Find Out What a Text Message is Worth at SoMoConf
August 14, 2013 | Contributed by: Guest
Gordon Borrell, CEO of Borrell Associates, returns to blog on the Local Search Insider. He is ranked in the top 2% among Gerson Lehrman Group’s 150,000 consultants worldwide and is quoted frequently in The Wall Street Journal, The New York Times, Ad Age, Forbes and other publications. He has appeared on CNN and other TV and radio programs discussing trends and forecasts for local media.
Dick Larkin has discovered a magical number for text messaging, and it is $5.71.
Larkin started in 2011 with a simple plan to sell text-messaging to SMBs. Two years later, CloseBy Text Marketing has raked in $4 million and given his yellow pages company invaluable information on how to make mobile work for smaller businesses. Eventually, he discovered the magical $5.71. More on that in a minute.
Larkin is executive vice president of sales for American Marketing & Publishing, which publishes 513 community directories branded as HomePages, mostly in the Midwest. He’s one of the most knowledgeable sales professionals when it comes to SMBs. He’s one of about two dozen speakers who will evaporate the hype and describe what works at the ground level – and what doesn’t – during the Social + Mobile: Show Me the Money! conference Aug. 21-22 in Chicago. (I’ll be attending this conference, one of the better ones I’ve seen this year on the social and mobile opportunity. Check out the agenda.)
Back to Dick Larkin. He said the $4 million came as the result of a “hard stance” to actually sell a low-price/high-interest program to SMBs instead of making it value-added in a print contract. The determination to put a price on text messaging may seem perfectly logical, but the brain of a typical print or broadcast sales manager doesn’t usually work that way. The manager is more apt to either ignore the product (“it’s too cheap for my reps to bother with”) or would throw it in as value-added to make the print contract more attractive. Instead, the directory reps sold it for $995. An easy add-on.
Larkin said AMP began learning “an enormous amount … on what messages work.” There’s a price point (below $20) that “will have vastly better return” for the SMB. And they found that there’s a very small window of opportunity with recipients: within 30 minutes of when you want them to purchase something.
“Text is very, very transactionally driven,” Larkin said. “The easier it is to make a small purchase, within a short time frame of when you want the customer to take action, the better. The text message is going to be read within 3 minutes of sending, so the content better pack a punch.”
So now for that magical number. What AMP discovered after sending 20 million messages was that, on average, SMBs participating in the program make $5.71 in sales from each subscriber per text message sent. In other words, a merchant with 100 subscribers will generate $571 on average every time they send a broadcast text message.
I don’t think I need to write anymore, and I do think Larkin’s session will be very well attended indeed.
Tags: Borrell, Borrell Associates, Chicago, CloseBy, conference, LMA, local media, Local Media Association, Local Search, Local Search Association, LSA, mobile, Mobile Advertising, mobile messages, ROI, show me the money, small and medium-sized business, SMBs, SMS, social, social + mobile, social media, text message
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