means switching to a curbside or take-out model.
Sure, it adds convenience to many who want to grab food and get back to their day while also staying safe. But ordering at a restaurant is an inherently in-person experience, filled with dialogue, gestures, pointing, and more personal nuances.
So how do you communicate with customers while staying 6 feet away from them? For some, the answer is with SMS marketing.
People are using their cell phone more and more - especially in a time where we often need to rely on digital devices for communication. For many, checking in on your iPhone’s weekly screentime report results in a knee-jerk reaction. After all, people seem to be spending a lot more time on their phones now that we are sheltering in place, short on entertainment, and inherently lonely.
Let’s get one thing straight: SMS (short message service) marketing isn’t just for ecommerce brands. While it is a clearly natural transition from email marketing or paid advertising for brands who are digitally native, even B2B incumbents, brick-and-mortar stores, and hospitality services are starting to use the channel.
So let’s broaden our view and get a thorough understanding of the rise of SMS, some general best practices, and guidelines for how all kinds of businesses are using text messaging as a way to communicate with customers.
Why is SMS marketing becoming so popular?
Flash back to 10 years ago.
Following the 2009 recession, customers saw a decrease in direct mail from brands due to the expense associated with the channel — plus, people just weren’t shopping much anymore.
So, they looked to the next “cutting-edge” technology: email marketing. At the time, email marketing was only being used by a subset of retailers, so many considered it an experimental channel.
Now, almost every business uses email as some part of their business — whether they’re using it to market to new customers, send updates on transactions, get more followers on social media, or anything in between. From a promotion standpoint, the channel is getting a bit crowded.
Consumers everywhere are being plagued with “inbox fatigue” — where they simply avoid the “promotions” tab of their email client because there is simply too much being sent to them.
SMS marketing still has a ways to go until we see a similar effect — and maybe we won’t even see that at all, as long as marketers continue to treat SMS marketing as a personalized, nuanced, and intimate channel.
But with all of this being said, email still has a really applicable function in many businesses. It’s more or less here to stay, marking its place amongst paid advertising, wholesaling, and other types of digital marketing strategies.
Now everyone is looking for the next big thing. While SMS marketing has technically been around since the 1990s, it is rising into popularity — and for good reason.
- It meets customers where they’re at. More and more people are spending time on their phones.
- Customers are becoming comfortable being approached in the channel. Back in the 90s, a SMS marketing message from a brand was probably not a good idea, because people weren’t texting often. In fact, it was probably seen as a mistake.
- It’s a channel with proven success. With nearly 100% open rates and click-through-rates that blast email and paid advertising out of the water (think 10% and more) - SMS is winning the hearts of many marketers when done effectively.
So you’re probably thinking — OK, how can I get my piece of the pie? And how much is it going to cost?
How much does SMS marketing cost?
The cost of SMS marketing includes a per-message cost — sometimes considered a “credit” — and often a fixed cost for managed services and/or campaign creation.
This cost varies depending on the SMS marketing software you use, but expect to spend anywhere from $.009 to $.10 per message. That price may increase based on a few things:
- If you’re paying an agency or service provider to manage SMS marketing on your behalf.
- If your solution doesn’t account for carrier fees, or if they have additional platform fees.
- If you send more MMS than SMS.
Curious about the ROI of your SMS campaigns?
We've got you. Explore our ROI calculator to determine an estimate of how much monthly revenue you'll get through Postscript.
At just cents per message, SMS is a super affordable channel, especially if you’re taking the time to craft a more tailored approach with your campaigns.
But the price of your SMS marketing depends a lot on how you manage your contact lists.
Get this: An enterprise company creating set-it-and-forget-it mass texts to hundreds of thousands of subscribers may see a significantly reduced ROI compared to a smaller brand that takes time to segment their list and only send SMS marketing to people they know will convert.
List hygiene is important in any marketing channel — SMS included.
Compared to other channels, SMS is
- Similar in pricing to email marketing — marketers spend between $10-$1,000 on email marketing per month.
