SMS Marketing Podcast: Chatitive SMS ROI vs Email

SMS Marketing Podcast

Hello again! In this episode Drew and Nate veer off the “non-salesy” tenant of “Left on Read” to talk about Chatitive’s new SMS ROI calculator, a nifty free tool that compares your current email marketing ROI to results you could be seeing with a context aware messaging platform like Chatitive. Try it out at textingroi.com.

 

Drew:
Hello and welcome to Left on Read. It’s a beautiful sunny day here in Seattle. And as always, uh, my name is Drew and I have Nate Odell with me.


Nate:
Hey Drew.


Drew:
Hey. So I want to talk today about something very cool that you have had your hands on for a while. Um, and it was born out of this conversation that we would have with, uh, potential customers all the time and, uh, surrounding their hesitation to leave email marketing behind and take a more contextually aware approach to their marketing through the SMS channel. So what you did was you had this crazy idea to create an ROI calculator that exists at textingroi.com. Um, I’m checking it out right now. It’s pretty cool.


Nate:
Yeah, thanks. Um, it’s, uh, you know, we’ve been using this, um, on a sort of private basis, um, in customer conversations and we’ve found that it’s pretty, you know, it’s pretty effective. Um, one, two and the results that we see, um, we were sort of able to share it in a way that is easy for other customers to visualize and the results are pretty profound. Um, and you know, I think that, um, if you’re a marketer, right, email marketing is sort of table stakes for you in terms of, um, how you, uh, communicate to your customers and in a digital world can, we’ve talked over previous podcasts, you know, around the benefits and sort of, and sort of the shortcomings, if you will, of, of email and where, um, using, you know, um, mobile messaging and, and, uh, texting in particular with customers, how, if that isn’t in your arsenal of tools, um, it really should be. And so, um, oftentimes when we talk to customers, we hear, well, I’m already spending like $1,000 a month, or, you know, $500 a month on email, uh, or, you know, we send, you know, sometimes we have conversations with customers and they’re sending, you know, upwards of one to two to 3 million emails a month.


Drew:
Which is insane.


Nate:
Which is staggering. Um, and, uh, and that all comes at a cost, right? Like the overall costs of email in particular is lower on a per message basis relative to texting. But the results from texting far exceed, uh, what anybody could possibly dream of in terms of, you know, open rates and click through rates and conversion rates that we see with, uh, with texting. And in particular with our approach of two way conversation, texting can have a dramatic, um, uh, increase and, and the results from what you would see elsewhere.


Drew:
I, I think that that’s, uh, that’s amazing. This is the first time that I’ve seen something like this that is comparing the channel to another channel. I’ve seen similar ROI calculators for other channels and for other different sorts of revenue generating, uh, products. Uh, this is the first one I think I’ve seen where you are putting in what you’re doing now and applying that to, if you did the same amount of messaging, uh, just over a different channel, over a different medium. And the crazy thing Nate says is say you’re sending 500,000 emails a month, right? Let’s just say that’s an email one, one day of the week and you’re having graphic designers, email marketers, everybody lay out those marketing emails. That’s an incredible time suck. To get, uh, open rates that are seriously mediocre, um, and uh, conversion rate that is mediocre because of that. I would say abysmal because of that. And I think one of the things that we’ve, been trying to convey is that with a contextual tool like Chatitive you’re going to see that conversion rate naturally, um, increase because you’re, you’re taking and making the highest value, uh, communication to any specific customer at any specific time rather than spreading that value out over equally over 500,000 messages. Right. Uh, and applying the same value to every single one. Does that make sense?


