Short message service or smart marketing service?
Technology now enables marketers to send short message service (SMS) broadcasts to hundreds or thousands of customers or members with the click of a button.
SMS has become a favoured means of communication particularly among the young adult market (Generation Ys, 16-24 year-olds). This group has more disposable income than ever before and their mobile phones have become ubiquitous, always active, multi-purpose accessories for listening to music, surfing the web, taking photos and videos, and finding information. These people often respond to SMS more than they do to emails.
Some sectors — telecommunications, fast food and large fast moving consumer goods brands — have incorporated SMS into their marketing mix, but the majority of marketing plans still do not include an SMS component.
This is partly because the enhanced technological capabilities for viewing messages, graphics and connecting to the Internet have only recently become available in mobile phone handsets, and it then takes time for these handsets to come down in price and become more widely distributed in the community. However, a critical mass in more modern handset penetration is being reached, which means the opportunities for marketers are expanding.
SMS can now act as a pointer to richer content either by linking the customer to a web page direct through a mobile device or by giving details of web pages that can be accessed via a personal computer.
SMS in the marketing plan
There are many ways SMS broadcasts can be incorporated into marketing strategies, such as to offer customers special deals or to inform them of an imminent event, such as a launch, or remaining tickets for a sports event, or a concert on tonight!
Our research has shown that companies’ marketing strategies are most effective when they combine multi-channel techniques – web, SMS, catalogue, media, competitions, etc.
SMS fits well into customer relationship management because it can provide the option for clients or customers to download information from the Internet, receive notifications when credits are running out, or remind them of overdue bill payments.
Loyalty programs are another branch of marketing that SMS can be useful for – a quick message can be sent to notify members of a special offer or initiative rather than incur the costs of a mail-out or the time of phoning around a database.
SMS can be used for a variety of creative purposes to meet the marketing plan objectives. Although it may be allocated a specific function in the marketing plan (notifications, special offers, loyalty/reward updates), this should be revaluated every 6-12 months to determine both effectiveness and new opportunities arising from technological improvements and increased consumer usage.
While we are dealing in ‘short’ messages, their capacity to communicate with customers and build brand and loyalty can be great. Time-poor consumers who are bombarded with information may be more receptive to a short, direct message.
SMS can be especially useful where timely message delivery is important. People are becoming more accustomed to carrying their mobile phone with them wherever they go and to reading SMSs as soon as they are received. For some campaigns, this is essential; for example, a promoter might want to offer concert seats at a special price a few hours before a performance. This would be an ideal situation for a quick SMS campaign.
What sectors?
The use of SMS for commercial or not-for-profit situations is only limited by the inventiveness of your marketing strategies. For example, I have seen SMS used by:
- A large corporate to advise shareholders of a change of meeting venue.
- A not-for-profit organisation to alert its 5,000 members that its newsletter has been posted online.
- A retail store to invite special customers to an early sale.
- A politician to send messages to their constituents.
- An organisation to remind its shareholders of its forthcoming AGM.
Understanding market demographics
SMS promotions have proved attractive to 16-24 year-olds, many of whom buy pre-paid mobile phone credits and spend them on sending SMSs rather than making voice calls. Although they have small mobile phone budgets, pre-paid customers are some of the most frequent respondents to promotions. These users are also more likely to forward an attractive or interesting SMS promotion to their friends. In this way, SMS can be a valuable tool to encourage word-of-mouth or enhance viral marketing strategies.
In recent years, I have noticed a shift among people in their 30s, 40s and 50s. They are gradually becoming more comfortable with the extensions in mobile phone technology and are carrying their phones with them all day. The SMS marketing options to this group is beginning to expand as their ease with the technology grows.
According to the Australian Government’s Invest Australia website,(1) mobile telecommunications is one of the fastest growing markets in Australia, contributing $8.77 billion annually to the economy. At the end of March 2006, there were 19.45 million mobile phone subscribers. Based on an estimated Australian population of 20.5 million people, this places mobile phone penetration at around 94%.
The Government cites SMS as part of the reason for the popularity of mobile telephony. SMS earns more than 80% of non-voice revenue for the industry. “Businesses are using SMS to offer new services and save money.” For example, Australian media companies are using SMS marketing solutions to enable voting for candidates on the Big Brother and Australian Idol TV programs.
Anti-spam and opt-in
Anti-spam mechanisms are essential to ensuring that SMS marketing is both credible and successful. For example, if the response to an SMS bounces back, the recipient will be justified in considering the original message to have been spam. To counter this, you need to ensure an opt-in/out database.
SMS recipients should have the option to opt-out from future campaign broadcasts. If the broadcast has been sent anonymously, then the recipient will not be able to reply to the SMS. SMS broadcast software thus should not allow broadcasts where the sender’s are details are anonymous or where the sender can impersonate someone else.
Opt-in databases are critical to the quality and credibility of SMS marketing. An opt-in option for SMS ensures that those who receive messages are happy to engage with a company in this way.
Collecting mobile phone numbers and offering an SMS opt-in option are still not a standard part of customer information forms. To even give you the option of SMS marketing, make sure your customer forms capture mobile numbers and ask about SMS opt-in. Many people will select electronic communication in preference to printed mail.
Return on investment
SMS marketing is an inexpensive form of communication that has the potential to generate strong returns. For instance, SMS credits can be purchased for 16 cents Australian per message. If you were to SMS an offer to 5,000 members on a database it would cost $800.
By comparison, if you were to use standard print mail it would be 50 cents postage plus graphic design and printing costs (say $2,000), making it $4,500 to reach the same 5,000 members. You also have the time impediments of turnaround and postal delivery.
In many direct mail campaigns, it is considered extremely effective to achieve a 10% response rate. Based on $800 to SMS 5,000 members, this means that a response from 500 members would cost $1.60 each to achieve. In the print format, it would cost around $9.
Other key factors to use to measure return on investment include the number of SMSs sent (size of database), the number of responses, the number of sales secured, and the harder to quantify brand value and reputation enhancement.
SMS is not an answer by itself, but can be an effective component of a marketing strategy. It can reinforce simple key messages, generate calls to action, and enhance brand.
Reference
1. These figures and statistics come from the Australian Government’s Invest Australia website, the Australian wireless industry page, and are drawn from a variety of sources. Website page: http://www.investaustralia.gov.au/index.cfm?id=9A0C9842-D0B7-180C-16403701E984FDFB [cited 2007 May 3].
|