- Much more affordable than direct mail, with costs reaching up to $5 per piece depending on printing, volume, and shipping.
Low costs paired with the ability to get up close and personal with customers makes it no surprise that companies across the globe are starting to use SMS marketing as part of their go-to-market strategy.
Benefits of SMS Marketing
Like any other communication channel, the primary benefit of SMS marketing is the ability to communicate with your customers.
This communication can take on many different forms depending on your business and use case — from transactional emails and order confirmations for commerce stores, to wait list notifications for restaurants.
In fact, basically any message you need to send to customers can be done through SMS, even if it’s kind of whacky.
At Postscript, we’ve seen it all… here are just two creative ideas from the past few weeks:
Emergency-preparedness tips sent from JUDY to customers
Free Starbucks gift cards (!!!) from Blume
And here’s the thing — both of these messages didn’t include a link. That’s right — sometimes companies send SMS marketing without a clear intent or call to action.
But if you do include a link, chances are you want to be able to measure how many people click on it.
Average CTR for SMS Marketing
The CTR (click through rate) of SMS marketing varies across industries, verticals, and message types.
For ecommerce, the CTR varies between 7.5%-30.3%.
For message types outside of ecommerce, like appointment confirmation requests or delivery updates, the CTR is likely much higher.
Average Open Rate for SMS Marketing
The average open rate for SMS marketing is between 98%-99%.
But SMS open rates are widely discounted as a vanity metric for a few reasons:
- Open rates for text messages are hard to track, and
- Text messages are almost always opened by the end user — which gives us a 99% open rate. That’s a compelling number, but not where your key focus should lie.
If you’re comparing the open rate of email marketing versus SMS marketing, SMS will come out on top (by far), but it is better to focus on a more conversion-driven metric like CTR or earnings per message (EPM).
Average EPM for SMS Marketing
The average EPM (earnings per message) for SMS marketing depends on your product’s price, the intent of your message, and the volume of texts you send.
In our 2020 Benchmark Report, we found that after studying several hundreds worth of brand’s SMS results, the mean EPM varies from $0.69 to $8.11. In short, the more a customer has engaged with your brand, the more likely they are to purchase — which is why campaigns like abandoned cart generate a higher amount of business.
Interestingly enough, the lowest EPM came from customer winback campaigns.
Average SMS Unsubscribe Rate
The average unsubscribe rate for SMS messages varies between 0.9% and 3.1%, again depending on the type of message being sent.
Welcome series have the highest unsubscribe rate, perhaps because customers aren’t exactly sure of what they’re signing up for when they opt-in to SMS marketing. (Making sure you explain this in your initial communication — like the collection pop-up — solves for this and keeps your brand compliant.)
As for the lowest SMS unsub rate, campaigns see the lowest amount of people opting-out. This makes sense, since campaigns are typically sent to customers who are already familiar with your brand and who have been subscribed to your SMS for awhile.
Let’s talk about unsub rates for a second – for many marketers, the mere thought of consumers unsubscribing sends shivers down their back.
But get this: unsubscribes are actually a good thing. They keep your marketing lists hygienic and ensure that you’re only sending messages to consumers who are actually interested in your products. That keeps your marketing spend low and your other metrics (like engagement and EPM) high.
Average SMS volume (how often should you text customers?)
The average brand sends 1 SMS message per week.
This depends on the age of the subscriber.
When we looked at our customer data in September 2020, we found that stores sent promotional messages spaced 4 days apart on average during the first 10 days after a subscriber opts-in, and then decreased to a consistent 7 to 9 days between promotional messages by the time subscribers are a month old. This amounts to 5-6 messages in the subscriber’s first month, and about 3-4 messages per month in the months thereafter.
Overall industry average varies from 2-6 texts per month.
Simply put: unless you have a special use case (like daily product drops, or a very high repeat purchase rate), you’re likely to find success with between 2 and 6 texts per month, with 4 being the most common.
