Latest / The Retention Marketing Podcast with Fexingo: Email, SMS, and Loyalty for Repeat Customers / How Ecommerce Brands Use SMS to Boost Customer Retention
Transcript
- Lucas: I want to talk about a channel that every brand has access to, most brands underuse, and a few brands are absolutely dominating for retention right now. I'm talking about SMS marketing — text messages. Luna: It's funny you bring that up because I feel like SMS has this reputation as either spammy or something only big retailers can do well. But I've been seeing more brands use it in a way that actually feels useful. Lucas: Exactly. And the data is pretty staggering. Average open rates for SMS are above 90 percent. Most of those opens happen within three minutes. Compare that to email, where you're lucky to get twenty percent open rates within the first twenty-four hours. The raw attention is just different. Luna: Ninety percent open rate within minutes — that's basically guaranteed visibility. So why isn't every brand doing it? Lucas: Part of it is fear of being intrusive. There's a fine line between a helpful text and an unwelcome interruption. And there are strict regulations — you need opt-in consent, you need to provide an easy opt-out, and you absolutely cannot message people who didn't agree to receive texts. But the brands that get it right treat SMS as a relationship channel, not a blast channel. Luna: So let's talk about a specific brand that's doing this well. I know Warby Parker has been in the news for their SMS strategy. Lucas: Warby Parker is a great example. They use SMS primarily for order updates and appointment reminders — things the customer actually wants to know. But they also send personalized recommendations based on past purchases. If you bought a pair of glasses, they might text you about a new frame style that matches your prescription. It's contextual, not random. Luna: And the key there is permission. You've opted in because you already have a relationship with them. It's not cold outreach. Lucas: Right. And here's the thing — Warby Parker doesn't send a lot of texts. Maybe two or three a month. That scarcity makes each message feel important. They're not trying to sell you something every week. They're trying to stay top of mind without being annoying. Luna: I've also seen The Sill — the plant delivery company — use SMS really effectively for retention. They send care tips for the specific plant you bought, plus reminders to water it. That's content that adds value beyond the purchase. Lucas: That's a perfect example of what I call 'adjacent value.' You bought a snake plant. They don't just text you 'buy more plants.' They text you 'your snake plant likes indirect light and water every two weeks.' That message builds trust. And when you eventually want another plant, who are you going to buy from? The brand that helped you keep the first one alive. Luna: And that's retention marketing in its purest form — it's not about the next transaction, it's about the long-term relationship. Lucas: Before we go deeper, I want to mention something that keeps this show going. We don't run ads here — no sponsor breaks, no affiliate links. The whole thing is supported by a small group of listeners who chip in through buy me a coffee dot com slash fexingo. That's what lets us keep digging into topics like this without any outside influence. Luna: It's a pretty simple model. And honestly, it's freeing. We can talk about what's actually useful without worrying about pleasing a sponsor. Lucas: So if you've gotten value from these episodes, that's the place. Buy me a coffee dot com slash fexingo. And now back to SMS — because there's a really interesting debate about whether SMS works better for acquisition or retention. Luna: I've seen a lot of brands use SMS for acquisition — like pop-ups on their site offering a discount in exchange for a phone number. But I wonder if those subscribers are less engaged than people who opt in after a purchase. Lucas: That's a critical distinction. An opt-in from a pop-up is often incentive-driven — 'give us your number for ten percent off.' Those subscribers might have lower lifetime value and higher opt-out rates. But an opt-in that happens post-purchase, maybe during checkout or through a loyalty program, tends to be much stickier. The customer already has a relationship with you. They're not just chasing a discount. Luna: So the timing of the opt-in matters as much as the message itself. Lucas: Absolutely. And that's why I think SMS is naturally a retention channel first. It's a high-intimacy medium. You don't give your phone number to a stranger. You give it to a brand you already trust. Luna: Let's talk about some numbers. You mentioned open rates. What about click-through rates? Lucas: Industry average for SMS click-through rates is around fifteen percent. That's ten times higher than email's average of