Let’s start with the basics. SMS stands for 'short message marketing' - in other words, it’s marketing with text messages. This is a form of marketing that works in a way that’s similar to email marketing in that users must opt in to receive SMS messages. They may do so by entering a mobile number on your website, if you offer that option, or by texting a short confirmation code to a number you provide.

The open rate for text messages is nearly 100% -- much higher than the open rate for emails. That means that it’s a virtual certainty that the people on your list will see every text you send them. For that reason, SMS is a very effective marketing option for businesses of all kinds. However, it is particularly effective for local companies because it enables owners to reach out to people when they are most likely to patronize local businesses - when they are already out of the house.

How Much Does SMS Marketing Cost?

Most small companies have a limited budget for advertising and marketing. It’s natural to want to stretch your marketing dollars as far as you can, and SMS marketing is a good way to do that. While costs vary depending on the service you use and the size of your list, here is a basic idea of what you can expect to pay.

* Some providers offer free monthly services with limited texting. If you’re just starting out or unsure about using SMS, a free option can be a good way to begin. If you want to get the full features of a service, you can probably expect to pay between $50 and $100 per month for a premium service.

*Most services charge a small fee for each SMS message you sent, usually about four or five cents apiece. However, the charges are tiered so companies that send a high volume of messages pay less per message. MMS (multimedia) messages usually cost a bit more than that, around eight or nine cents per message.

*Some small companies end up sharing a response number and then renting a chosen keyword. For example, you might band together with other local business who use SMS marketing and share the opt-in number '12345'. To differentiate people who are opting in to your list, you would choose a short, relevant keyword and rent it for $15 to $25 per month.
It’s always a good idea to shop around and check out all of your options before you commit to a service.

How to Use SMS Marketing Effectively

If you decide you want to give SMS marketing a try, here are some ideas that you may want to consider to help you engage customers and increase sales.

1. One of the most popular ways to use SMS marketing is to send out coupons and promotional codes to customers. Coupons are a great way to get people to visit your store or business because they create a sense of obligation, triggering a psychological phenomenon known as reciprocity. When you send out a coupon (especially one that offers something free, such as a free appetizer or other item), customers feel obligated to you. You can also build the idea of reciprocity into your coupon code by offering a two-for-one or other similar option that requires a purchase.

2. Target customers at the times they are most likely to frequent your business. Not every business is time-sensitive, but some are. Many restaurants use well-timed SMS messages to get people to come in. For example, a happy hour announcement and coupon sent in the late afternoon on a Friday could catch people when they’re on their way home from work. If your business lends itself to this type of marketing, then SMS can be the perfect way to do it.

3. Poll your customers to learn their preferences. One nice thing about SMS marketing is that it makes it very easy to collect valuable information from your customers. All you have to do is send out a question and provide instructions about responding, including where to send responses and what keywords to use. It’s a very inexpensive and easy form of market research that you can use to your advantage.

4. Sponsor a sweepstakes or giveaway and let people enter via text message. Everybody loves a freebie, and SMS marketing can be a good way to get people to enter your contest. If you have a new product or are introducing a new service, a contest can be a very effective option when it comes to building awareness and anticipation. The anticipation may increase the chances of making a sale to the people who aren’t lucky enough to win.

5. Use SMS marketing to set up a drip campaign. When people opt in to your list, you may want to send them a little thank you such as 5% off coupon. You can set up automatic follow-up texts with greater discounts to entice people to come into your store and make a purchase. The nice thing about this option is that you don’t have to send individual text messages. You set everything up when the customer first opts in, so it works very much like an email autoresponder series.

6. Create groups to target customers effectively. Once people have opted in to your list, you can ask questions to narrow down the messages you send them. For example, an apparel store owner might ask people to text words like WOMEN, MEN, or INFANTS to specify what kind of apparel they are most interested in. Follow-up messages can be tailored to individual interests.

7. If you have the budget for it, a slightly pricier option is to use GPS to ping customers when they are close to your business. It is definitely more expensive than traditional SMS marketing, but it can also be an extremely effective way of getting people to come to your business.

These are just a few ways you can use SMS marketing to your advantage. Use your imagination, and think about what your customers are most likely to want. The more closely you tailor your campaign to your target customers, the better return you will get on your SMS marketing campaign.