How SMS Can Help Brands Improve Customer Retention and Drive More Revenue

SMS Marketing Mar 31, 2021

Customer retention has long been something of a struggle for emerging and legacy brands alike; attracting new leads can feel like a hurdle, but keeping people coming back for more after they’ve converted once can be a whole different beast. Unfortunately, the pandemic has exacerbated the problem, making it even tougher than before to keep customers after you’ve acquired them. In fact, research shows that customers acquired by brands during the pandemic have an 82% lower retention rate than customers acquired during non-pandemic times.

This just goes to say: you can have the best product offering and lead acquisition strategies in place, but without the right post-acquisition marketing tools, every new customer you bring through the funnel can fall off just as quickly.

So, what’s a brand to do?

While marketing advice of old would recommend a host of retention strategies to keep customers coming back time and time again, new trends and data suggest that one tool is a cut above the rest: SMS. Read on to discover how implementing the right SMS marketing strategy could give your brand a major boost when it comes to keeping customers for the long haul!

Why is customer retention so important?

First things first, why is customer retention such a big deal, anyway? After all, a sale is a sale; why should it matter if it comes from a repeat customer or a brand new one, right? Eh, not quite.

For starters, while customer retention might be a tricky task, it’s still a whole lot easier to convince someone who’s given you their business before to do it again rather than sell someone on your product or service for the first time. Converting a customer who has already made a purchase from you can actually have an up to 65% higher success rate compared to converting a brand new lead, according to data from Invesp.

Then there’s the financial side of things. Through traditional acquisition strategies, sourcing new prospective customers can cost 5x as much as converting an existing one. Even if you’re able to bypass some of the traditional costs through a streamlined, budget-friendly acquisition platform like DojoMojo, past purchasers are still more likely to drive higher revenue overall. The same data from Invesp found that a mere 5% increase in customer retention can boost profits by up to 95%. (Yup, you read that right.)

How can SMS improve your retention rate?

Now that we all agree on how important customer retention is thanks to that enlightening (albeit very, very quick) overview, let’s dive into why SMS can be a game changer when it comes to keeping customers happy and increasing their overall LTV (lifetime value).

Understanding the importance of SMS in driving customer retention can be as simple as understanding the importance that mobile devices play in the modern consumer’s life. (Hint: it's super important.) People have such a strong connection to their smartphones, and being able to tap into that connection through direct, personalized communication that a user has opted into is like winning a golden ticket. By being invited to communicate with a consumer via text, marketers are given an opportunity to connect with customers in a way that feels friendly, familiar, and meaningful. It’s different than, say, an email, which can feel increasingly transactional or formal. This is probably why customers who come in through mobile are 10x more likely to make a purchase than customers who are acquired through other channels. And guess what? Those same customers are 12x more likely to make a second purchase.

Discover how DojoMojo SMS Marketing can help you optimize your brand's text marketing strategy and get the most return on your SMS marketing budget! Learn More

Tips for using SMS to boost customer retention

Once you’ve got an idea of why SMS can be such an important part of your customer retention game plan, it’s time to put your own SMS retention strategy in place to minimize churn through mobile-driven marketing. To get you started, here are a few tips and tricks you can employ when it comes to using SMS with your existing customers:

Personalize experiences

Research shows that 44% of consumers say they would make a repeat purchase if they have a personalized experience with a brand. As it turns out, SMS offers brands one of the strongest opportunities to personalize communications with consumers. This is in part because of how direct it is, but also because of how customizable it can be. With segmentation and automation tools, such as DojoMojo's SmartTarget, it's super simple to identify past purchasers within your audience and deliver quick, targeted communications that cater to them specifically. This kind of SMS personalization might be a little bit more work for a brand than sending out a full blast, but it can go an incredibly long way in driving repeat purchases from customers.

Reward loyalty

Using list segmentation to divide out people who have purchased from SMS leads who have yet to convert is one way you can send a more targeted blast to past customers to reward them for their loyalty. This is one way to drive repeat purchases by offering a loyalty promo or offer to past customers, but also nurtures that loyalty by making your customers feel like you recognize and appreciate their business — and that can go a long way with consumers.

Ask for feedback

Think about it: why do customers churn in the first place? They do it because there’s some aspect of your business that wasn’t satisfying what they needed as a customer. In order to make sure that you’re constantly measuring up to customers’ expectations and delivering on their needs, it’s important to create a dialogue so that you can source feedback. With SMS, you can simply send a message to past customers requesting feedback — how was their experience, what products/services do they want in the future, etc. — and they can respond as easily as they would answer a text. This generates valuable insights, and it creates a sense of agency for consumers who are likely to feel a stronger connection to your brand because of it.

Provide follow-ups

SMS provides the perfect way to check in with customers in a casual format, whether it’s following up a few days after a purchase or checking in with past customers who haven’t purchased in a while to see how they’re doing. In this way, text can be used to keep a conversation going with recent customers or to reopen a dialogue with past customers in a way that feels natural and low stakes. Be mindful though: one of the risks of SMS is that it can feel intrusive when used excessively. It’s necessary for marketers to find a sweet spot where they’re communicating with their customers regularly, but not so much that their text messages start to feel overwhelming.

Focus on customer service

Plenty of brands think of mobile marketing as a great way to get brand updates and promos in front of customers faster, but one of the best things you can use SMS marketing for is improving your customers’ overall experience through proactive, simplified customer service. According to data from Zendesk, a positive customer service experience can be a big driver of favorable buying behavior. Not only does it improve retention by encouraging around 54% of consumers to give more business to a brand, but it also helps act as a passive lead acquisition strategy by driving around 67% of people to recommend your brand to others.