This, of course, also changes for SMS marketing that is purely transactional, delivery-based, or notification-based. For example, meal delivery service Lunchdrop sends a text every weekday, because they’re asking you to select your meal. No follow up needed.
Customers of transactional SMS have different expectations than customers of promotional SMS, so don’t expect this method to translate across different communication types.
Types of SMS Marketing messages
To the average shopper, one thought usually comes to mind when they think of SMS marketing: promotions.
But in truth, there are so many other use cases for the text messaging channel.
Every type of business transaction can be aided by SMS marketing.
But before we dive into all of the different types of text messages businesses can send, let’s make one quick distinction.
What’s the difference between SMS and MMS?
The difference between SMS and MMS messages is that MMS messages contain pictures, GIFs, or animations. SMS messages are only copy - or text.
When SMS marketing first came into the limelight, many people (including us!) thought it was best to use a picture in every text message. But now, data shows that SMS messages actually perform just as well, have fewer deliverability issues, and cost less to send.
In fact, as of the time of publication (November 2020), Postscript is officially recommending that brands opt for SMS instead of MMS through the end of the year, to combat potential sending issues over the BFCM super-spending holiday.
What You Need to Know About SMS Marketing
SMS marketing isn’t just another way to send deals to your customers. It’s a way to uplevel your customer experience with thoughtful touchpoints, transactional details, customer support, and more — in addition to occasionally letting subscribers know about an upcoming product launch or sale.
Much like any other marketing channel, SMS requires a well-concieved mix of messages that help your business meet its goals while also not annoying customers. Sounds complicated? Let us help:
1. Some messages are promotional, and some are transactional.
This one’s pretty simple.
Some messages are sent with the intention of making customers purchase. Others are sent to give them a piece of information – like order confirmation or shipping updates.
Aside from message intent, another clear difference between promotional and transactional SMS revolves around compliance.
Compliance rules for transactional SMS are slightly more lenient due to the fact that transactional messages are informational and may be necessary for the customer to receive, no matter whether or not they’ve unsubscribed.
Transactional SMS can be sent to any customers at any time of day, but promotional SMS must be sent during “waking hours” — in Postscripts’ case, that is between 8:00 am and 6:00 pm Pacific time.
2. Sometimes, less is more.
We covered this a bit earlier — but when it comes to promotional SMS, savvy marketers know that “spray-and-pray” bulk SMS distribution approaches do nothing for your ROI. Why spend a lot of money and annoy a lot of customers when you could easily segment campaigns so you’re only sending messages to customers who are engaged and likely to purchase?
A great way to determine how many texts to send (and how often to send them) is to survey your customers to see what types of transactional messages they’d like to receive.
3. The number you send from makes a difference.
There are two ways you can send SMS messages:
- With a 5 or 6-character short code, or
- With a 10-character long code.
Short codes are better for SMS marketing. SMS marketing is considered “high-volume” sending, and many texts can be sent at once from a short code. With long codes, only one text can be sent per second.
Plus, when a consumer sees a text from a short code, they immediately know it is from a business trying to get in touch with them. While having a long code mimics the experience of texting with someone else on a mobile device, people actually don’t mind getting messages from short codes.
Carriers also hand-approve all short codes, so by using a short code you’re less likely to be filtered by carriers or suspended.
Plus, for those brands who want to use imagery in their text message marketing, SMS is your only bet. You cannot send MMS through a long code.
There are some nuanced circumstances in which a long code is better for your promotional texts — like if you truly need a one-on-one communication channel, or only anticipate sending a really small volume of messages. But usually your best option is a short code.
4. If you’re not compliant, you can get fined. Big time.
We mention SMS compliance in just about every piece of material we publish, so it may feel a bit repetitive, but we cannot stress it enough — if you’re not collecting phone numbers and sending SMS/MMS messages compliantly, you can put yourself out of business.
In the United States, the Telephone Consumer Protection Act (“TCPA”) and its accompanying regulations control how companies can use SMS and MMS text messaging services to communicate with customers and subscribers.