Nate:
It does. And I actually want to go back to something that you were, um, you were, you were sort of hinting on. Um, and it reminded me of the conversation that I had a little over a year ago with the CMO of Revlon and, um, and she, uh, told me that, um, they spend like the amount of, you know, team resources, people, uh, both internally as well as contractors. Uh, just to put together the creative and the content for an email. It would, it would take them like seven to eight days to deploy neat and an email. And now that’s probably a little crazy in terms of what more, uh, I’ll say, you know, modern, um, emerging companies are doing, you know, they’ve got tools that are a little bit more that allow them to be more nimble and faster. But the, but when you look, when you think about the, the return. There’s a lot that goes into email. It’s not just like, you know, picking out a couple of graphics, writing a couple of words, you know, selecting your subscribers and hitting send. There are, there are built in costs that were not even factoring into this calculation into this tool that are super expensive for businesses and texting, um, you know, also reduces some of that because of the nature of, you know, what’s, um, the nature of the platform, right? It’s designed to be very direct brevity of everything, right? Yeah. You gotta be thinking about making sure your messages are short and concise, et cetera, et cetera. Um, but yeah, I mean like, so if you think about all that and then you look at what’s possible with texting and then to your point, being able to use something where every, uh, platform like Chatitive where the, uh, the underlying technology becomes smarter with every conversation and aware of those transactions. It will increase your conversion rates significantly because you’re able to offer very personalized, um, things and that you know, that that includes knowing the person’s name. Um, that includes knowing when they bought lots that includes, you know, what are the, what, what things do they like, what things did they don’t like, um, and it, and it can go way beyond that. So doing that and having the technology to facilitate, facilitate that, um, that type of interaction is really key to blowing out your potential revenue gains. Um, using texting versus me now.


Drew:
Awesome. So let’s go through it. I’ll play customer and I’ll, I’ll play dumb and, uh, you play expert.


Nate:
No, no, no you’re going to play, you’re going to play smart customer.


Drew:
Smart customer. Um, but I will say, I will say it as if I, if I am going to play customer, is this texting ROI or is it Chatitive ROI? Could I get this result with any texting provider?


Nate:
Yeah. Uh, I w I will, I’ll say two things. Um, one I believe that if you’re not, if you’re not using SMS or texting at all. And you’re up and you’re only using email that no matter what vendor you decide to go with, um, to launch an SMS program, you know, programs, marketing programs with the customers, you’re gonna see better results than you are with email.


Drew:
Yeah.


Nate:
Now I’m biased, but the, what we have seen with customers relative to other solutions in this space, because we have a different, you know, data, consumer data engine on the background that is not only like, you know, uh, listening and waiting for responses, but learning from those responses that it’s, uh, you know, with Chatitive, it can be a, you know, five to 10 to 15X above what, um, what we normally see with other SMS vendors. So if you’re going to make the move, you know, we obviously want, um, to help customers move to, you know, the more modern way of messaging. And that is being able to facilitate what we’re talking about. Um, being able to facilitate, uh, the listen, know, waiting for responses, the listening, the learning, being contextually aware so that you as a business can or as a brand can just continue to deliver on that promise of being, um, you know, empathetic being, uh, really focusing on personalization. If you spend a little bit more time and effort on those initiatives, you’re going to see a way better return of Chatitive versus the others.


Drew:
Cool. So I am [inaudible] excuse me. I am in the fashion and apparel space, I own, uh, e-commerce storefronts. Um, and we sell, uh, we sell flannel. No, we sell outdoor gear. Okay? We send 500,000 emails a month to our customers. That’s probably around five emails per subscriber on our list per week. Um, we’re very aggressive with email. We think that we think that that is where, uh, our bread and butter is, that’s what makes our business, uh, the most money. So how’s return on investment? )Our average order size is around $97, and our average margin is around 30% direct to consumers. And with that, our open rate is around 11.4%. What our conversion rate is only 0.1%. We have to send 500,000 emails to actually get to those marketing goals. Um, what would make, what, what would and that that ends in a expected revenue per month of $165,870. Um, which we think is, uh, is great. Um, how would Chatitive?


Nate:
Of expected revenue


Drew:
Of expected revenue. So how, how would Chatitive differ from that?


Nate:
Okay, so let me go back. So you had five, so half a million monthly emails here. Um, your average order value was…


Drew:
$97.


Nate:
$97. Okay. Your, um, your margin on a percentage basis is, can you say it was 20%?


Drew:
30%.


Nate:
30%. Okay. Your open rate.


Drew:
Is, um, 11.4%. And I, I feel like that’s more of like an industry standard. I don’t think that my professionals, my colleagues in the field have also seen similar, similar open rates.


Nate:
And uh, your conversion rate was point 0.1% 0.1%. Yes. Yeah. So you, your expected revenue from email, um, based on that volume is roughly a hundred or about $166K a month. Right? Right. So, um, so on a relative basis, you know, the Chatitive SMS ROI or expected revenue estimation based on the same input, uh, you’re going to look at, you’re gonna, you’ll expect to see, you know, four to 4.2 million in expected revenue compared to a hundred, $166,000.


