The Extraordinary Effectiveness of SMS Coupons

The-Extraordinary-Effectiveness-of-SMS-Coupons

This is a guest post by Orla Forrest of Neon SMS, an SMS Marketing company (http://www.neonsms.ie/).

Marketing campaigns are measured not by how cool or flashy they seem, but by how much money they recoup for the company and whether the investment in the campaign is made back through customer engagement. Therefore, any decisions regarding the execution of the campaign need to be made carefully. For instance, the success or the failure campaign could boil down to the selection of medium through which it is executed.

That will depend on the specifics of the campaign and its target market, but by and large, SMS proves to be the most successful channel by a distance. Its average peak redemption rate is a staggering 85%, which is more than four times greater than any alternative channel, so SMS is a proven winner.

What makes it such an attractive medium for ecommerce? Its convenience is a major plus point, as customers will get the message on their phone and know exactly how to redeem the coupon. The timeframe from the sending of the coupon to its redemption is far shorter than with other channels, as people will have their phones on them the whole time and redemption is usually as quick as sending a short code or keyword. Email, by contrast, tends to go over people’s heads and be ignored, while paper coupons just seem old-fashioned and can easily be left at home by mistake. Your phone, on the other hand, always makes it out the door with you.

For ecommerce providers devising an SMS coupon campaign, the key is in its simplicity. Make it as easy and quick as possible for customers to redeem the coupon, or else they probably won’t bother. Be sensible about the timing and frequency of delivery, too. Send it during evening downtimes rather than first thing in the morning when people are at their busiest at work. Messaging customers once a week is usually the best balance between consistent engagement and not flooding them with messages to the point of nuisance.

Etsy IPO and What We Can All Learn

Etsy’s long awaited IPO is finally happening with the release of their S1 filing today. Surprisingly, unlike many of the classic ‘marketplace’ ecommerce companies like Ebay, the company is loss making:

The company registered a $4.9 million net loss on $108.7 million in revenue in 2014. The prior year, Etsy was actually closer to profitability, with a $796,000 loss

That aside, there are a couple of pieces of information related to marketing and loyalty that I’d like to point out and may be useful to you running an ecommerce business. First up, marketing:

We believe that the rapid growth of our marketplace is a testament to our compelling value proposition for Etsy sellers and Etsy buyers. Etsy sellers and Etsy buyers have been our best marketers, and the majority of our visits have come from direct and organic channels. Historically, we have invested relatively small amounts in marketing. We spent only $10.9 million on marketing in 2012 and only $17.9 million in 2013. In 2014, we began increasing our brand and digital marketing efforts and spent $39.7 million in marketing, up 122% from 2013.

In essence, let our customers market our company and our products. Easier said than done right? But it’s absolutely the right strategy to compete in today’s world where everyone is fighting for attention, just look at Apple. Yes, the iPhone maker spends a ton on marketing – especially traditional advertising like TV and print – and yet, look at their social media strategy or lack of it. The whole focus of successful companies like Apple and in alignment with Etsy’s marketing strategy is the notion that you both let (and encourage) customers to do marketing on your behalf.

Some call this word of mouth and more formally, ‘organic’ but whatever, it’s where you want to be. And on loyalty:

Our members’ repeat sales and purchases drive GMS growth. In 2014, 78.5% of our GMS resulted from repeat purchases made by Etsy buyers, and 99.3% of our GMS was generated by repeat sales made by Etsy sellers.

Over three quarters of sales from repeat customers; some would say this is a sign of a small customer base but remember what happened during the .com boom with all of those ecommerce companies who bought customers and lusted after those sales; they burned off course. You are far better off with a smaller, more engaged group of loyal customers. Amazon started with book buyers, Ebay with coin collectors, Netflix with DVD by mail and so-on – you want to start small and then grow horizontally into other categories or customers over-time.

Finally, if you’re wondering what the typical Etsy customer (aka ecommerce business) does, check out this graphic form the S1. You won’t be surprised to learn that the vast majority of time is dedicated to inventory – circa 70% in the Etsy seller’s case. The rest? Broadly split between marketing and administrative tasks. Running a company can be very exciting but much of time, it’s a case of getting your head down and working through the stuff that just needs to get done.

Are Affiliates Still Relevant? You Bet

I recall an outcry to the story of how Amazon embedded ‘buy it now’ buttons in articles on the Washington Post and it got me thinking about affiliates and their relevancy in what’s becoming a mobile first Internet. As this WSJ article mentions:

“Amazon could use the data it has about buying behavior to help make these ads much more effective,” said Karsten Weide, an analyst at researcher IDC. “Marketers would love to have another viable option beyond Google and Facebook FB -0.85% for their advertising.”

Forget just Amazon using affiliates however, should all retailers regardless of size be pro-active in affiliate marketing? How big an opportunity is it still? I would argue it’s often overlooked.

For example, you can now ‘roll your own’ affiliate program rather easily using software as a service solutions like Tapfiliate. If you don’t want to manager your own program, services such as CJ are still very useful for driving traffic.

The point is with affiliates, in an age where social is often the be all and end all to folks, taps into a very old but successful principle of retailing: loyalty. This is particularly important in ecommerce, you want loyal customers. The value of repeat customer is many orders of magnitude more important than single transactions. It’s no secret that Amazon is number one in the ecommerce world (at least in the west) as their customers are rabidly loyal.

And this is in no small part due to affiliate marketing. Do you use affiliates? If not, why not?