7 Things to Do (And Avoid) with SMS/Text in Bank Marketing

By not using SMS text messaging for marketing, you are missing a channel with a 98% open rate and a rapid response rate. Consumers love the convenience and are open to receiving personalized and relevant texts from their bank and credit union. Naturally there are some caveats to be aware of. Here are seven pointers.
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Are you content to have your customers take 90 minutes to respond back to a communication you’ve sent, or would 90 seconds be better? That’s the difference in average response times between email and SMS text.

Then there is the open rate: SMS texts have high open rates — up to 98%, according to Gartner and 82% by another source. The average open rate of email is around 20%.

If you send an email with a link to a survey to find out what a consumer thinks about the virtual meeting with a lending officer they just had, it may linger in the consumers’ inbox for days, at which point the experience is no longer top-of-mind or the consumer decides to simply delete the email because it’s so old. In contrast, text messages trigger an almost immediate response from just about everyone, meaning that you are much more likely to receive the feedback you are after and reinforce the overall experience.

Bank of America Goes Big with Texting

Texting became the new email as consumers flocked to texting during the pandemic for everything from Covid-19 alerts and curbside pick-up to telehealth appointment reminders. Six out of ten consumers say they spend more time texting now as a result of Covid and 78% say that checking, sending and answering text messages is the top activity they do on their smartphones.

Alert Mechanism:

So far, banks and credit unions have used text messages mainly for notifications. Marketing is still virgin territory.

Bank of America is relying on this type of instant communications as part of its marketing strategy. In an interview with Insider Intelligence, David Tyrie, Head of Digital, noted that BofA sends 600 million alerts and notifications each month to its customers, and that number will grow exponentially.

“You, as an end user, are going to depend on Bank of America to push you the information you want, when you want it, how you want it. In a nutshell, the future of banking is that the experience is built into your daily life,” says Tyrie.

600 million messages is certainly an impressive number, but Jeremy Goldman, Director, Marketing & Commerce Briefings, Insider Intelligence, says that most financial institutions are not yet using SMS text messaging for marketing. Today, text messages are more transactional in nature, such as sending a one-time passcode to a consumer’s mobile device or for fraud alerts.

SMS texting can be the marketing channel you didn’t know you needed. If you are ready to give it a try, here are seven things to think about when adding SMS text messaging to your marketing mix.

1. Find the Right Tempo

How much is too much? When does text messaging move from wanted communication to just plain annoying? Too many text messages is a turnoff, with three in five consumers (60%) saying that is the number one reason they would unsubscribe from a business, according to a 2021 survey by SimpleTexting. But send too few texts, and consumers forget that they even signed up as subscribers or opted-in. Messages will seem random and coming from out-of-the-blue.

Too Much of a Good Thing:

The biggest way to lose text access to a customer is to ping them too often on something non-urgent. It's a balancing act.

Consumers respond best to consistent messaging. It’s wise to space out text messages, creating a cadence that straddles the line between too much and too little.

However, finding the right rhythm is tricky and is one reason why SMS texting for marketing hasn’t taken off in financial services as it has in other industries like retail. Banks and credit unions don’t run promotions or release new products every two weeks so it’s more difficult to establish the right tempo.

2. Make it Personal

Most consumers will only engage with a text message if the message is personalized. Consumers increasingly expect that their financial institution truly knows and understands them and SMS texts don’t get a pass.

Texting simply feels more personal, says Goldman. “Every brand you’ve ever engaged with sends you emails, but text messages feel more intimate. If you get an email from someone you don’t know, you delete it and shrug it off. If you get a text from someone you don’t know, it feels more invasive,” he says.

Since banks and credit unions already have a trusted relationship with consumers, they can use this innate intimacy to their advantage. Perhaps send customers and members a birthday greeting or use segmentation to create targeted messages to specific groups of consumers.

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3. Incorporate Texting into an Overall Marketing Strategy

Of course, SMS text messaging is just one way to communicate with consumers, but adding text messaging to an omnichannel marketing strategy yields results. SimpleTexting’s survey found that 35% of marketers say that adding texting increased conversion rates for other marketing channels.

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4. Consider the Negatives

Text messaging does have it downsides. Since all messages flow through mobile operators, financial institutions have to pay the operator. Banks and credit unions must also adhere to consumer privacy requirements.

Kasasa notes that 1-to-1 SMS text messaging can be equivalent to calling consumers on the phone, so texting isn’t governed by the same regulations as broadcast promotions to a shortlist.

Financial institutions also need to make it easy for consumers to opt-out of text messages. Not doing so has several repercussions, including brand damage and fines.

5. Stay on Brand

We’re all used to sending texts to people we know using abbreviations, acronyms, and emojis and other “textese.” SMS text messaging is informal by nature — but that doesn’t mean you should adopt informality. LMK (let me know) is perfectly fine when texting a friend about going to see a movie, but inappropriate when communicating with a consumer in a banking context.

Avoid the Informality Trap:

Even if a customer texts something funny, resist responding with 'ROTFL' (rolling on the floor laughing). Informality from your banker doesn't always go over well.

Text messages should feel on-brand and match the institution’s tone and voice. While this is an important take-away for businesses in all industries, it’s particularly critical to relay trust and professionalism in banking.

6. Educate Consumers About the Bad Guys

Just as banks and credit unions need to educate consumers on phishing and the dangers of clicking on an email link from someone who could be impersonating the institution, bank marketers need to educate consumers about “smishing” — using deceptive text messages to lure consumers into providing their personal or financial information.

Inform consumers that you would never send a link in a text message and ask them to click on it or ask them to provide personal information including Social Security number, account numbers or password. Instead, assure consumers that you will send a code that they must enter directly into your mobile app or website if sensitive information needs to be exchanged.

7. Keep It Short

Text messages are limited to 160 characters in theory, but in practice, most mobile network operators support “message concatenation,” meaning they split large messages into several segments, and reassemble the longer text message at the receiving end.

But you may not want to rely on concatenation, says Jeremy Goldman. Keep text messages short and concise to drive higher response rates. Simple is best.

Keeping these seven keys in mind, it may be time to move past text messaging only for notifications and multi-factor authentication, and to leverage SMS as a key component in your marketing strategy.

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