Latest / The Retention Marketing Podcast with Fexingo: Email, SMS, and Loyalty for Repeat Customers / How a Grocery App Pairs Purchase History With SMS to Drive Returns
Transcript
- Lucas: So there's this regional grocery chain in the Midwest called FreshGroove — about 40 stores, nothing flashy — and they figured out something that most retailers with loyalty programs never quite nail: how to make SMS actually feel personal without being creepy. Luna: Personal SMS that's not creepy — that's a fine line. What did they do? Lucas: They tied their loyalty purchase history — the actual items a customer bought on their last visit — directly into an automated SMS campaign that fires 72 hours after checkout. The text doesn't say 'hey, you forgot something.' It says something like, 'Last time you bought organic chicken breasts. We just got a fresh batch of our lemon-herb marinade that pairs perfectly — 20 percent off if you grab it this weekend.' Luna: So it's not a generic 'come back' — it's specific to what they bought. I like that. But how do customers react? I'd worry some people find it invasive. Lucas: That's the key tension. FreshGroove actually tested this. They sent a survey to everyone who received the SMS and asked: 'Did this feel helpful or intrusive?' 78 percent said helpful. Only 7 percent said intrusive. The rest were neutral. And the numbers on the campaign itself are pretty striking — 12 percent click-through rate on the link in the SMS, and of those who clicked, 43 percent made a purchase within 48 hours. Luna: Twelve percent CTR for SMS — that's high. Industry average for retail SMS is usually around 4 or 5 percent. What drove it? Lucas: Two things. First, the offer was always for a complementary product, not a repeat of the same item. So it felt like a suggestion, not a reminder that you're out of something. Second, the timing — 72 hours after purchase is that sweet spot where the item might still be fresh in mind but the customer hasn't necessarily planned their next trip yet. They tested 24 hours and 7 days. 72 hours outperformed both by a wide margin. Luna: That makes sense. 24 hours is too soon — you still have the food at home. 7 days is too late — you've probably already gone again or you're out of the habit. Lucas: Exactly. And FreshGroove didn't just launch this blindly. They ran a three-month A/B test against their existing email campaign that sent the same offers — same product, same discount, same timing — but via email instead of SMS. The SMS version had a 3x higher redemption rate. The email version had a 4 percent CTR, which is actually decent for email, but SMS crushed it. Luna: Three times higher — that's a big gap. Was the discount the same in both? Lucas: Identical — 20 percent off the complementary item. So the channel itself was the variable. The theory is that SMS feels more urgent, more immediate. An email lands in a promo folder and might sit there for days. A text message is read within minutes by most people. FreshGroove measured the average time to click: 14 minutes for SMS versus 6 hours for email. Luna: That's almost instant. But I'm curious: did the SMS campaign also increase the basket size on the return trip? Or was it just a one-item purchase? Lucas: Great question. FreshGroove tracked the basket size of customers who came back via the SMS link compared to their typical trip. The average basket on an sms driven visit was 18 percent larger than their average trip. The theory is that once you're in the store to get that marinade, you also grab a few other things. The complementary item acts as a hook. Luna: So the SMS doesn't just drive a repeat visit — it drives a higher-value visit. That's the holy grail for retention marketing. Lucas: And FreshGroove is now scaling this. They started with only high-margin items — things like specialty sauces, bakery items, fresh-cut flowers — because the 20 percent discount cuts into margin less when the margin is already high. They're now expanding to dairy and meat, but they're being careful because those categories have thinner margins. They don't want to train customers to wait for a text before buying staples. Luna: That's smart — you don't want to cannibalize regular purchases. So they're using SMS as a discovery tool for higher-margin add-ons, not as a habit for everything. Lucas: Exactly. And this is something most retailers overlook. They think loyalty SMS is about 'you haven't visited in a while' or 'here's a generic coupon.' FreshGroove proved that the specific, purchase history driven approach — suggesting a complementary product — feels like a service, not a sales pitch. Luna: I want to ask about the opt-in. How did they get customers to agree to receive these texts without feeling like it's too much? Lucas: They embedded the SMS opt-in into the loyalty sign-up flow at checkout — both in-store and online. The pitch was: 'Get personalized suggestions based on what you buy, sent by text so you don't miss them.' They tested a version that said 'offers and deals' and a version that said 'personalized pairing suggestions.' The personalized language had a 22 percent higher opt-in rate. Wording matters. Luna: People want to feel like they're getting a curated tip, not a coupon blast. That's a lesson for any brand doing SMS. Lucas: Absolutely. And they also gave customers control — you can set your preferred frequency: once a