As a company sending SMS and MMS marketing, it is your responsibility to ensure that you understand and are complying with all relevant TCPA regulations.
To sum TCPA up, consumers have the right to not receive unsolicited marketing communications via SMS, and companies shouldn’t send SMS marketing to customers unless they have express written consent from the consumer.
This consent can be gathered electronically, and most likely is in an online scenario. A few compliant ways consumers can opt-in to SMS marketing include:
- By texting a keyword
- By signing up and inputting their phone number into your website
- On a list at an event
- As part of a giveaway
But no matter what type of opt-in you use, you have to make sure that there is explicit language stating that by singing up, the consumer agrees
- To receive recurring marketing messages on the consumer’s mobile phone number
- That your messages may involve the use of an automatic telephone dialing system (“ATDS”)
- That consent is not a condition of purchase.
Here is an example of TCPA and CTIA-compliant language.
Compliance can be tricky, but it is something your brand needs to nail down unless you want to face serious fines — like up to $500 per message. That's a huge harm to your bottom line, especially for small businesses.
Learn more about compliance in our easy to read checklist.
SMS marketing use cases & campaign examples
The simplest way to understand how SMS marketing works for a variety of industries is to take a look at what is actually being done by different brands.
It’s easy to view SMS marketing as something that is exclusively used in a retail environment (aka brands use SMS to sell you stuff), but in reality SMS is being used just about everywhere.
Take a look at the 2020 US election (a hot topic as of me writing this piece…) Chances are you’ve received just a few messages from people urging you to vote.
While the compliance — as well as the volume — of these messages is something to question, one thing is for sure: SMS has a practical use for a lot of different types of consumer communication.
Here is a pretty comprehensive list of where we’ve seen SMS in the wild.
Retail and Ecommerce
Perhaps the most common use case of SMS marketing, commerce stores use SMS as a marketing channel to communicate with customers in a number of ways.
One quick thing to note — not all of these are Postscript customers. While we’re the go-to SMS choice for many Shopify brands, often other technologies (or SMS platforms!) are a better fit for particular use cases.
Cross-sell / Upsell
It’s all about the timing. If you haven’t purchased from a brand in awhile, they may send you a quick reminder of what you’re missing with a cross-sell or upsell SMS campaign — urging you to purchase again or to try something new.
Sometimes they make the deal sweeter with a discount code.
Check out this example from Alpha Lion.
The simplest and most common campaign of all ecommerce SMS marketing is promotional — and it makes sense. Brands want customers to know about the products they sell.
Here’s one from Slumberkins.
Engagement / Brand-building
Sometimes, all it takes is a quick touch-base to make a customer feel happy. Not everything has to be about promotions, and some brands take this to heart by sending conversational text messages with no call to action.
What does this look like in real life? Take this example from Great Jones, a cookware brand. They have a “Potline” that you can text in asking for recipe ideas. This creates great brand awareness.
Transactional SMS messages
These are a different breed of communication. Aside from the differences surrounding SMS compliance for transactional messages, they serve a different intent — instead of selling something, brands use transactional SMS to relay important information to consumers.
They are applicable in industries outside of ecommerce, as well.
Order confirmation SMS
Whether you’re ordering a new pair of jeans, a set of binoculars, or some yummy Thai food, some brands will let you know that you’re all set via SMS. Here’s an example pulled straight from my phone from one of my favorite restaurants, Thai Fresh. If you're ever in Austin, check them out. 🤠
If you’re like me, you’re constantly checking where your online purchases are in their journey to you. SMS makes it easier to keep track of what’s happening.
Here’s an example from Frey:
And one from Apple — you’ll also see delivery confirmation here, which is even better!
Postal carriers like UPS and FedEx are notorious for giving SMS updates.
Sometimes small businesses put their own spin on this, as well, although it may be harder to scale.
When I did a pickup for a virtual cheese class from Antonelli’s (also a great spot in Austin), I went through a series of messages to help them figure out where I was parked.
