The Untapped Power of SMS Marketing in Banking

Text messaging is a highly effective, yet underutilized, communication strategy that can build engagement with customers and prospects at any stage of the buying journey. With open and response rates far exceeding any other channel, financial institutions should consider adding SMS to their marketing arsenal.

Think about how you use your own mobile device. When do you first look at it during the day? What messages do you check first? Which messages are you most likely to respond to? For most people, the mobile phone is looked at within minutes of waking up in the morning and text messages are viewed before any email is opened.

When it comes to direct marketing, no channel is more immediate or impactful than SMS marketing. 68% of people say checking, sending, and answering text messages is the activity that they’re most engaged with on their phones throughout the day. In addition, 82% of consumers say they open every text message they receive.

Key Fact:

82% of consumers open every text message they receive.

Since the pandemic, more and more firms have leveraged SMS marketing to communicate with receptive customers. With much higher and faster open rates than email, SMS marketing is an extremely effective way to reach a massive audience of consumers with important messages.

Research has shown that it takes 90 seconds for someone to respond to a text message compared to the 90 minutes or more that it takes for someone to respond to email. Since most consumers carry their phones at all times, SMS is a highly reliable way to reach your target audience. And, while text messages can’t have the depth of other forms of communication, the simplicity of linking content and compatibility with all brands of mobile devices are why text messages have become so popular.

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Important SMS Text Messaging Insights

Now more than ever, consumers expect the brands they use to communicate on a personalized level, in real time. There is no communication platform that is as direct and agile as an SMS message. But, while over 65% of the world regularly uses text messaging, only about 40% of marketers use SMS texting. The delay in adoption by marketers is a combination of the lack of familiarity with how to maximize the channel’s effectiveness and concerns around the perceived intrusiveness of the channel.

As email inboxes and social media feeds become cluttered with direct-to-consumer brands urging people to buy something, brands are in search of new places to talk to customers where they aren’t yet sick of hearing from brands. In fact, more than 75% of consumers say they prefer to receive promotions via text messages than seeing ads while browsing the internet and social media channels. By giving consumers the choice to opt in or opt out, you’re giving them control of the messages they see, instead of interrupting their social browsing.

According to the 2020 Text Messaging Marketing Report from SimpleTexting, 42% of Millennials check their text messages 10 or more times per day on average. When asked, “How quick are you to check your text notifications throughout the day,” almost 60% of all consumers surveyed stated that they checked within one to five minutes of the text coming through. In fact, 68% of respondents said that checking, sending and answering text messages is the activity that they’re most engaged with on their phones throughout the day, followed by:

  • Checking social media updates.
  • Checking their emails.
  • Making phone calls.
  • Consuming news or entertainment.

Similar to all communication options, consumers have preferences about the types of information they want to receive via text, how often they want to receive texts from businesses, and other preferences. For instance, when it comes to SMS marketing, consumers are most receptive to texts regarding shipment tracking (75%), order confirmation (65%), scheduling reminders (46%), and special offers (35%). In addition, the majority of respondents (60.8%) would like the capability to text businesses back about customer support issues.

Key Fact:

60% of customers want to actively text businesses back about customer support issues.

When it comes to who consumers want to receive text messages from the top three industries customers say they are more likely to opt into text messages are: e-commerce/retail industry (46%), healthcare (43%), and banking or financial institutions (41%). Businesses see 98% open rates and 36% click-through rates for special offers because consumers enjoy when good deals come to them directly through text, rather than sifting through websites, emails, and social media.

When asked about the advantages of SMS texting, over 62% of business owners and marketers surveyed stated that fast delivery of messages was the biggest benefit of texting their audience, followed by strengthened customer engagement and cost-effectiveness. With consumers having their phone in hand almost every waking moment, the speed of message delivery and engagement for SMS text messages is hard to beat. Text marketing is also very cost-effective in comparison to other forms of digital marketing and advertising.

Key Fact:

Text marketing is incredibly effective, with SMS open rates as high as 98%.

When businesses were asked about the primary motivation for using SMS texting, over 52% of businesses stated that having a large mobile audience was their primary motivator for investing in text marketing, followed by the ability for strong customer engagement, real time reach, and high open rates.

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6 Ways to Maximize Success of SMS Text Marketing Campaigns

If you’re trying to recommend a new service, activate a dormant account or provide guidance at a time of potential need, communicating on the mobile channel will be one of the most effective options. SMS marketing is a low-cost, high-return marketing process that can deliver short messages or multimedia content to customers.

Below are some of the most effective SMS tactics used to boost engagement and response rates.

1. Get Permission. Before texting your customers, you need to their permission – by law. Asking for permission provides an opportunity to discuss the way text messaging will be used in the future and gives a very easy way to opt in or opt out. This simple process will increase engagement going forward.

2. Send Time-Sensitive Messages. SMS messages can be perfectly timed based on consumer behavior. From a welcome message after opening a new account to an engagement or special offer message to help a customer use a product or service more effectively, SMS is an ideal marketing channel for communications that need to be opened and acted upon quickly.

3. Integrate with Other Channels. With only a 160-character limit, you can get more out of a campaign if you leverage other channels in addition to SMS. For instance, you can send personalized videos, pictures and links to your web page within a text and supplement SMS messages with email, mobile banking messages and even phone outreach.

4. Personalize SMS Messages. As with any outbound marketing, customers respond best to messages addressed directly to them. With text marketing, you can tailor your message to each recipient according to the data gathered from customer intelligence.

5. Reference Locations. Location-based text campaigns are a method of personalization as well as an effective way to initiate action and engagement. This type of communication can drive them to a local branch or provide them an offer from a local business.

6. Measure Effectiveness. SMS marketing offers a direct, measurable, and trackable marketing channel. You can easily determine which messages and promotions are working and which ones aren’t, allowing you to refine and enhance your text campaigns. Of greatest importance, you can capture leads and text-based responses for sales follow-up.

SMS messaging has become one of the most effective ways for large and small financial institutions to connect with customers and prospects in a very personalized and immediate manner. As more consumers are opting for digital channels, the use of SMS messaging is definitely on the rise. With the success of these campaigns being stronger than any other existing channel, firms are finding new and exciting ways to integrate into their marketing plans.

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