Why does a text message strategy beat social media, email and other forms of direct digital advertising?
Whether it’s through lack of a smartphone, or because the customer just isn’t online at all, one of the main benefits from text message marketing is the ability to tap the ‘digitally disenfranchised’. This group doesn’t do mobile banking, or even online, but sticks to the tried and tested models of banking.
Mobile phone ubiquity
Everyone has a mobile phone. It’s pretty simple, but it should be seen in the context of rising digital banking adoption that seems to ignore the fact that many customers still prefer the old ways of banking.
Figures tend to vary a bit from country to country, but almost every adult has a mobile phone these days. Not everyone has a smartphone, however, which is where the text message stands out over its rivals.
Through SMS marketing you can reach all those customers who are not online, or do not engage with digital channels in any form.
Something like nine in ten US consumers has a mobile phone, while around 70% own a smartphone, according to Federal Reserve figures. This strips out a fairly large segment of your consumer base who simply are not prepared for mobile banking.
In other words one in five of a bank’s customers are likely to own a mobile phone that is not internet enabled. It is worth noting that a recent American Bankers Association survey showed that branches were the preferred banking channel for 21% of US customers, which was an increase from 18% the year before.
It’s easy, particularly when talking about SMS services, to focus on mobile banking – but this misses the point about the versatility of text messages in reaching every customer, not just the tech-savvy youngsters.
Online or non-line?
Meanwhile, even in most developed markets there are large portions who do not regularly use the internet at home.
In 2014, 38 million adults, or around 76% of the population in Great Britain accessed the internet every day, according to official figures. Access to the internet using a mobile phone, meanwhile, more than doubled between 2010 and 2014, from 24% to 58%.
Overall, 84% of households had an internet connection – but what’s startling from the perspective of a bank is just how many that leaves behind.
They tend to be older or poorer, but for the bank and credit union, this does not mean that they should be ignored.
In fact there are many lucrative products – such as prepaid cards – that should be offered to poorer customers who are less likely to be using mobile or online banking. The question for any marketing person at a bank is how to reach these people effectively and cheaply. Again we see how the SMS service can offer a direct channel to customers who otherwise miss out on digital marketing efforts.
Moreover, customers who are not online are only going to feel increasingly marginalised if they are ignored by banks too focussed on all things digital. The bank that ignores this portion of their customers can expect to lose some of them.
The incredible success of M-Pesa in Kenya and beyond is testament to the fact that a text-based approach to banking is the best way to engage people who do not have access to the internet. Banks and credit unions in developed markets should remember that not all their customers are online either.