More and more appointments are being made online rather than over the phone. Sticking to the digital trend, offices now use SMS to confirm appointments with clients.
Here are a few different types of notifications from my hairdresser using Vagaro:
And a more simple variety from a Physical Therapy appointment.
Whenever you implement mobile marketing into your channel mix, much like email, it’s really important to have a human at the other end of the line who is available to answer any questions that come through in real-time. If a customer has a question about an order, delivery, or something else, they expect to get communication back from you. If they don’t, it isn’t a good customer experience.
If you can’t afford to have someone dedicated to support (which you should prioritize), or if your platform doesn’t allow for two-way SMS chat, a good middle ground is putting up an autoresponder, like this:
Customer Loyalty Programs
Rewards programs have been around since the 1700s (yes, really), and for good reason — they are a great way to gain repeat customers.
Brands often use SMS as a way to remind customers about the amount of points they have left to redeem — or to do a loyalty-related product launch (limited release drops for VIPs) or a loyalty-related promotion (double the points on your purchase this week.)
Here’s a loyalty-related promotion from Girlfriend:
And a few others from a local CBD shop, MARYJAE.
SMS for Politics
Now more than ever (seriously — President Trump’s 2020 campaign has been quoted as saying they’ll send more than 1 billion texts over the course of the race) SMS is finding a place in the political environment, even though it’s been a bit overwhelming.
View prescription status, refill notifications, and more. Here’s what I get from Walgreens.
Real estate notifications
We are seeing an increasing amount of real estate and real estate related businesses start to use SMS for notifications about showings, open houses, estate sales, and more.
After inquiring on Zillow about a property, I received a drip campaign of text messages from a Zillow employee trying to get me connected with a local realtor.
And when I reserved a shopping window at a local estate sale, I got a reminder text about it on my phone the morning of.
Financial services, notifications and transactions
Card payment declined? Monthly payment due? Suspicious activity? Your bank can now let you know via SMS if anything is going on with your account.
Brex does this well, and lets you reply with additional details about the transaction (and yes, that was me spending $30 on coffee…):
But get this: this is just a taste of the different use cases for SMS marketing. It seems like every week there is a new, innovative brand doing something different with texts. This list is likely to evolve really quickly.
Browse even more examples
Fantastic Texts makes it easy to browse and discover the best *real* text messages from hundreds of ecommerce brands.
Putting together an SMS Strategy for Your Business
As we just saw, there are tons of different ways that businesses can use SMS.
Your SMS marketing strategy will change depending on what the goals of your SMS campaigns are. Here are a few quick tips to help you get started, but by no means is this a comprehensive strategy because your brands’ needs may be different from others.
SMS for business growth
If you’re using SMS to grow your business (the most common use case), make sure you start building your list from the get-go with keywords and on-site SMS collection pop-ups.
From there, do segmentation. Be sure to segment your customer and avoid a spray-all approach. Instead, only send text messages to consumers you know will purchase, either based off of on-site activity (like cart abandonment) or patterns in their purchase activity (they seem to buy every 3 months.)
Don’t be afraid to get more personal with SMS by offering customer support or two-way chat, either. The most talked-about brands using SMS often have a really innovative approach.
SMS for customer service
As always, you want to underpromise and overdeliver. Much like consumers are often disappointed by on-site chat experiences where there is no one to interact with, if you boast about SMS customer support, you need to have a team member on the other end of the line who is ready to respond to inquiries.
No robots allowed, especially if you’ve set the expectation that it will be a more human experience.
SMS for transactions
If you’re using SMS to let customers know about an order confirmation, delivery, or anything else that is transactional, the details are more behind-the-scenes. Make sure your SMS platform is properly connected to whatever feeds in order information, and make sure you’re not overloading the customer with both transactional and promotional SMS at the same time.
Deciding which SMS marketing platform to use
If you’re reading this article, chances are you are on the hunt for a SMS platform to fuel your text message marketing efforts.
