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Transcript
- Lucas: Luna, I want to talk about something you see every time you walk into a franchise these days — the little sign at the register that says 'text JOIN to 55555 for 10% off.' That QR code, that tablet at the counter asking for a phone number. Luna: Right — and I usually ignore it. But apparently, I'm in the minority. Because franchisees who are doing this right are seeing huge retention lifts. What's the actual data? Lucas: Well, let's start with a specific case. There's a multi-unit Smoothie King franchisee in Atlanta — runs eight stores — who started a simple SMS program about six months ago. He uses a sequence of three automated text messages after a customer's first purchase. First message, two hours later: 'Hey, hope you loved your Mango Magic. Show this text on your next visit and get a free upgrade to large.' Second message, three days later: 'We've got a new flavor — Acai Blast. Stop by this week and we'll throw in a free booster.' Third message, seven days later: 'We miss you! Come back this weekend and use code SMOOTH10 for 10% off.' Luna: I like that it's not just a generic coupon blast. There's a real sequence — timely, relevant, builds on each step. What were the results? Lucas: Over 90 days, his monthly return rate for customers who opted in went up 18%. That's not theoretical — that's from his actual point of sale data. And he's spending about $150 a month on the SMS platform, which is Postscript in this case. So the ROI is absurd. But here's what I think is more interesting: he didn't get that lift from the discount alone. The key was integrating the SMS with his existing loyalty app so the offer could be redeemed without friction — customer shows the text, the cashier scans a barcode from the app, and the discount applies automatically. No manual entry, no 'can I get a manager,' no confusion. Luna: Speaking of — I was wondering about the opt-in. A lot of franchisees worry that asking for a phone number feels invasive. How did he get people to sign up? Lucas: He made it part of the checkout flow. The tablet at the register simply says: 'Enter your phone number for a free upgrade on your next visit.' No checkbox for newsletters, no complicated form. Just the number. After the first purchase, the system automatically sends an opt-in confirmation text — and that's where compliance matters, by the way. The TCPA requires that you get explicit consent. So the customer receives: 'Reply YES to get exclusive offers from Smoothie King.' If they don't reply, no more texts. But about 40% of his customers said yes. Luna: And these aren't just young customers, right? I've seen data that SMS open rates are something like 98% across age groups. Email is lucky to get 20%. Lucas: Yeah — that number is real. And we should say, those three messages are it for the first week. After that, he sends at most two texts a month — usually tied to an LTO, a limited time offer, or a seasonal flavor. He tests different cadences, but the principle is: don't over-text. He actually dropped the frequency from weekly to bi-weekly and the click-through rate on the link in the text doubled. Less is more. Luna: Look, I know we've talked about a lot of retention tools on this show — gamification, subscription models, loyalty apps. This feels like a simpler, more direct channel. But is it really that easy to set up for a franchisee who's not tech-savvy? Lucas: Honestly, yes. The major platforms — Postscript, Klaviyo, even the SMS add-on in Shopify — all have templates built for this exact use case. You don't need a developer. You configure three triggers: new customer, visit after 3 days, visit after 7 days. Write the messages yourself. And most of them integrate directly with the POS — Toast, Square, Clover. The hardest part is getting the franchise's corporate approval, because brand guidelines often restrict how you communicate with customers. But this franchisee got buy-in by showing that the messages were on-brand — same voice, same color palette in the links, no third-party logos. Luna: So what about the cost? You mentioned $150 a month. Is that typical? Lucas: For a small multi-unit operator, yeah. Postscript charges based on the number of contacts and messages sent. For a list of about 2,000 opted-in numbers, sending two to three texts a month, you're looking at $100 to $200. Compare that to a retention lift of 18%. And remember, these are repeat customers — their average ticket is higher than a new customer's. So it pays for itself quickly. The real cost is if you do it wrong — if you blast too often and people unsubscribe, or if you violate TCPA rules, which can carry fines of $500 to $1500 per text. Luna: And that's why the opt-in step is so critical. You mentioned the confirmation text — but what about the unsubscribe process? Does he make that easy too? Lucas: Absolutely. Every text includes 'Reply STOP to opt out.' That's not just good practice, it's the law. He actually monitors the unsubscribe rate — it's under 2% per month. That tells him his content is relevant. If it spiked, he'd know he's over-messaging. And he uses the data from the POS to segment his list. For example, customers who only buy smoothies get fruit-focused offers; customers who buy supplements get protein-related messages. That personalization drives the lift. Luna: Before we go deeper, I want to echo something you said earlier about the value of this show. If these conversations have moved your work forward in some small way — maybe you've picked up a tactic like this SMS approach and it's helped you retain a few more customers — a couple of dollars a month is genuinely what keeps these episodes ad-free. Buy me a coffee dot com slash fexingo. It's a small thing that makes a real difference. Okay, back to the numbers. Lucas: Yeah — and that support is how we keep digging into stuff like this. So the next question is: can a single-unit franchisee do this? Or do you need scale? Luna: Let's