week, after every purchase, or only for new items. That reduced unsubscribes by 40 percent compared to a one-size-fits-all approach. Luna: So the personalization extends beyond the content — it's also about how often you hear from them. That's respectful. Lucas: It is. And the results speak for themselves. Over six months, FreshGroove reported that customers who received at least one SMS per month had a repeat visit rate of 68 percent, compared to 51 percent for loyalty members who didn't receive SMS. That's a 17 percentage point lift. Luna: Seventeen points is huge. That's basically the difference between a mediocre loyalty program and a great one. Lucas: Right. And the cost is minimal — SMS is cheap at scale, especially if you use an aggregator that charges per segment rather than per message. FreshGroove's total cost for the campaign was about $0.02 per text sent. Their average order value on those return trips was $38. So the ROI is enormous. Luna: I also wonder — did they see any negative feedback about the timing? Like someone getting a text at 10 AM on a Tuesday about chicken marinade when they're at work? Lucas: They actually A/B tested send times: morning, afternoon, and evening. The afternoon window had the highest CTR — 14 percent — while morning was 11 percent and evening was 9 percent. They think afternoon catches people when they're starting to think about dinner plans. So they now send all their SMS in that 2-4 PM window. Luna: That's smart — you're catching them at the decision point for what to cook. It's not random. Lucas: And they also segmented by customer type. For customers who usually shop on weekends, they'd send the SMS on Thursday afternoon — giving them time to plan a weekend trip. For weekday shoppers, they'd send it two days after their last purchase, which could be any day. That level of granularity is what made the campaign work. Luna: So it's not just 'send an SMS' — it's 'send the right SMS, at the right time, based on the right data.' That's a lot of moving parts. But the template is replicable for any retailer with a loyalty program and purchase history. Lucas: Yes. And I think the biggest takeaway is: don't just blast offers. Use the data you already have to make the offer feel thoughtful. FreshGroove isn't a tech company — they're a 40-store grocery chain. If they can do this, most brands can. Luna: It's almost like a reverse showrooming — instead of using the store to then buy online, you're using the digital nudge to get them back into the physical store where they'll spend more. Lucas: Exactly. And the beauty is that the SMS also works for online orders — they offer curbside pickup or delivery. So it's channel-agnostic. The same campaign drives both in-store and e-commerce return visits. Luna: I think this is one of those episodes where the tactic is so specific that listeners can probably implement something similar within weeks. You just need a loyalty database and an SMS provider. Lucas: And we put together a small resource page on the Fexingo site with a template for the SMS copy and the timing logic they used. It's linked in the show notes if anyone wants to grab it. Luna: Speaking of resources — these episodes take a fair amount of research and writing, and we keep them ad-free because we think that's the right way to do a business podcast. If the show has helped you think differently about a marketing problem, and you'd like to support that, you can find us at buy me a coffee dot com slash fexingo. No pressure at all — just a way to keep this going without sponsors. Lucas: Yeah, we really appreciate that. And if you're not in a position to do that, no worries — just sharing an episode with a colleague is huge. Now, back to FreshGroove — one more thing I wanted to mention: they also tested adding an expiration time to the offer. 'This 20 percent off expires in 48 hours.' That version had a 16 percent CTR versus 10 percent for the no-expiration version. So urgency works, but you have to be careful not to overdo it. Luna: Right — if you always have an expiration, customers might start ignoring it. But used sparingly, it can boost response. Lucas: Exactly. FreshGroove now uses expiration only for items with limited stock — like seasonal produce or new products. For regular items, they don't include an expiration. That way, the urgency feels genuine. Luna: That's a good rule of thumb: only create urgency when there's a real reason. Customers can smell fake urgency. Lucas: They can. And the last data point I'll share: FreshGroove's overall customer lifetime value for sms opted in customers is 34 percent higher than for loyalty members who don't receive SMS. Over a year, that's about $84 more per customer. Multiply that by 40 stores and tens of thousands of opted-in customers, and it's a meaningful revenue driver. Luna: Thirty-four percent higher LTV — that's the kind of number that gets a CFO's attention. It turns retention marketing from a cost center into a profit center. Lucas: Absolutely. And it all started with a simple idea: use what you know about a customer to send them a helpful text, not a spammy one. FreshGroove proved that when you treat SMS as a service, customers reward you with loyalty. Luna: Great case study. I think we'll see more grocery chains adopt this model in the next year. Thanks, Lucas. Lucas: Thanks, Luna. That's it for this episode. See you next time.