Small Business SMS Marketing Just Isn’t Practical

The following is a guest post by Derek Johnson, Founder & CEO of text message marketing provider Tatango. You can text him at (206) 334-4012 or email him at derek@tatango.com. You heard me right, SMS marketing just isn’t practical for small businesses (1-50 employees). I know this sounds completely crazy coming from one of the biggest …   Read More

5330 9
5330 9

Small Business SMS Marketing Just Isn’t PracticalThe following is a guest post by Derek Johnson, Founder & CEO of text message marketing provider Tatango. You can text him at (206) 334-4012 or email him at derek@tatango.com.

You heard me right, SMS marketing just isn’t practical for small businesses (1-50 employees). I know this sounds completely crazy coming from one of the biggest advocates in our industry during the last six years for small businesses using SMS marketing, but it’s true, and it pains me to admit it. It’s a pretty humbling thing to be proven wrong after six years, especially when everything I’ve done during the last six years has in some way tried to make text message marketing a reality for small businesses. The truth is, after six years of trying, I’m giving up, and have conceded to the fact that text message marketing wasn’t, isn’t and most likely won’t ever be practical for small businesses.

Now before you go scrolling down into the comments below and tell me about XYZ company, which is a small business that had a runaway success with their text messaging campaign, let me be clear that I’m talking about the majority of small businesses, not all small businesses. Yes, we’ve worked with hundreds of small businesses at Tatango that have run successful text messaging campaigns, but the truth of the matter is that those successes are the minority for our small business clients. Let me explain why this is with my top four reasons why text message marketing for small businesses just isn’t practical.

  1. There has to be a marketing budget, on top of the budget for SMS marketing. If you’ve ever launched an SMS marketing campaign, you’ll know that if you build it, most likely they won’t come, or at least they won’t come until you start advertising and promoting the new campaign. The problem for small businesses (between 2-10 employees), is that the majority of them (65%) don’t ever spend more than $1,000 per year, and 40% of them spend somewhere between $0 and $499 per year. See Vistaprint’s Small Business Survey. If the majority of a small businesses marketing budget is spent on just the SMS marketing software, there’s hardly any budget left behind to advertise and promote the campaign. Without being able to advertise or promote the SMS campaign, the small business owner is unable to build a large enough subscriber database to see any meaningful results from SMS marketing, making it useless.
  2. The rules and regulations surrounding text message marketing have become too complicated. While the TCPA is pretty clear regarding what is required to send a text message to a customer, the CTIA has made it near impossible for any small business to run an SMS campaign that complies with all of their rules and regulations. I’m serious; does the CTIA expect a small business owner to review their 12 page CSC Monitoring Compliance Handbook, which gets updated every year, then take all that information and execute a compliant SMS campaign? If a small business owner actually read, comprehended and then implemented an SMS campaign that complied with the CTIA rules and regulations on their own, I’d be so surprised that I most likely would hire that person on the spot to come work at Tatango, as it would be that rare.
  3. 90% of SMS marketing success is due to a well-planned strategy. Over the years at Tatango we’ve tried to help businesses create their own SMS marketing strategies by providing them with free guides, videos, etc. but lets be honest, that’s just not enough to launch and manage a successful SMS campaign. The worst part is that even if we wanted to spend the needed time to help small businesses develop a well planned SMS marketing strategy, the economics when a small business is paying an SMS marketing provider $49/month just doesn’t make sense.
  4. You can’t track what you can’t measure. Lets face it, most small businesses don’t have the point of sale technology, or aren’t willing to pony up for the software needed to integrate their point of sale system with an SMS provider. This means that most small businesses are flying blind when it comes to measuring the performance of their SMS campaign. This means most small businesses have almost no knowledge as to the amount of redemptions each campaign generates, the revenue, the cost of goods sold, profit margins, or even methods to prevent coupon code fraud. I think any marketing expert would agree that if half a businesses marketing budget is going toward one marketing channel, you better damn well be able to track the performance of that channel. With small businesses and text message marketing, this just isn’t a reality.

What do you think, has small marketing budgets, complex rules and regulation, lack of time and resources to plan a well thought out strategy and limited, or even outdated point of sale technology made SMS marketing just impractical for small business? Let me know your thoughts regarding this topic in the comments below.

In this article

9 comments

  1. Chisangu Matome

    BryanJackson1 You read this comment right out my head. Spot on!!
    Lets distinguish between businesses and hobbies.

  2. atonti

    Derek, I have been a fan of yours from afar for a while now.  We run a business for SMBs just for mobile web so I can relate to what you are saying.  I was wondering why companies like Constant Contact and iContact can make it with 100Ks of SMB customers who have to do email marketing each month.  Really SMS is not that far from email campaigns – you have to get them to opt in, plan and write an email (much harder than SMS) and these SMBs are finding the $$ each month for this activity.  I wonder if it really is a timing thing… and a switching thing.  They have their “marketing” going with email and now they have to add or replace with another untested effort.?

  3. Lisa ONeill

    Could it be entirely industry dependent?  I am not sure that there is a massive opportunity in care marketing where purchase (at least in the UK) is very much a ‘distress purchase’.  However, as braddown says, a hugely successful strategy in beauty
    As with any form of marketing, the potential is in actually committing to the cause rather than bumbling through it half-heartedly.

