Lesson 2: Everything you need to scale and maximize ROI
Promote customer loyalty and retention
Real-time, two-way conversations
Now more than ever, consumers expect personalized experiences throughout their shopping journeys, as over 64% of consumers expect two-way communication when communicating with a brand. With SMS, you can send personalized, conversational text messages at every point during the customer lifecycle—whether you’re replying to a subscriber's response, answering questions, or providing a personalized recommendation.
The most common way to optimize SMS for conversational messaging is to build a series of triggered responses based on keywords or numbers that include topics that your customer cares about. Topics can vary from brand to brand, although there’s no limit to what you can choose as an SMS conversation starter.
People-powered, conversational messages help customers build direct relationships with brands that traditionally may have only been made while shopping in-store. To help deliver the one-to-one experiences that subscribers want, brands are incorporating these types of messages into their SMS strategy. Smooth, interactive experiences with real people (instead of chatbots) provide a new level of convenience and remove friction from the shopping process.
Meet your customer where they are
SMS is a direct marketing channel that lets you deliver personalized messages straight into the hands of high-intent shoppers and start building long-term customer relationships. For brands looking to improve their customer loyalty and ROI, it’s a game-changer.
Loyal customers typically spend more than one-time buyers—meaning your SMS strategy should include messages that nurture happy, returning customers and convert them into brand loyalists.
Here are some ways to do so:
Sending shoppers a post-purchase message can help increase customer loyalty while incentivizing repeat purchases. Use your post-purchase series to:
- Cross-sell or upsell with relevant product recommendations (which account for 10% to 30% of e-commerce revenue).
- Ask subscribers to leave a review or share their purchase on social media.
- Invite subscribers to join your loyalty or referral program.
Customers feel more emotionally connected to your brand after they make a purchase. That bond can boost sales and increase the likelihood of positive reviews, referrals, and repeat purchases.
Time-based offers, location-specific deals, and promotions that are only sent once are just as important as triggered messages for engaging customers with your brand.
From Back-to-School to Black Friday-Cyber Monday and Boxing Day, events and holidays are excellent opportunities to create one-time campaigns that align with your brand story and focus on customer experiences.
Whether there’s a strong connection between your core customer and a particular holiday or a new product offer that’d make your customers’ lives easier next season, there’s no limit to the creativity these campaigns can have.
Non-promotional messages and special announcements
While many of these strategies aim to drive revenue and loyalty, make sure to include non-promotional messages as well.
These messages help create a level of depth and increase brand familiarity, allowing your customers to connect with your brand on a personal level. For customers at the beginning of their journey with your brand, these types of campaigns help drive engagement while building alignment and devotion.
Here are some examples of engaging non-promotional campaigns:
- Brand collaboration
- New location announcement
- Event announcements targeted to certain area code
- Educational messages that align with brand values
Show them you know them
All customers are people who want to be seen, heard, and understood. But they’re also consumers with rising expectations for catered, personalized experiences that emphasize the values they share with brands. Brands can now easily tap into customer insights to help create the curated experiences consumers are looking for.
Whether that’s receiving a “Did you forget this in your cart?” message or a rewards points balance update; customers expect things to be personalized.
You can use your SMS channel to convert subscribers into loyal members using loyalty programs. Customers that have signed up for text messages have already shown a personal interest in your brand and will be more likely to join a community of loyalty members.
Here’s how loyalty programs grow VIP purchasers:
- Loyalty programs give you a treasure trove of first-party customer data you can use to personalize all your marketing programs.
- Loyalty programs are an opportunity to create a “shared vocabulary” and reinforce your brand story with your most loyal customers, so you can turn them into advocates.
- Loyalty programs extend customer lifetime value (CLV) and average order value (AOV) by building customer habits, increasing repeat purchases, and decreasing the time between purchases.
- Loyalty programs make it easy to reward your most dedicated customers with exclusive deals, early access to new products, early sales announcements, and more.
Setting up a Loyalty Program
Most brands start their loyalty programs with two or three tiers to encourage certain customer behaviors—like providing more personal information or stacking multiple purchases—and increase customer engagement across marketing channels.
Most loyalty programs reward actions like:
- Engaging and liking their brand on social media
- Inviting friends/family to the program
- Purchasing products
- Signing up for email and SMS
- Leaving reviews
- Adding their birthday details
Incorporating loyalty programs into your SMS channel makes it crystal clear where customers are in their journey with your brand. Combined with lots of loyalty data, it becomes relatively easy to be intentional with segmenting your messaging and your offers. That means no more guessing about who you should send certain messages to and when.
When customers start to rely on your product or subscription thanks to a loyalty program, your brand will see an increase in CLV, AOV, and overall message engagement.
The rule of thumb for integrating your loyalty program with your SMS program is to increase access, offers, and direct messaging as you get to the higher tiers. This approach creates opportunities to nurture newer customers with non-promotional brand stories and increases their desire to get to the higher tiers, which have better sales and more perks.
Enhance customer experience
Customer service historically has been the last line of defense—and often presented only when things go wrong. This approach has since been outdated and brands are incorporating customer service throughout various stages of the customer's purchasing process.
Because customer expectations and acquisition costs in e-commerce are so high, it’s crucial for brands to focus on customer retention. That means providing a seamless purchasing experience is no longer optional. If customers have any tension during the purchase process, you could lose their sale.
Here are some SMS strategies to ensure your customers feel supported and empowered by your brand:
- Send support tickets directly to SMS to support purchasers having trouble checking out and help dissatisfied or frustrated customers.
- Create automated SMS campaigns for satisfied customers—promoting them to leave a review, provide product feedback or join a loyalty program.
- Create automated SMS campaigns for dissatisfied customers that offer discounts or free shipping.
- Create “contact cards” for your brand to make customer support feel more familiar—like they’re talking to a friend.
KPIs to look at
Now that we’ve gone through some valuable retention strategies, let’s take a look at how you can measure retention efforts.
These are the customer loyalty KPIs we recommend tracking—apart from the standard click-through rate, conversion rate, customer acquisition cost (CAC), and average order value (AOV)—especially when it comes to gaining, growing, and keeping customers loyal to your brand:
- Repeat purchase rate (RPR) is the percentage of customers who come back to place another order. 100% means that every customer comes back again. A 0% means that no one comes back. According to industry benchmarks, an average business's repeat purchase rate should be around 30%.
- Purchase frequency (PF) is the number of times a customer makes a purchase in a given time period. Understanding how often a consumer purchases within a specific category indicates their level of engagement.
- Customer lifetime value (CLV): represents the total amount of money a customer is expected to spend on your products during their lifetime.
CLV = AOV x PF
CLV helps you make decisions about how much money to invest in acquiring new customers and retaining existing ones, as well as who your most profitable customers are and what kind of products they want.
CLV also tells you how much you can spend to acquire a similar customer while profiting. If you can’t afford to acquire new customers because your CLV is too low, invest in retention strategies to keep your business profitable. The ideal ratio of CLV:CAC is 3:1, meaning that a customer’s lifetime value should be three times the cost it took you to get them to purchase.
Here are some questions to help center your team when it comes to loyalty:
- What channels are driving your most important metrics, and which are hurting them?
- Do you have a good balance (30/70) of returning customers to new customers?
- Is your CLV:CAC ratio appropriate or should you invest more (or loss) in acquisition vs. retention?
- How can you encourage people to stick around after their first purchase?
- What kind of clients need to be nurtured more vs. less?
- Who are your most loyal customers, and why?
- How can you make them feel more valued?