one to two percent. But the catch is that SMS messages are short — you have maybe 160 characters. So you have to be incredibly concise and clear about the call to action. Luna: That constraint actually forces better marketing. No room for fluff. Lucas: Exactly. And it works especially well for time-sensitive offers — flash sales, limited restocks, appointment reminders. Things where immediacy matters. If you're a service business like a salon or a dental practice, SMS can drastically reduce no-shows. That's a retention win too. Luna: What about the cost? I've heard SMS can be expensive compared to email. Lucas: It can be. Per-message costs vary, but if you're sending to a large list, it adds up. However, the ROI can be much higher because engagement is so strong. A lot of platforms charge by the segment — typically a few cents per message. So you want to be strategic. Send fewer, higher-quality messages rather than blasting every week. Luna: That's where personalization comes in. If you're going to pay per message, you better make sure each one is relevant. Lucas: Right. And the best brands are using data to segment their SMS lists just like they do with email. Maybe you have a segment for high-value customers who get early access to new products, and another segment for lapsed customers who get a re-engagement offer. The same message doesn't work for everyone. Luna: I want to bring up a potential pitfall. Over-messaging. I've signed up for a few brand SMS programs and immediately regretted it because they text me every other day. Lucas: That's the fastest way to get someone to opt out — or worse, to report you as spam. The general best practice is to start with a welcome message, then no more than two to four messages per month. And always give an easy opt-out. The brands that respect that see much lower churn rates on their SMS lists. Luna: Warby Parker again — they have a really clean opt-out process. You just reply STOP and it's done. No hassle. Lucas: And that builds trust. If you make it hard to leave, people resent you. If you make it easy, they might come back later. Luna: So for a small or mid-size ecommerce brand that's thinking about starting SMS, what's the first step? Lucas: First, make sure you have a clear opt-in mechanism that's compliant with regulations like the TCPA in the US. That means explicit consent, not a pre-checked box. Then start small — maybe just transactional messages like order confirmations and shipping updates. See how people respond. Then layer in one promotional message per month. Test, measure, and iterate. Luna: And integration with email is key. You don't want to send the same offer via text and email on the same day. That's annoying. Lucas: Right. Ideally, you use email for longer-form content — stories, guides, product deep dives — and SMS for urgent, short, high-impact messages. They complement each other. Some brands even use SMS to drive email sign-ups, like 'text JOIN to get our weekly newsletter.' It's cross-channel. Luna: One thing I've noticed is that conversational SMS — where a customer can reply and get a real response — is becoming more common. That feels very different from a broadcast blast. Lucas: That's the frontier. Two-way SMS allows for customer service, personalized recommendations, even booking appointments. It turns a broadcast channel into a conversation. But it requires staffing or automation. Some brands use chatbots to handle common questions, then escalate to humans. Luna: So it's not just a marketing channel, it's a customer experience channel. Lucas: Exactly. And that's why I think SMS will only grow in importance for retention. As more brands crowd email inboxes, text remains relatively uncluttered. The brands that get it right early will have a real advantage. Luna: Are there any industries where SMS doesn't make sense for retention? Lucas: Probably for very low-engagement products — things you buy once every few years, like a mattress. But even then, you could use SMS for delivery updates and care instructions. The threshold is: does the customer want to hear from you between purchases? If yes, SMS is viable. If not, stick to email. Luna: That's a good rule of thumb. And I think the best approach is to ask customers how they want to be communicated with. Some people love text, others hate it. Lucas: Exactly. Preference centers are underused. Let customers choose their channel and frequency. That's true retention marketing — meeting people where they are, not where you want them to be. Luna: So to wrap up — SMS is powerful for retention because of its high open rates, immediacy, and intimacy. But it requires consent, scarcity, and relevance to work. Lucas: And it's not a replacement for email. It's a complement. Use email for the long game, SMS for the short game. Together, they create a retention loop that keeps your brand top of mind without being annoying.