Retail SMS Loyalty Program Case Study – Ace Hardware
Remember our post late last year about Ace Hardware, and how they’re utilizing in-store advertising to promote their retail SMS loyalty program? Well advertising their SMS loyalty program at the customer checkout, on corner displays, and even on customer receipts is really starting to pay off for multiple Ace Hardware.
As you’ll see below, Ace Hardware retail locations are reporting some pretty impressive metrics when it comes to the annual value of each one of their SMS subscribers.
This means that Pete’s Ace Hardware in Castro Valley, California can expect to generate $401 in new sales over the course of a twelve (12) month period from one new mobile phone number in their SMS loyalty program. So lets say Pete’s Ace Hardware currently has 1,000 SMS subscribers, this means that their retail SMS loyalty program would be generating $401,000 in new sales each and every year.
To determine the annual value of an SMS subscriber, each Ace Hardware location took the amount of sales attributed to their SMS loyalty program over the course of a twelve (12) month period, then divided that number by the total amount of SMS subscribers in the loyalty program. So in the case of Pete’s Ace Hardware, working backwards to find the value of each SMS subscriber, they would take the total sales generated over the twelve (12) month period ($401,000), then divide that by the amount of SMS subscribers in the loyalty program (1,000). $401,000 divided by 1,000 equals $401, which is the annual value of an SMS subscriber for Pete’s Ace Hardware.
Since Pete’s Ace Hardware now knows that each new SMS subscriber will generate $401 in new annual retail sales, it’s time for Pete’s to increase the amount of SMS subscribers. How do they do this? My suggestion is to offer an incentive for new SMS subscribers to join their SMS loyalty program. Why? In a recent study conducted by our friends over at HipCricket, they found that 44% of consumers were willing to provide personal information like their mobile phone number to a retailer, in exchange for a reward, coupon or deal.
Want proof this strategy works for gaining new SMS subscribers? Check out how Seattle Sun Tan was able to generate 4,750 new SMS subscribers in the first month of their SMS loyalty program by offering $20 off a subscriber’s next purchase. Want even more proof? Check out how online retailer Julep, was able to generate an impressive 5,000 new SMS subscribers in less than 24 hours by offering 50% off a subscriber’s next nail polish purchase. With each of Pete’s new SMS subscribers generating $401 in new annual sales, increasing Pete’s SMS loyalty program from 1,000 subscribers to 5,000 subscribers, would add an additional $1,604,000 in new annual sales!
Worried that customers will immediately unsubscribe after they receive the initial promotion? Don’t worry, from our research at Tatango we’ve found that this is rarely the case with an average of only 2.3% of SMS subscribers unsubscribing after receiving the initial opt-in promotion.
With 44% of retail customers willing to provide brands personal information like a mobile phone number in exchange for a reward, coupon or offer, and average subscriber retention of 98% after they receive the initial offer, this would be a sure fire way for Pete’s Ace Hardware to grow their retail SMS loyalty program.
Don’t forget though that keeping SMS subscribers is just as important as adding new SMS subscribers. When it comes to retail SMS loyalty programs, you’ll want to keep opt out rates below 3.7%, which means that for every thousand text messages you send, you should be losing no more than 37 SMS subscribers. Looking for ways to lower opt out rates, try sending SMS offers during the week, rather than on the weekends. Why? On average, SMS loyalty program opt out rates during the week are only 1.8%, while that numbers skyrockets to 8.5% for SMS offers sent on the weekends. This means that SMS offers sent during the weekend are on average going to receiving almost 5 times the amount of opt outs, when compared to SMS offers sent during the week.
Looking for more retail SMS loyalty program case studies? Check out our recent blog post of the top 30 SMS loyalty program case studies.