Have no fear — there are a ton, and they all work pretty well, especially if you are just starting out with SMS. But depending on how deep you want to go in a specific direction, you may want to do a bit more research before deciding on one platform.
Moving SMS platforms isn’t easy - especially if you want to transfer your subscriber list. Plus, you often have to re-build all of your marketing automations and campaigns when you make the switch.
There are, in general, 4 ways you could build your SMS marketing.
1. Go with a general solution.
If you’re just starting out with SMS and want to experiment with the channel without spending too much time with it, a general SMS marketing solution that serves several different industries, such at Attentive or Tatango, may be a good route.
Keep in mind that while these services have some pretty big names on their client roster, it may be more difficult to get product features that are tailor-made for your specific industry.
2. Go with an industry-specific solution.
If you’re a store that sells online on Shopify, consider Postscript. We were build specifically for ecommerce, and specifically for Shopify.
While other solutions are a good catch-all for SMS marketing, our product was built specifically for online stores. You’ll find ecommerce best practices embedded throughout everything we do — from our product roadmap through to our Help Center and educational content.
3. Build it on your own.
If your SMS use case is really niche, or you want to be completely hands-on with your SMS marketing, you can always adventure out to build your own campaign using a technology like Twilio. As you’re doing this, keep in mind that while building your system gives you the ultimate flexibility, it also puts the onus of compliance completely on the user (you).
4. Calling in an expert + using an agency to kick off SMS marketing.
Want to leave the decision in someone elses’ capable hands? There are tons of marketing agencies who make it part of their job to find you the right technology and tools for your unique business needs.
Setting up your first SMS marketing program
The first thing you should do to get started with SMS is to define what you want your goals to be.
You also should have a pretty solid understanding of your buyer persona or target audience — how do your customers like to be communicated with? Do they like emojis? What time of day do they expect to be reached out to? (If your goal is to do purely transactional communication, then that last part doesn’t matter.)
Make sure to study your channel mix, especially if you are also doing email marketing to the same customers. If you intend on using SMS and email simultaneously, make sure the communications are timed in a way that isn’t annoying to the subscriber.
How to grow your SMS list
Once you press “play” on your SMS campaigns, you may be wondering why the money isn’t instantly coming in.
It most likely is because you don’t have many subscribers. The amount of subscribers in your SMS marketing list often correlates directly to the amount of revenue you make, as long as you continue to segment your lists and keep good list hygiene.
How to make sure you stay compliant and avoid fines
We’ve already mentioned it several times, but the number one way to stay compliant with SMS messaging is to make sure that customers are opted in to communications from you.
How to create your first SMS marketing campaign
By now, you should have a good understanding of how to get started with SMS. But if you need a quick takeaway, here is the whole process boiled down into just a few steps:
- Make sure you're collecting phone numbers. Set up a popup on your homepage, use keywords in marketing, or send a campaign to your email subscribers incentivizing them to sign up for SMS.
- Jot down your actual goals for SMS. Whether it's revenue, brand-building, transactions, or something else, your strategy will change depending on what you want to get out of the channel.
- Test, test, test. Much like email, SMS needs to be agile. You can't set it and forget it. Measure whether subscribers react differently to MMS vs SMS. Play around with message length. Throw some emojis in there. Make note of what works well, and don't let anything become stale.
- Rather than send a bulk text out to thousands of subscribers at once, segment customers based off of last purchase, location, engagement rate, or something else. Not all customers are the same — why should your messages to them be?
- When in doubt, ask a partner. There are lots of specialized agencies who work day in and day out with SMS. Consider asking them for an audit of your strategy or to help spin up your first few campaigns with some templates until you get the hang of it.
Text message marketing is a wonderful tool that can be used across a number of different industries.
Aside from general promotion, SMS can be used in many use cases — delivery notification, brand-building, two-way SMS, and more.
No matter how you're using SMS, follow the golden rules: don't annoy your customers, stay compliant, and keep segmenting/testing your campaigns.
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