  4. BryanJackson1

    @Derek I’m going to have to step back and seriously reevaluate:
    1) There has to be a marketing budget, on top of the budget for SMS marketing. 
    If $50 per month (assuming this is what they would pay) is a stretch for ANY business, my advice to them would be to consider another occupation. Obviously, they are not generating revenue and under current IRS statues may well qualify their business as a “hobby” or leisure pursuit. 
    As for the Vista Print Survey, the study certainly does support long held, traditional attitudes about marketing in general. Actually when the average demographic is taken into account, the results are neither surprising or out of the ordinary. (Yellow pages – long term marketing strategy? Excuse me are we in the 21st century here?) 
    2) The rules and regulations surrounding text message marketing have become too complicated. 
    I am in total agreement, however (and again I cite my previous statement), assuming I really am running a real business and not an interesting past time hobby, that’s what I pay my attorney for.
    If he or she can not interpret the intentionally ambiguous and necessarily complex wording of the CTIA regulations and  produce a meaningful set of guidelines that I can understand, then I’m spending my money with the wrong person. Fire them and find competent legal council.
    3) 90% of SMS marketing success is due to a well-planned strategy. 
    Again, I agree. But what campaign would you plan on offering to a small business that they would readily agree to implement in which you could not show them (up front) a reasonable ROI expectation?
    While I don’t know what methods or tactics you use, before I ask a business to fork over one penny, I sit down with them and do a complete ROI analysis AND calculate my fees from that ROI in the form of a percentage. 
    As far as I’m concerned, the onus to make a campaign perform should always rest on the shoulders of the consultant. (are we talking about reals businesses here – certainly doesn’t sound like it)
    4) You can’t track what you can’t measure. 
    To be sure, POS integration while certainly desired is not a complete barrier to proper tracking of campaign metrics.  In the case for the very small business, I would suggest that they simply employ the  time honored method of keeping track of customer redemption’s using the “Clear the customers coupon using the store personnel redeem button (on their device) or get fired”  approach until I have the time/money to invest in a code scanner (again not out of the reach of a small business).
    As far as campaign tracking goes, I am not aware of all the SMS platforms out there in the market place but I do know that  with a possible exception of a few, most all SMS platforms provide at least some rudimentary from of analytic ability. Again, as long as we are talking about a real “small bushiness” here, none of hem (that I know of) fall outside the range of affordability for any business that’s truly in business and able to sustain a customer base and turn a profit.

    I get the impression from this article that businesses can not afford $49 (heaven forbid $100) for a simple SMS marketing platform, do not have legal resources to keep them from running afoul of the law , and use the Yellow Pages as an effective means of marketing.
    Maybe I’m missing something but if the above is true, businesses that fall into that description are either a heartbeat away from financial ruin or will soon be swept away in the first wave of the technological Tsunami that is mobile marketing.
    Either way, the “numbers” presented here just don’t add up. Not only for me, but for the numerous small business that are thriving even in my small Ohio city.
    That’s my take. I’m tired now and I just got a message on my phone. My favorite pizza place has a special going  “Get half Off  Regular Size Pizza (Normally $49) – Next 5 hours only!”

  5. OneAPI4SMS

    Isn’t all marketing hard for small businesses? Their cash and time is limited. Their ability and competency to use technology is less than at larger businesses. 
    As you say, “Yes, we’ve worked with hundreds of small businesses at Tatango that have
    run successful text messaging campaigns, but the truth of the matter is
    that those successes are the minority for our small business clients.”  So it’s not impossible, just hard. If small business marketing was easy, it would be easier to launch and sustain a small business, and increased competition would make it hard again.
    One thing you didn’t mention. Don’t you think that shared short codes are less effective than dedicated short codes. I’m not saying less cost effective, just overall less effective. And only a very large business can afford them.
    And you focus on “marketing,” not broader customer interaction. Most small businesses already have a landline, no? Home owners are dropping landlines, but I think businesses are not dropping them as fast. So why not text enable the business’s existing landline with Zipwhip. They have 14 day free trial, flat fee, no per message charges. And coupon code ‘ZipwhipME’ gets you additional discount.

  6. Pal Flagg

    I agree with each one of your assessments however I’m not sure that we’ll see a significant reduction in the number of vendors. It’s still very easy to become a “mobile marketing”expert” and sell SMS messaging. 
    The future successful vendors of SMS marketing in the SMB segment will have to take into account non existent marketing budgets, stringent CTIA rules, lack of strategy and offer tracking. This requires investment in software development and partnerships in other industries(payment, hospitality etc.)
    Once vendors make the investment and figure it out then they’ll have something much more powerful and won’t be called “SMS Marketing”!

  7. braddown

    Disagree, doesn’t cost much to put a poster up on your wall to join your SMS specials campaign, then send out weekly specials to encourage repeat business. Our beauty industry clients thrive on this, in fact to the point where some of them have even stopped other forms of advertising. They have built their local DB send out a message every Monday and their weekly appt book is full before lunch. If the phone keeps ringing, that is all the measurement a small business owner needs.

  8. darren_press

    Derek,
    I agree with many of your comments however you also need to take Return on Investment (ROI) into consideration. If you are able to demonstrate to small business that if they spend $1 for instance, they can get $30 or more back.  It is not a hard proposition if you have the references, case studies etc. to back up your argument. Thankfully the regulations are different here in Australia and this has allowed small business SMS marketing to proliferate. We have hundreds of small businesses taking advantage of our self managed platform.
    Regards
    Darren Press
    MOBIPOST/Thirdscreen

  9. HyperlocalConnect

    I don’t agree.  We have solved these problems with cooperative marketing distribution.  It is not practical for small business with a small business to use anything other than cooperative marketing platforms, SMS is no exception.  By combining print, SMS, email, social feeds and free onsite coupon exchange programs small business can get a total community campaign that includes all of the above for the price of just the SMS service and get a cooperative community database to reach more consumers for far less.  In fact the budget is in line with the $500 to $1,000 these organizations spend.  Hyperlocalconnect.com

Comments are closed.