Latest / The DTC Marketing Podcast with Fexingo: Direct-to-Consumer Brands, Shopify, and E-Commerce Growth / How DTC Brands Use SMS Marketing for Retention
Transcript
- Lucas: So you get an email from a brand you bought from once, maybe six months ago. You probably ignore it. But you get a text message from them — same offer — and you open it. That's the gap we're looking at today. Luna: And it's a big gap. Email open rates average around twenty percent. SMS? More like ninety-eight percent within three minutes. Lucas: Right. And for DTC brands especially, where the relationship is direct and often digital-native, text feels intimate. It's your phone, your personal space. So when a brand texts you, it's a different kind of attention. Luna: But it's also a risk. If you abuse that intimacy, people opt out fast. I've seen some brands treat SMS like a broadcast channel, blasting every customer the same message. Lucas: Yeah, that's the mistake. The brands that do this well treat SMS as a surgical tool. Let's look at a specific case. There's a mid-size DTC skincare brand — I'll call them Glow Lab, not their real name — but they started an SMS retention program in early 2025. Luna: What were they seeing before? Lucas: Their repeat purchase rate was around fifteen percent. Typical for a brand that relied mostly on email and social ads. They had a decent email list but the engagement was dropping. So they decided to test SMS for a segment: customers who had bought at least twice in the past six months. Luna: That's a smart segment. Not new customers, not lapsed — warm, but not necessarily loyal. Lucas: Exactly. They offered a personalized product recommendation based on past purchase, plus a ten-percent discount. Sent via text. The click-through rate was twenty-eight percent. Their best email campaign that quarter was four percent. Luna: Twenty-eight percent is huge. But what about the opt-out rate? Lucas: That's the key metric. They kept it low — under two percent — because they were careful. Only one text per week, always relevant, and they made it easy to customize frequency. They also integrated the SMS with their loyalty program, so customers could redeem points via text. Luna: So the value exchange is clear. They're not just selling, they're offering utility. Lucas: Right. And the results after three months: repeat purchase rate jumped from fifteen to twenty-one percent. That's a forty-percent increase. Their average order value also went up by eight percent, because the personalized recommendations often included higher-priced items. Luna: But I wonder about the broader context. Privacy regulations are tightening. iOS updates have made email tracking harder. SMS might be the next battleground for consent. Lucas: Absolutely. The brands that succeed are the ones that get explicit opt-in. Not just checking a box during checkout, but a double opt-in via text. And they're transparent about what you'll receive. One brand I know sends a welcome text that says: 'You'll get one offer per week, plus restock reminders. Reply STOP anytime.' Luna: That's the right approach. Because if you trick someone into opting in, they'll opt out fast and never trust you again. Lucas: And here's the thing — SMS isn't just for offers. Some of the best retention texts are purely service-oriented. Like, 'Your subscription is about to ship. Reply to customize.' Or 'We noticed you're running low on your serum. Want a refill?' Luna: That's the 'concierge' model. It builds loyalty without a hard sell. Lucas: Yeah. And the data shows that service texts have even lower opt-out rates than promotional ones. One DTC pet food brand sends a monthly text asking if the customer's dog's weight has changed, and they adjust the portion recommendation. That's not marketing, that's a service. And it locks in retention. Luna: But what about smaller DTC brands? If you're a solo founder on Shopify, you don't have a dedicated SMS team. Lucas: Good point. But the tools have gotten cheaper. Platforms like Postscript and Klaviyo have SMS built in, with automation flows for abandoned cart, welcome series, and post-purchase. You can set it up in an afternoon. The key is starting small — one flow, one segment, test for a month. Luna: And measure the right metrics. Not just open rate, but conversion rate and opt-out rate. Lucas: Exactly. And also lifetime value. Because if SMS increases repeat purchase by even ten percent, that compounds. A customer who buys three times a year instead of twice is worth thirty-three percent more over their lifetime. Luna: I want to push back a little. Some listeners might say: 'I get too many texts already. I don't want to add another channel.' Lucas: Fair. But the difference is permission. If a customer actively opts in, they want to hear from you. The problem is when brands buy lists or add numbers without consent. That's spam, and it kills the channel. Luna: So what's the single most important piece of advice for a DTC marketer listening right now? Lucas: Start with a behavior-based trigger. Not a broadcast. The abandoned cart text is the classic — and it works because the customer already showed intent. The average conversion rate for an abandoned cart SMS is around ten percent. That's ten percent of revenue you were leaving on the table. Luna: And then build from there. Maybe a welcome series, then a replenishment reminder, then a birthday offer. Lucas: Right. Layer in personalization as you go. Use purchase history, browsing data, even weather if you sell seasonal products. The more relevant, the more retention. Luna: You know, it's funny — we talk a lot about the latest shiny object in DTC, like AI or AR. But SMS is old tech. It's been around for decades. And it's still one of the most effective retention tools. Lucas: Because it's simple. It's direct. And people actually read it. That's hard to beat. Luna: Before we wrap, I want to mention something that keeps this show going. A handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many of these episodes. Lucas: Yeah, we keep it ad-free because of that support. It's not a big ask — just if these conversations have sparked something you've actually used, that's the whole idea. Luna: And we really appreciate it. Now back to SMS — one thing I've seen work is combining SMS with a loyalty punch card. 'Buy four, get one free' via text. Lucas: That's a great tactic. And it gives the customer a reason to keep the texts. They're tracking progress. It's gamified retention. Luna: Alright, so to sum up: SMS is powerful but fragile. Permission is everything. Start with one trigger, measure opt-out rate, and build from there. Lucas: And remember — the goal isn't to send more texts. It's to send better ones. One thoughtful text beats ten blasts every time. Luna: Thanks for listening, and we'll see you next time.