Retailers Adopting SMS to Boost Customer Engagement, Conversions, Loyalty

Retailer-customer relationships are formed on the basis of communication. For retailers, effectively communicating with customers — on their terms — is integral to building relationships with them. That communication encompasses all touchpoints in the customer journey, from browsing/pre-purchase to post-purchase support, and occurs across multiple channels. Therefore, what should retailers be considering as they evaluate the strengths, weaknesses, and areas of opportunity within their current customer communication methods?

To help answer that question, NAPCO Research, in conjunction with Podium, the leading customer messaging platform for local businesses, surveyed retail executives about their companies’ current usage of digital communication channels, future usage plans, how various channels have performed (e.g., response and conversion rates), benefits associated with digital customer communication, and more. (NAPCO Media is the parent company of NAPCO Research and Total Retail.) The findings of that survey, as well as in-depth analysis, are featured in the subsequent report, A Message for Retailers: Go Digital.

The survey respondents included multichannel retailers (39 percent), brick-and-mortar-only retailers (26 percent), wholesalers (19 percent), online-only retailers (9 percent), and CPG brands (7 ppercent). Those respondents represented companies with annual revenues ranging from $10 million to greater than $1 billion.

How consumers prefer to communicate with retailers has increasingly shifted to digital channels recently, such as SMS/text messaging, chatbots and website live chat. This phenomenon has only been accelerated during the COVID-19 pandemic. Case in point: According to a recent survey conducted by Podium for its 2020 State of Local Business Report, consumers are almost twice as likely (1.8x) to prefer text messaging over any other communication method, including email and phone calls.

And counter to what one might expect, those preferring text messages aren’t only younger consumers. In fact, text messaging was the preferred communication channel for all consumers surveyed, including those aged 45-60 (49.4 percent favor text messaging) as well as those aged 60 and above (36.2 percent). Expect this trend to continue as the pandemic lingers. Forty-one percent of consumers say they’re more interested in texting with a business now than they were prior to COVID-19.

While nearly half of respondents (48 percent) said they’re currently using text messaging to communicate with customers — the highest rate among nine digital messaging channels listed — the other 52 percent that are not utilizing this channel are missing an opportunity. With mobile taking a more significant role in retailers' communications plans, customers have shown they want to hear from retailers via SMS and other digital communication channels for a variety of reasons, from customer service to customer feedback (e.g., product reviews) to promotional marketing offers.

And text messaging yields desirable results. According to our survey respondents, text messaging produces a 38 percent response rate and a 35 percent conversion rate. These rates were second only to live chat (46 percent and 41 percent, respectively) in our survey, and compare very favorably to response and conversion rates for email marketing, a more ubiquitous communication channel for retailers.

In addition to SMS, digital communication channels such as live chat, Facebook Messenger, Instagram, chatbots, Google Messenger, WhatsApp, and Apple Business Chat offer retailers multiple tangible benefits, including the ability to send targeted and/or personalized messaging, increased sales/conversions, increased customer engagement, increased customer retention, expanded marketing reach, cost savings vs. other marketing channels, among others. Taking it a step further, the better the messaging experience for the consumer, the more likely they are to convert. And conversion is the first step to building the customer loyalty that retailers are so desperately fighting for in an ubercompetive commerce environment, particularly online.

Consumers want choice and flexibility in how they interact with retailers, and increasingly that means digital channels such as SMS. It’s incumbent upon retailers to react to those demands. The future of retailers’ customer relationships depends on it.

To read the full report, A Message for Retailers: Go Digital, download it today.