When Should Bank Marketers Text Clients? (Hint: Not Often)

By John Oxford

There is a heavy debate brewing in the marketing community over the future use of text message marketing. In this, there is also a rise of text message providers selling services to engage your clients via the delivery of SMS and MMS marketing.

You, as a bank marketing professional, probably receive a request for a demo a few times a month. And there is nothing wrong with a business trying to sell their services. However, for the purpose of this column, we are going to provide an opinion on text message marketing, why we should pay attention to history, and what are the best ways for banks to use text messaging as a service tool.

Let’s first define what SMS and MMS are for purposes of our own understanding. SMS stands for short message service and is interchangeable for text messaging in most terminology. It has no picture or videos, was developed in the 1980s and was built to be one of the simplest forms of quick person-to-person communication technologies. It was created for speed, low memory and, according to various sources, more than 6 billion SMS messages are sent every day throughout the world, as 80 percent of the U.S. population uses text messaging. This creates a salivating opportunity for marketers and those selling text messaging marketing services.

SMS and MMS, which stands for multimedia messaging service—which includes dynamic content such as video, audio, photos and all of those GIFs you just love—would appear to be the perfect tool to engage a completely captive audience, one which is fully targetable and less expensive than other marketing channels or creative placement. With most industry reports citing an 80-to-90 percent open rate, the mass intimacy of text messaging for marketers is tantalizing. Quantitatively, text-based marketing clearly appears to be a winner.

So in knowing that text message marketing is comparably inexpensive to deliver a marketing message vs other channels (we’ll not get into cost per text vs email, mail and other mass marketing) and that text messaging has a supreme engagement and open rate, how should we as bank marketers engage in text marketing?

Let history be your guide. There’s a long running joke that marketers ruin everything. As a marketer, I represent that remark. Email previously had an open rate similar to text messaging, then marketers made their way into too many inboxes and now it’s frustrating to even manage said inbox. Phone marketers aka tele-marketers are so bad the government had to step in and create a Do Not Call Registry and now most people will not answer a call unless they know the number. Satellite radio was created for listening to music without commercials.

Then came along other streaming means of entertainment that built part of their business models around not having to watch or listen to commercials. The list of communication delivery channels ruined—including mail, roadways with billboards, and social media pre-roll ads—goes on and on.

Think about it: People actually pay to not have commercials or marketing presented to them. As much as it should hurt a marketer’s feelings, it may be even more important to note this for text messaging. The reason for that great open rate mentioned earlier is because of the personal nature of text and the lack of marketing messages diluting your usage of text as a communication platform. So as much as cold quantitative analysis would reveal that text looks like a no-brainer for a marketer, when you look at it from a qualitative perspective, there is no way we should be doing text marketing. The real question here might be how long until we ruin it as well.

Do unto others as you would have them do unto you. This brings us to how to balance text as a tool for your bank in taking note of both its advantages and disadvantages. As a mass marketing and branding tool, don’t do it. It is too intimate of a channel and you’ll end up hurting your brand. In fact, the only way I would suggest using text is as a heavy opt-in platform that is only used when the client makes an activity they have chosen to be “texted about.”

For example, using text to update individual clients on where they are in the Paycheck Protection Program funding cycle on getting their loan approved is good. It’s one-to-one and relevant and valuable information. Using text to mass-text clients about rates or loan options your bank has is bad. It will clog clients’ text feeds and will only work to devalue the channel and reduce open rates.

Comparatively, think of banking more like UPS or FedEx and less like a restaurant. When do you want texts from a delivery service? When you are waiting on something to be delivered. Now if you are a restaurant that turns your products over two-to-three times a day with multiple sales opportunities, yes, text messaging clients by location and special is appropriate with a strong opt-in and opt-out program. A text from Subway at 10:30 a.m. about half-off foot long subs is not an inappropriate text marketing strategy.

However, when would bank texts be appropriate? When a client is waiting on a loan or mortgage approval with various steps in the process, or has taken an action, such as requesting a spending alert, and asked to be notified. Anything else: DO NOT DO IT. You’ll annoy your clients, start to reduce those precious open rates and become that pre-roll in your clients feed they hate to see. Not to mention the many compliance issues which will be sticky to navigate unless it is an opt-in text program which bases its interaction on real client activity and not selling something.

To close, there is a place for heavy opt-in, action-driven text communication in bank marketing but anything other than that, before we ruin another “thing,” please just say no. Let’s get back to spending time on figuring out social media, big data, millennials and all those other key BINGO words that are not text messaging and clog our inboxes.

To hear about this discussion and more worldly happenings, check out this week’s Marketing Money Podcast with Josh Mabus of the Mabus Agency and me.

John Oxford, director of marketing at Renasant Bank, and Josh Mabus, president of the Mabus Agency, are co-hosts of the Marketing Money Podcast.