By Jake Meador | 13 Apr 2020
Did you know that on average 40% of a business’s revenue comes from repeat customers?
It’s true. And that’s why figuring out the right ways to attract and retain your customers is essential if your business is to be a success.
First-time customers can be reached via a variety of marketing and advertising channels, of course. Whether it’s newer marketing tools like SEO or social media or old school methods like radio ads or direct mail, there is no lack of tools for reaching people who have never bought from you before. These are all called broadcast channels and they work by broadcasting your message to a large, indiscriminate audience. Messages sent via such channels do reach their target, of course, but they tend to be highly inefficient and, for that reason, expensive.
For returning customers, it’s a different game. If they have bought from you in the past, you should have some form of contact information for them. Ideally, you would have both a phone number and email address. So in that case you have a question before you: Which channel will you use to try and encourage them to buy from you again?
Most businesses default to email. This isn’t surprising. Email is familiar. Everyone sends business emails so people are used to receiving them. And there are plenty of email marketing solutions out there.
But is email really the best way to go?
On average, only 21% of marketing and sales emails are opened. Indeed, even the most successful email marketers struggle to clear a 30% open rate—meaning that 70% of the emails they send are never seen.
In other words, you can spend all the money or take all the time required to produce the best marketing emails for your list of past customers and still only see around 30% of those emails get opened.
That’s probably not the kind of return on investment you’re looking for, is it?
Now take SMS marketing: 95% of all text messages are opened. That’s the average. So it’s not just that SMS is opened more consistently than email, though it is. It’s that even the best emails still lag well behind SMS for engagement. So even the companies that master email will run behind a simply competent SMS marketer.
This is the simplest reason to prefer SMS over email for marketing to past customers.
The answer here is fairly relatable: It’s all about ease of use.
Email has three things working against it.
First, it’s so common that most people have flooded inboxes that they mostly ignore simply as a way of managing their time and maintaining their sanity. No one has time to read every email they get.
Second, accessing your email is something you have to consciously decide to do—you log in on your browser on your laptop or you open up the app on your phone. Sure, you could have a notification on so that every time you get an email you get an alert, but no one does that precisely because we get too many emails.
Third, email is incredibly customizable. Often we think of this as a good thing, but it can actually create some huge difficulties. Most significant for our purposes is the fact that emails usually have a lot of features that are simply not necessary for the relatively basic uses that many small businesses ought to have in mind. If you’re looking for repeat business, all you really need is a greeting, a sentence or two to make your pitch, and a link to where the person can buy. But emails often include images, subject lines, meta descriptions, header images inside the email, footers, and a host of other things too. The result is that relatively simple requests can easily get lost in a cluttered inbox full of complicated messages.
SMS solves all of those problems.
First, fewer people use SMS messaging for non-personal uses, so our inboxes tend to be less stuffed. (Plus anti-spam protections are far stronger for text messaging than they are email because texting is covered under phone spam laws.)
Second, because our texting inbox is usually not so cluttered, most of us get a notification when a text comes in and we see it right away.
Third, because text messaging is so simple already it is an ideal medium for making very simple sales pitches.
All of these factors help to explain why SMS engagement is so much higher than email.
As already noted, email is a far more customizable medium than texting. So if you are looking to produce newsletters or more involved digital media in hopes of building your brand, texting is not as powerful a tool.
That being said, brand-based marketing has a classic weakness, which is that it’s slow moving and attribution is a challenge. Often it’s adopted as a marketing strategy used to reach a fairly broad and undefined audience, many of whom are unlikely to ever become customers.
The more direct method of SMS marketing is, then, perhaps not as much of a weakness as you might think. Texting is simple, very easy to attribute, and easy to judge—you make the sale or you don’t, the customer uses the discount code or they do not. And, of course, because it is simpler and more targeted, text-based marketing is often going to be far cheaper than brand-based methods.
The point here is not that email is universally terrible or over-rated or anything like that. Rather, it is simply that email has some particular strengths, which aren’t especially helpful for repeat sales, and some fairly significant weaknesses that are significant for repeat sales.
In contrast, the simplicity of SMS as well as the high engagement rates associated with SMS marketing make it a particularly valuable tool for accessing that 40% of your revenue that should come from repeat customers.