Consumers in the US want to hear from their favorite brands via SMS. A recent study by Validity shows US consumers are more loyal towards their go-to brands and are 343% more likely to sign up for brands’ texts compared to other regions.

 Designing SMS loyalty programs is crucial now to engage these consumers and convert this traction into revenue.

In this post, we will cover how to run SMS loyalty programs and the benefits of running one, as well as discuss common challenges in running these programs. 

What is an SMS loyalty program?

SMS loyalty programs are impactful marketing strategies using text messaging to stay in touch with your regular customers and reward them. It’s an excellent way to encourage repeat purchases, boost client lifetime value, strengthen brand equity, and build customer loyalty. 

Such loyalty programs usually offer points (which customers can redeem later) or other perks like early access to product drops, exclusive discounts, promotions, giveaways, etc.

Brands like Nike have successfully integrated SMS into their loyalty strategies by offering personalized shopping experiences through their NikePlus program. Members receive exclusive promotions and early access to new products via SMS alerts, enhancing their overall shopping experience.

Benefits of SMS loyalty programs

Here are the top advantages of running SMS loyalty programs:

1. Increases customer lifetime value

According to KPMG, 83% of customers say they continue buying from brands after joining a loyalty program. They also keep trying to make the most out of rewards. 

Additionally, Antavo’s Global Customer Loyalty Report 2024 notes that, on average, customers redeem 49.8% of all rewards in a loyalty program. In fact, 66% of customers even modify their spending habits to maximize loyalty benefits. 

Therefore, SMS loyalty programs not only help you build strong relationships with existing customers but also result in repurchases and an increase in customer lifetime value.

2. Boosts brand visibility

70% of customers say they would recommend a brand to others if their loyalty programs add value. Loyalty programs create satisfied customers who are more likely to create positive word of mouth (one of the most influential forms of marketing). 

Your brand gets additional visibility without spending extra. 

3. Provides high returns on investment

Acquiring every new customer takes more marketing investment rather than nudging existing satisfied customers to repurchase. 

Brands have already experienced high returns of marketing to existing customers. In Antavo’s customer loyalty report, nine out of ten companies have reported a positive return on investment (ROI) in their loyalty programs. The average ROI was 4.8X of their investment.

How to create SMS loyalty programs

Follow this step-by-step guide to creating an effective SMS loyalty program:

1. Understand your customers

Before launching any SMS loyalty programs, it's important to take a step back and understand your customers. What excites them more? 

To identify that, you can:

• Conduct surveys: Run surveys on small focus groups to find out their preferences
• Monitor social media: Scan social media conversations to find what’s trending
• Do competitor analysis: Check what your competitors are doing and getting results

2. Define your rewards scheme

After understanding customers, it's time to look inward and understand your business goals. What do you want to achieve out of running these rewards programs, and what benefits can you offer? The most common rewards in SMS loyalty programs are:

• Points-based: Customers get points after every purchase, which they can redeem later
• Tier-based: Customers are divided into tiers. For example, elite (level one), icon (level two), and superstar (level three). Each tier has different benefits, mainly free shipping, early access to sales, and exclusive discounts
• Time-based: Customers get further offers around birthdays, holidays, and festivals
• Gifts: Customers get exclusive gifts for reaching certain milestones. You can use your own products as gifts or collaborate with other brands who can sponsor gifts. It becomes a good promotion for other brands to showcase their products

3. Choose an SMS marketing platform

Now that you have the base program ready, you can choose an SMS marketing platform to run these programs. 

Use this checklist to choose a platform with the right features:

• Scheduled sending: Supports scheduling messages at specific times
• Automated workflows: Allows creating automated workflows to trigger messages after a specific user action
• eCommerce integrations: Integrates with eCommerce platforms and pulls user data required to run loyalty programs.
• Regulatory compliance: Meets all the key industry regulations like TCPA and GDPR
• Detailed Reporting: Track key metrics like open rates, click-through rates, and conversions
  

Apart from the above features, the platform must also offer high-deliverability rates for SMS. 

4. Setup automated workflows

Next, you can set up automated workflows to send messages based on different user actions:

• New member welcome series: Set a welcome message for all new members for loyalty programs
• Post-purchase: Set a thank-you message and point updates after every purchase
• Milestone celebration: Set a congratulatory message after customers cross any milestone and explain to them their latest perks
• Anniversary or Birthday rewards:  Send a congratulatory message and offer a special reward for the anniversary or birthday
• Inactive member reengagement: Set win-back messages for members who haven't purchased in a while

Apart from these above-automated messages, you can run ad-hoc promotions around holidays or festivals that you can simply schedule on an ad-hoc basis in the tool.

5. Get customers signed up for the program

You have your rewards plan ready. Now, add a sign-up form on your website explaining the perks and add a sign-up option. 

Take the H & M membership webpage for reference. It explains points associated with the rewards and also has a join now option.

Alternatively, you can collect phone numbers on the order checkout page.

6. Track and analyze results

Lastly, to track the effectiveness of your SMS campaigns, track the key metrics such as open rate, click rate, conversion rate, and revenue to understand what’s working and what’s not. 

You can beta-test a few automated workflow messages to finalize the messages. 

Common challenges in running loyalty programs (and how to avoid them)

A latest customer loyalty study found the top challenges businesses face while running loyalty programs:

1. Poor communication

39% of customers feel let down by inadequate information about the loyalty program from the brand. There is a significant communication gap between brands and customers about the perks of loyalty programs. It leads to reduced engagement and the programs getting an underwhelming response. 

Solution:

Set up a detailed automated workflow for new customer sign-ups. Every time a customer is added to a loyalty program, they should get a detailed message explaining program details, how points/rewards are earned, redemption processes, and special offers. 

Further, in all your follow-up messages, also add a note on how to redeem the points and other perks of the program.

2. Unattractive rewards

71% of consumers did not find the rewards relevant. This gap clearly indicates a significant disconnect between what brands are offering and what customers actually want. It happens when brands take a one-size-fits-all approach and offer similar rewards to all customers. 

Solution:

Use customer data to personalize rewards for customers. SMS marketing platforms such as Plivo CX can segment customers based on demographics, browsing activity, online behavior, etc. You can offer different rewards to different segments for easy personalization.

3. Complex redemption

71% of customers disliked the complex process of reward redemption. They were looking for a clear direction to make the best of the rewards offered as part of the loyalty program. 

Solution:

Regularly send a short SMS to customers on their points/rewards with a shortened URL, which the user can click directly to redeem. It simplifies the entire redemption process. 

Plan SMS loyalty programs with Plivo CX

As a cloud-based omnichannel customer service tool, Plivo CX serves as a robust SMS marketing platform designed to help Shopify brands build strong relationships with customers through SMS campaigns. 

We help you run effective SMS loyalty programs with all these key features required for easy setup:

✅Registering customers opt-in through a sign-up page or importing existing customer data

✅Setting up an automated journey for regular communication 

✅Creating personalized content for campaigns with in-built templates and AI copywriter

✅Segmenting subscribers for personalized rewards and communication

✅Scheduling ad-hoc rewards campaigns with AI assistance

✅Building reports of SMS loyalty programs

Plivo CX’s internal premium carrier network assures high deliverability and affordable costing. Send messages in as low as $0.0065/SMS and reduce SMS marketing costs by 70%.

Ready to launch your SMS loyalty programs? 

Sign up for a quick demo today to explore all features and plan end-to-end loyalty marketing activities.