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What’s SMS Got to Do With Conversational AI?

7 minute read
Chitra Iyer avatar
SMS has been around for a while — and it’s only getting smarter. How can you use this communication method in your marketing efforts?

SMS, or short message service, are those unpretentious little text-only messages that have been around for ages but never quite found their feet in the glamorous world of video-emails and digital everything. But unlike so many others, SMS has never quite vanished, either. 

Ever since GDPR (General Data Protection Regulation), ecommerce and smartphones have reframed buyer behavior, brands are rediscovering SMS as a powerful way to keep customers updated, engaged and supported, right on their mobile devices. A key reason is that customers are starting to associate SMS with important, urgent or useful messages such as credit card use alerts or delivery updates. 

So, what’s changed? It’s not SMS itself so much as the landscape around it that’s evolved. Conversational AI tech has advanced by leaps and bounds, integration between systems and data flow capability has improved, as has marketers’ abilities to gather high-quality data and segment and personalize it — and all of it has unlocked new and interesting use cases for SMS marketing. 

To be fair, SMS already had some solid pros in its favor, including: 

  • It’s short — that’s always handy. It’s so short that one can read most of the messages on the notifications panel itself. 
  • It plops straight into your dedicated SMS inbox, which is relatively uncluttered and ad-free.
  • It’s as immediate as any instant messaging that consumers expect today.
  • Embedded links give customers a clear CTA (call-to-action), and UTM (Urchin Tracking Module) codes help measure and track the performance of each message.
  • Various reports show that SMS has a 90% delivery and open rate — much higher than any other channel, and a relatively low unsubscribe or opt-out rate.
  • It doesn’t need an internet or Wi-Fi connection or an app to be downloaded — it is pre-installed on most phones.

On the flip side, it’s not glitzy or interactive like what we're used to today, and it only works on phones, not laptops or tablets. But those negatives are by no means deal-breakers, considering how ubiquitous mobile devices are and the changing consumer perception of SMS messages being useful and timely. In a world full of shiny distractions, its simplicity may even help SMS stand out.

evolution of sms

Functionality-wise, SMS today can enable personalized, two-way conversations that seamlessly flow into other channels like chatbots, helpdesks and landing pages. Marketers making serious forays into it are finding massive returns on investment at a low cost per message. But what really sets conversational SMS marketing apart is its versatility — it offers interesting use-cases at each stage of the buyer's journey to help with awareness, engagement, conversion and retention. 

So, if you're a marketer considering SMS marketing as a way to build first-party data and stronger CX and make it a part of your conversational AI stack, what should you keep in mind? 

Related Article: 3 Ways Sentiment Analysis Can Improve the Customer Experience

Know Your Use-Case

Modern-day SMS marketing has become more targeted, immediate and, like all other martech, smarter. Machine learning-powered smart SMS marketing tools that are part of the conversational marketing toolkit can classify and respond to a message based on a triage between language, intent and sentiment, says Jon Aniano, senior vice president of product at customer service software provider Zendesk. But starting with specific use cases is key to getting results.

In general, texts can be information-, transaction-, service- or engagement-oriented.

Informational Texts

Great for personalized appointment reminders, points updates, order and delivery status messages, new launches, sale previews, pre-debit notifications, etc., that can have a finite set of customer responses.

Transactional Texts

Trigger-based, personalized messages that directly impact sales, such as abandoned cart reminders, sale and price-drop alerts, due dates, offers and deals, time-sensitive reminders, new product purchases, etc. 

Service-Oriented Texts

24x7 customer service availability via keyword responses, chatbots and help desks, and recording customer feedback.

Engagement Texts

Post-purchase drip campaigns like this one from Rex Specs, a dog gear company, trigger an SMS right after product delivery to improve successful usage, leading to lower rates of product returns and higher reorder rates. 

And while smart SMS is, of course, smarter, Ian Reither, chief operating officer of communication API provider Telnyx, reminds us that it’s not always the default choice. While smart or AI-powered SMS marketing is ideal for augmenting brand services with a 24x7 presence, one-way SMS marketing is great for mass marketing campaigns and promotions, and two-way SMS marketing is a quick and convenient way to address basic customer concerns that don’t really need human intervention.

In all its forms, he added, SMS is a valuable addition to the marketing mix because it’s convenient, quick and has one of the highest open and engagement rates among communication channels. 

Invest in Building and Segmenting Your List 

Aside from technology, the one aspect that’s transformed SMS marketing outcomes is the quality of the list and how well it's segmented. Many years ago, mass-purchased lists were the bane of SMS marketing. Today, first-party data lists are a boon for the hyper-personalization of SMS messages.

Learning Opportunities

But message relevance is based on the quality of segmentation, which can, in turn, be based on diverse criteria — from date of joining, order category, cart abandons, feedback, etc. SMS allows for a wide array of segmentation options to try different campaigns and optimize what works.

Plan for Integration From the Start 

SMS is exponentially effective when it’s part of a one-two-punch sequence. For example, campaigns that use SMS and email in tandem can deliver exciting results, while email alone is seeing declining open rates among younger audiences.

Ecommerce sites often send first-timers a discount code by SMS right after they sign-up. Aniano said the SMS + chatbot + agent model also delivers seamless CX and substantial savings on call handling costs if the systems are integrated, and agents are up-to-date on the customer’s context and history regardless of the channels.

To make sure your SMS marketing is set up to work with your other channels, said Matt Ramerman, president of Sinch for Marketing, consider conversational APIs (application programming interfaces), which serve as a hub for conversational marketing efforts, storing customer preferences, purchase history across channels and facilitating handoffs from chatbots to live agents when needed.

Design Your SMS Campaigns Around the Customer Journey 

Relevance (based on segmenting and targeting) and timing (offers based on event or behavioral triggers) are key for SMS campaign success.

For instance, smart SMS can be a great hook or kick-off point to start conversations, address inquiries, facilitate orders, encourage product usage or drive repeat purchases. Once the customer engages via SMS, you can move the conversation forward with NLP (natural language processing) chatbots and rich messaging — whether it's confirming product availability in nearby stores, helping them reschedule an appointment or even sharing a shoppable carousel of products that may interest them, said Jennifer Shambroom, CMO of chat commerce company Clickatell.

Welcome flows can go into multiple paths based on the customer's response. Similarly, tiered escalation in customer service and drip campaigns in sales are both very impactful with conversational SMS. Currently, Shambroom added, 79% of customers prefer live chat over any other communication, including phone calls — but mixing up the messaging between notifications, updates, news and coupons works best to keep customers engaged. 

Related Article: Connected Customers, Connected Data, Connected Journeys

SMS Needs to Be Privacy-First Too

Of course, like all marketing channels today, SMS, too, needs to be respectful of customer privacy, Reither reminded us.

Business SMS has many rules and regulations, and brands have to remain compliant to avoid legal and financial penalties, in addition to providing adequate proof of opt-in, an opt-out option in each message and a documented policy and process to keep lists updated.

Where Will Smart SMS Fit in Your Stack?

As SMS marketing technology becomes more intelligent, moving from automation (automated marketing messages, auto-replies) to action, actually providing recommended content, next steps, answers for the live agent or self-serve for the customer, said Shambroom, the entire experience of a purchase or a relationship with a brand can now happen within mobile messaging.

And right now, smart SMS offers marketers an exceptional opportunity to test and build cost-effective, measurable, mobile-first personal connections.

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