Drew:
Wow.


Nate:
Yeah, and that’s crazy. And the reason for that is, is really to, um, critical metrics. Uh, but we keep the average order, we keep the estimated monthly message volume the same. So if you’re sending half a million emails, you’re going to say, I’m half a million text messages. Okay. We definitely kept the average order value at $97 does that shouldn’t change. And we keep your um, order margin at 30%, cause that’s not going to change. But what changes with Chatitive is the open rate, right? So we typically see 98%, um, sometimes higher.


Drew:
Is that an industry standard? Is that an industry standard?


Nate:

Uh, eh, I wouldn’t say it’s an industry standard per se. I think, you know, industry-wise, um, SMS, we’ll see anywhere from, you know, 90% or more on, on open rates. So, you know, look, if your open rates are 11.4%, anything North of 30% is going to be, uh, a dramatic increase for you. Right?


Drew:
Yeah, for sure.


Nate:
Turn. It just turns out that, you know, texting is very hard to ignore, right? It’s, everybody looks at their phone. Those people don’t have, you know, unread text messages on their phone. Um, compared to email, which, you know, I’ve got like hundreds to thousands of emails. And like, even if you have, you know, like you think about your experience on, on your phone in most cases, even if your phone is off, you’re getting the little text notifications right on your home, right on the, you know, the home screen of your, of your home, whether you’re an Android user or iPhone user or otherwise. So there, so you’ve seen them. Right. Um, uh, and then the crazy thing is, again, with personalization and with the contextual awareness of Chatitive, conversion rates can be 30% or higher. And the combination of at bat volume, the combination of the open rates and the conversion rates are what make Chatitive just crazy, um, you know, potential revenue generator, uh, over texting and that’s a 26X increase compared to email. Um, that’s a jump in 86% increase in open rate. Um, a, you know, a 29% increase, uh, in conversion rate and an overall revenue expected revenue increase of 4.1 million bucks.


Drew:
That’s pretty, it’s pretty awesome. Yeah, that’s, that’s pretty, that’s pretty crazy. I’d say that if you’re doing SMS right now and you’re not seeing that sort of result, maybe look at your strategy for what your messages over SMS look like. If they look a whole lot like what you’re doing with email, that’s probably the problem. If it’s just a blast one way outbound, “take 20% off site-wide today on labor day,” you’re not delighting your customers in a way that they expect or need to be delighted inside of the text channel. And that’s, that’s my thought on that exercise right there.


Nate:
Yeah, for sure. Numbers. The numbers are almost too good to be true. And, and, uh, you know, um, I would say conversions for Chatitive, um, the conversion percentage at 30%, um, it can be less than that. Um, but it’s not going to be, you know, it’s not going to be lower than 10% eight, you know, 8%. So, um, but it, but we’ve also seen stuff higher than that. Like we have a customer today that did a refer a friend campaign and they had to, they had a conversion rate of 50%, um, over tax. So imagine what that can do in terms of driving revenue, um, and, and new sales year for your business.


Drew:
Yeah, that’s, that’s pretty wild. I love it. You have got me sold Nate.


Nate:
Awesome. Hey, uh, can I send you a contract?


Drew:
Yeah, yeah. Just send it over DocuSign. Um, well, uh, thank you again for creating this tool. I think it’s really incredibly helpful for people who are exploring, uh, SMS solutions and, uh, potential strategies in the channel. This has been Left on Read. Nate, did you have anything else that you needed to plug today?


Nate:
Uh, yeah, no, I realize this is a little, you know, overtly salesy, but we wanted everybody to know about the free tool that is out there. Um, texting roi.com, uh, is for messaging roi.com. Either one of those. It will take you to the calculator. Uh, you can also go to textingroi.com and find it on our website as well. So, um, so anyway, go play around with it. It’s free. Uh, we encourage you to use it, share it, uh, both with your, you know, um, direct to consumer colleagues as well as people within your organization. And, uh, let us know if you have any questions. Um, you know, give us some feedback. Give us your thoughts. Uh, we’d love to talk to you. Cool.


Drew:
Thanks, Nate.


Nate:
Thanks Drew.

 

Conversational Messaging Evangelist at Chatitive