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Voxie Founder, Bogdan Constantin, fields questions on SMS adoption, zero party data, opt-out rates, lifetime customer value

As many major brands are now incorporating some form of texting into their marketing strategy, what do you consider to be the major factors that are driving that adoption?

Constantin: One of the key reasons centers around the Apple privacy shift that happened last year. The feature, which was first made available as part of iOS 14.5 in April 2021, is called App Tracking Transparency (ATT), and it provides users with a pop-up window when they open an app that asks if they want the app to track their data. When a user chooses not to be tracked, which they do more often than not, the Identification for Advertisers (IDFA) software tracker technology becomes useless, and advertisers can’t see the kind of sites you visit. It means that pixels are no longer as actionable as they once were and you can’t build lookalike audiences anymore. Overnight, everyone’s customer acquisition costs skyrocketed. The legacy ad platforms where you could find your customers relatively cheaply were going away and the impact of those decisions is really being felt now.

Then, as the shift to privacy continues, brands like Apple and others won’t even let marketers collect people’s real emails anymore. You sign up through an ad or whatever and Apple will give the brand a fake email so the customer can even further protect their privacy. So it’s getting harder and harder for companies to grow their businesses through the legacy products of the past. The analogy I use is that traditionally growing your business is like sailing a ship in the ocean, during a storm. While incredibly difficult — if you knew what you were doing — you could make it through because you had the right team, the processes and most importantly a compass to guide you. Now your compass doesn’t work anymore — it literally won’t point you north — so what do you do?

What is the difference between traditional one-way SMS and conversational SMS, and why is that important to marketers?

Constantin: SMS used to work great because the one-way blasts in relation to mediums like email — were so effective — you had insanely high open rates and because of that even low CTRs would move the needle in a major way. But as more and more brands deployed one-way blasts, it begins to pollute the medium and consumers begin opting out in droves. So now the focus is becoming more on customer retention and lifetime value. Because the customer is so expensive to acquire you can’t afford to lose them, you have to shift your mindset and deploy conversational SMS, so you can start talking with your customer at scale — learning their likes, their preferences, their habits — and then using that in future engagements and also across your ecosystem.

Marketers are learning that all outreach needs to be better. To be smarter. If marketers can’t figure out a way to do that, they won’t continue growing because customers will leave you when you burn them with lots of one-way promotional SMS, and secondly, more painstakingly, you’re not going to be able to replace them.

Let’s use a customer — say, Beth — as an example. In the early days of ecommerce, I could acquire Beth’s email address and regularly send her spam emails. At a certain point she’d unsubscribe and I’d say, oh well, I got two purchases out of Beth. I’ll go find another Beth on Facebook in the ad section and just think that source was unlimited, that it could go on forever.

That process and mindset has fundamentally changed now. You no longer have a million Beths  and they’re so expensive to acquire online that you’d better treat the Beths that you have well.  You need to start focusing on maximizing the value of every Beth because finding the next one will be six times as expensive.

It’s never been harder to be a marketer and if you continue using the old one-way blast playbooks you’re going to fail. So there’s a huge value in being able to talk with your customers and have conversations with them where you can learn their likes, their preferences, their zero party data.

What is zero-party data and what impact does it have on the long term customer relationship?

Constantin: How many kids does Beth have? When is her birthday? When you can pose  personalized questions like these and customers respond, you’re collecting zero party data. With conversational SMS, you can now mine that data and do something with it in real time. Action it. Put her in a specific audience so she gets the next text from the drip nurture campaign the day before her birthday. All of that can be done through automation, AI and natural language processing. This approach represents the future relationship between brands and customers. And that’s what we can deliver for our customers today at scale, across millions of interactions at the same time.

You’ve talked about email being like an unlimited source of customers. Why isn’t SMS the same?

Constantin: There are so many SMS providers, but most are doing the same type of promotional one-way SMS blasts — similar to the approach that email providers have used for years — and they’re burning their customers’ marketing lists. And customers coming to us from that approach are seeing a really high unsubscribe rate. Or opt out rates. And many brands are treating SMS like email saying “oh, we’ll just email her later some other way.” Once you opt out, SMS is legislated by a completely different set of rules than CANSPAM and email. Many people we talk to don’t understand that. Once someone responds STOP, that’s it, you’re never allowed to text them again, forever! That’s very different from email. So if your company burns this list or if you have a high opt out rate, you’re burning it forever. To compound the problem, many SMS vendors won’t even show you what your opt out rate is. You’re basically taking what should be the future saving grace of your business and you’re driving it off a cliff.

It is imperative that brands take a truly long term view to text and more importantly to conversational SMS, and the best corollary is like other mediums — you likely have a 20 year life-span on SMS — if you don’t start off on the right foot, you’re setting yourself up for long term failure. Being thoughtful in your approach is critical.

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