The company plans to use the funds to expand internationally.
The message on texting: retailers that promote it widely see good results.
Text messaging has a lot going for it as a marketing vehicle. For starters, most U.S. consumers text: 61% of all U.S. adults and 73% of mobile phone owners, according to a spring 2011 survey by the Pew Research Center's Internet and American Life project.
Plus, there is an immediacy factor to text messages that e-mail lacks.
"When you have a cell phone and someone sends you a text, you're going to read it," says David Goldfarb, CEO of online discount retailer YourBestDeals.com. Plus, every cell phone can send and receive text messages, while only Internet-enabled phones can access mobile commerce sites, and only consumers with a certain type of phone can use a mobile app; for instance, only iPhone owners can use iPhone apps.
Retailers employ text messages to offer coupons, special deals or participation in a contest. Some may send links within texts that take the consumer to a loyalty program site. Retailers can have two-way communication via text that is impossible with newspaper or television advertising. Because each text recipient is uniquely identified, retailers can build a profile of the consumer based on his text requests and responses.
Retailers especially benefit if they are able to connect the text activity to customer relationship management programs they use, says Mark Beccue, senior analyst for consumer mobility at ABI Research. That could allow greater personalized communications and offers to the consumer, he says.
Nonetheless, relatively few retailers are using text messaging as a marketing tool. Only 13% of 67 retailers cited text messaging as part of their mobile commerce programs in a survey this year by Forrester Research Inc. for Shop.org, the online arm of trade group the National Retail Federation. That compares with 48% that have mobile commerce sites and 35% mobile apps. Plus, only 13% said they planned to spend more on texting in 2011 than in 2010.
As a result, relatively few consumers receive texts from retailers: 72.2% of consumers receive no text messages from retailers, says market research firm Kantar Media Compete in a survey of more than 2,700 consumers this summer.
Retailers may shy away from text messaging because consumers have to opt in to receive the messages, Beccue says. Retailers cannot buy lists of text subscribers as they can for direct mail, he adds. And it takes time to build a subscriber list.
But retailers like Goldfarb of YourBestDeals.com that are marketing through text messaging say it can be effective, especially when retailers promote their text offers through a variety of channels. YourBestDeals.com, for example, places promotional messages about its text offers in e-mails sent to customers and posts the messages on the company's Facebook fan page and in its Twitter account. The potential audience from this cross-pollination includes 33,000 Facebook and 26,000 Twitter followers.
In plain sight
Experts say retailers should promote their text message campaigns everywhere they can, including online and in stores, to reach the maximum number of consumers.
"It's never been a standalone element," Beccue says. Text message campaigns always are in tandem to other promotional efforts, he says. Beccue cites J.C. Penny Co. Inc. as a retailer that plasters the text campaign wherever possible, placing it on shopping bags, in-store signs and on its e-commerce site.
Consumers shopping inside stores likely will have their phones with them, says Nikki Baird, managing partner at Retail Systems Research LLC, an advisory firm. Such collateral promotion is essential, she says. "To get consumers to opt in, retailers have to make text programs visible," Baird says.
DVD rental company Redbox Automated Retail LLC touts everywhere it can its Text Club, which offers a free rental once a month to subscribers, says Jake Fenske, Redbox director of new media. "Redbox has integrated text messaging and collection into all channels," Fenske says. "We prompt users to sign up when creating an online account, in our e-mail communication, via on-screen messages at the kiosk, on printed signs and during all promotions."
To sign up, all a consumer needs to do is text the word SIGNUP to short code 727272. A short code is a truncated phone number used in automated text messaging. To unsubscribe consumers text STOP to the same code. "Join the redbox text club to get monthly freebies and special announcements texted straight to your phone," Redbox.com encourages visitors.
At online coffee retailer CoffeeForLess.com, Zachary Ciperski, vice president of marketing, is in charge of creating a text program scheduled to launch this month. The program relies on three promotional methods.
One way consumers can enroll is to send a text message to the CoffeeForLess.com short code. Marketers can offer text messaging programs via any kind of promotional material, including print ads and direct mail, by including the short code and some brief language describing what to do and what a consumer will receive. "We need to get that code out," Ciperski says.
Banners placed through the CoffeeForLess.com site also will promote the text campaign when the campaign launches, Ciperski says. CoffeeForLess.com will promote the program in e-mails to existing customers in an effort meant to boost customer retention rather than acquire new customers, he says. "We see it more as a retainer piece than a marketing piece," he says. "We're trying to build the lifetime value of the customer."
Over time, a consumer's responses to a retailer's promotional texts will reveal products they buy and offers they respond to. Armed with that historical data, retailers such as CoffeeForLess.com can tailor text messages based on that information. For example, Ciperski might send a text alerting consumers to the availability of a seasonal flavor because they bought it last year.
A successful campaign could help increase sales, for instance, by sending a text to a customer reminding her it has been three weeks since the last order and it's time to replenish, Ciperski says. The retailer also may send a text coupon and a text when a product is back in stock.