Imagine if you could find a marketing channel where messages were read by 90% of your audience within 3 minutes. SMS is this channel, and is why brands are finding it offers 15x more ROI than traditional methods – but it must be managed correctly.

Economic conditions are challenging for the Australian retail industry, customers are being far more selective over what and where to buy and brands must learn how to keep buyers engaged in times of uncertainty. In addition, the changing consumer behaviour is putting pressure on operating profits, squeezing budgets and forcing a “do-more-for-less” approach to marketing.

Finding the cash to invest in growth, innovation and product development will be difficult, yet growing the size of your eCommerce footprint has never been more essential. According to Shop Association ANZ, 9 in 10 of us now engage in hybrid shopping – moving between physical and online stores before making a purchase.

While the pandemic saw a ‘grow-at-all costs’ model adopted by brands in the e-commerce space, there has been a significant pivot into retention marketing over the last six months. In a recent eCommerce survey by Yotpo, they found 52% of brands are more focused on retention than last year, yet 70% said their retention rate had either stayed the same, or declined in the past year.

So where’s the disconnect?

Cultivating a community of loyal customers requires much more than the industry standard email sends.  Customer loyalty is dependent on personalisation, in fact you could argue loyalty programs and personalisation are two sides of the same coin. In a speech in 2000, Jeff Bezos commented on his definition of personalisation:

“You go into a bar and sit down, and the bartender puts a whiskey in front of you without having to ask what you want”.

For retail brands, you could think this means I need to just have the perfect offer or personalised gift. But there’s an advantage the bartender has that retail marketers don’t – they’re face to face, we have to use a medium to communicate.

What I see is that brands who stick to traditional email marketing tactics are getting left behind, and is why they’re seeing retention rates plateau or decline. And Marshall McLuhan can give us a clue into why this is – it’s the medium of email which is the problem. No matter how personalised the content of an email, the millions of promotional emails we receive has meant the medium of email is not personal.

This is not to say email is dead, but when a brand is looking to increase customer loyalty, we need to think not just about the content and offers, but the medium you’re using to communicate with your most loyal customers.

Creating highly personalised shopping experiences with SMS

One of the concerns many retail marketers have with SMS as a channel is that it’s too personal. Ignoring the obvious – to increase customer loyalty we need to be more personal. But the data is startlingly different to many people’s expectations. According to Shopify, 70% of millennials spend over 6 hours a week shopping online and they prefer text messages to emails.

Add to this, there are over 269 billion emails sent per year, with about 50% being spam, it’s clear why texting drives 8x higher engagement rates than email and why nearly all of the brands I work with see SMS as their top revenue driving channel.

So, what does this look like in practice? First it’s about building ideal customer journeys and not stopping at the first purchase. This bow tie marketing funnel puts as much emphasis on post purchase as it does acquisition. So once you’ve acquired a customer what’s the next best action? Giving a review of the product? Signing up to a loyalty program? Driving a repeat purchase or signing up to a subscription?

Once you’ve built these journeys, now you have to connect all the data points you have about your customer and create segments and communication flows that drive action.

At Yotpo, we enable brands to drive customer retention everyday, but the most common goal our customers have is to build out a loyalty program.

Building a loyalty program that feels like a community

The stats on loyalty programs are appealing. A 2020 survey by McKinsey found that 59% of loyalty members are more likely to choose that brand over a competitor and 62% say they are likely to spend more.

But the biggest opportunity we see for brands is in building the feeling of a community. The key to this is regular, personalised communications so they feel they have a 1:1 relationship with the brand.

The thought of having to maintain 1:1 communications with every customer could send a marketer into shock! But it’s a lot easier with the tools and technology now available. First is to set the strategy where you define and automate the key points of communication. For instance when a loyalty member first joins, a change in loyalty tier they’ve just achieved updates on points and any expiration dates.

This is another reason why brands are finding that SMS, as most messages are read within 3 minutes, are allowing these just in time communications so customers don’t miss out on urgent communications.

It’s an area I work closely with my customers, using loyalty data points and shortcodes to build robust customer journeys that have a material impact on loyalty engagement and retention.

Getting more out of loyalty programs

Loyalty programs can be resource intensive and complex with multiple stakeholders involved in the development so it is critical to get them set up correctly – and that means customers are actually redeeming.

From our data, we see that loyalty redeemers spend 89% more than non-redeemers and there’s a 164% increase in repeat purchases vs non-redeemers. So the primary goal of a loyalty program is to get your members redeeming points.

So how are the brands I work with achieving success? It’s with SMS and the medium to connect with their most loyal customers. With our global customers, we see the ROI on SMS loyalty messages above 81x and by enabling no-login redemptions with click to redeem via SMS increases daily redemption rates by between 5-10x.

Everything is cyclical, but the days of a “growth at all costs” mentality for eCommerce brands is over. The brands that are able to balance their acquisition efforts with an intentional focus on retention, will ultimately be the winners.

Jessica Minnett is manager of customer success for Asia Pacific at Yotpo.