answer that, because I think a lot of our listeners run one or two locations. Lucas: You can absolutely do it with one store. In fact, the SMS platform doesn't care if you have one location or fifty — the pricing is per contact. A single-unit operator with 500 opted-in numbers might pay $50 a month. And the impact could be even bigger proportionally because you can be more personal. I know a franchised pizza shop in St. Louis that sends a text to every customer who hasn't visited in 30 days: 'Hey, it's Mike. We haven't seen you in a while. Next pie is on me — just mention this text.' That's a 35% redemption rate. The cost is one free pizza per customer, and the lifetime value of a reactivated customer is easily $200. Luna: That's a great example because it uses the owner's name. You can't fake that at scale. But I'm curious — what about measuring attribution? How do you know the SMS caused the return visit, not just a coincidence? Lucas: The platforms give you unique tracking links and discount codes. In the Smoothie King example, the third text used code SMOOTH10. The POS system records that code on every transaction. So he can see exactly how many redemptions came from that message. He also tracks the overall return rate of the SMS segment vs. a control group — customers who didn't opt in. That 18% lift is net of the control. It's clean data. Luna: What about the timing? Two hours after the first purchase — that feels quick. Is that standard? Lucas: It's actually deliberate. You want to hit them while the experience is fresh, but not so soon that they haven't left the parking lot. Two hours is the sweet spot that a lot of franchisees use. The second message at three days is about catching them before the habit fades. The third at seven days is the 'we miss you' nudge. There's research from Postscript that shows the optimal sequence is three messages over 7-10 days, then shift to a monthly cadence. More than that and you get fatigue. Luna: And what about SMS vs. push notifications from an app? I know some franchisees have apps, but the adoption is low. Lucas: Right — app push notifications require the customer to download and enable. That's a huge barrier. SMS is universal. Every phone has it, and open rates are 98% within three minutes. Plus, you don't need the customer to have data or Wi-Fi. It's the most direct channel. The downside is cost per message, but at pennies per text, it's negligible. The bigger downside is that you can't send rich media easily — no images in standard SMS — but you can include a link to a mobile landing page. Luna: So how does a franchisee get started tomorrow? Give me the three steps. Lucas: Step one: pick a platform. Postscript, Klaviyo, or even the built-in SMS in your POS if it has one. Most offer a free trial. Step two: set up your opt-in flow at the register. A simple sign, a tablet, or even a verbal ask: 'Can I get your number for our VIP list?' Then the automated confirmation. Step three: write your first three-message sequence. Keep it short, offer value, and include a clear call to action. Test it for a month, measure redemption rates, and adjust. That's it. Luna: And compliance? How do you avoid the TCPA traps? Lucas: The two big ones: get explicit opt-in — 'Reply YES to receive offers' — and provide an easy opt-out in every message. Also, don't text outside of 8am to 9pm local time. Most platforms enforce that automatically. If you follow those rules, you're fine. The bigger risk is buying a list of numbers — never do that. Only text people who have opted in from your own store. Luna: So no importing your email list and hoping for the best. Lucas: Correct. That's a fast track to fines. Also, don't use SMS for things like debt collection or legal notices — that's a whole different regulatory framework. But for marketing and retention, the rules are straightforward. Luna: One thing I want to touch on: the integration with the loyalty app you mentioned earlier. How important is that? Lucas: It's a force multiplier. The SMS gets the customer in the door, but the loyalty app captures the transaction data and lets you reward repeat behavior. In the Smoothie King case, the SMS offered a free booster — but the redemption required the loyalty app barcode. So every SMS redemption also created a new loyalty account if they didn't have one. It built the database at the same time. Now he has a list of thousands of opted-in customers with purchase history he can segment. That's the long game. Luna: And what about the content of the messages themselves? Any patterns that work best? Lucas: Personalize with the customer's name if you have it. Keep it under 160 characters — that's one text segment, and it costs less. Use emojis sparingly; they can increase engagement but also feel spammy if overdone. And always include a clear, single call to action. Don't say 'come in and try our new smoothie or get 10% off.' Pick one offer. The best performing patterns are: urgency, exclusivity, and surprise. Luna: Last question: what's the biggest mistake franchisees make when starting SMS? Lucas: They try to sell too soon. The first few messages should build the relationship — a thank you, a welcome offer, a helpful tip. Not 'buy now, 20% off.' The franchisee I mentioned credits his success to the fact that his first text is purely a thank you with a small upgrade, no strings attached. That builds trust. If you lead with a hard sell, people unsubscribe fast. So start soft, then gradually introduce offers based on behavior. Luna: I think the key takeaway is that SMS isn't just another channel — it's a direct line that, when used right, can turn first-time buyers into regulars. And it's cheap enough that any franchisee can try it without a big risk. Lucas: Exactly. And with measurable attribution, you know if it's working within a month. No guesswork. For a $100 monthly investment, the potential return is massive. If you haven't looked at SMS yet, it might be the highest roi retention tool available right now.