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Dollars and Sense: the ROI of business texting for physical retail stores

Fatima Puri
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Retail stores were once the go-to destination for all shopping needs, but they’ve become more of a showroom for products with the introduction of e-commerce. While more than half of Americans prefer online shopping, 49 percent of consumers say that not trying a product is one of their least favorite aspects of online shopping. So, despite the rise in e-commerce, retail businesses can still be profitable, and tools like business texting can help. We’ll cover how business texting can bring in more foot traffic to your stores, increasing your number of sales.

The most significant challenges for retail stores

To survive the digital age, retail stores have adjusted to working with online shopping instead of fighting against the change. But the shift can be difficult, and many stores struggle to make their online and in-store experiences seamless for their customers.

Retail stores have another major challenge, too, besides learning to adapt to the digital space. Despite people preferring to sample products before purchase, it can still be challenging to get customers through the doors due to lack of proximity, time, or other factors. No matter what a customer’s intent is — expressing interest at an in-store event, collecting an order pick-up, or simply following up on new products — it’s critical for retailers to stay in touch with their customers to ensure an order is made or collected. Business SMS is a great tool to use to communicate with customers for this purpose. It provides a two-way communication method, and it’s personal enough to establish a better customer relationship. 

The ROI of business texting for physical retail stores

To better understand how business SMS can help your business increase sales and customer experience, we’ll break down the math and magic for common retail use cases.

ROI of business texting: Follow-up with interested customers

Not all customers go to a store to buy a product on the spot. But that doesn’t mean a customer isn’t interested in purchasing a product; they may just need more time to make their decision. One thing that your business can do to ensure they come back to make a purchase is to reach out to them with a follow-up text proactively. Whether it’s texting a customer to let them know a product they were interested in is back in stock or reminding them that the item they were looking at in stores is still available.

To get a better idea of how much of a difference a follow-up text can make, let’s say you are a jewelry store called Nina’s, and you have roughly 50 customers a month express interest in a particular necklace. Of those 50 customers, only 10 percent of them will close a sale without a check-in. The price of the necklace is $100.

50 customers x 10% conversion rate = 5 purchases
5 purchases x $100 cost = $500 total revenue

Now let’s say with a follow-up text, you can close an additional 10 percent of customers for a conversion rate of 20 percent.

50 customer x 20% conversion rate = 10 purchases
10 purchases x $100 cost = $1,000 total revenue 
$1,000 total revenue (with texting) - $500 total revenue (without texting) = $500 additional revenue (with texting)

By simply sending a follow-up text, you can potentially double your conversion rate.

ROI of business texting: Increase event attendance with business texting

Hosting an in-store event is an excellent way for businesses to get more customers into their stores. Used as a marketing tactic to increase sales, in-store events can help companies improve their brand awareness, gain new customers, and reengage older customers. But no matter how incredible or well-planned an event is, a lack of proper promotion can leave attendance lacking. So, let’s examine how business texting can increase event attendance with a before and after example.

Leroy’s is a home appliance company with a recurring quarterly event. On average, 400 people register for the event every quarter. However, only 30 percent of those 400 registrants attend the event.

400 registrations x 30% attendance rate = 120 attendees

Of the 120 attendees, only 15 percent make a purchase within 30 days of the event. The average order value, also known as AOV, of these purchases is $1,000.

120 attendees x 15% purchases = 18 purchases within the next 30 days
18 purchases x $1,000 AOV = $18,000 total event revenue

While looking for ways to increase event attendance, Leroy’s implemented business texting to send event promotions and reminders to attendees. It was a gentle and low-touch way to get in touch with their customers. Texting also has a four times higher open rate than emails, so Leroy’s increased event attendance by 20 percent with texting.

Mail icon with 4 times
Texting has a four times higher open rate than emails.

400 registrations x 50% attendance rate = 200 attendees

For the sake of the example, we’ll keep the sales conversion rate of 15 percent and AOV of $1,000 the same.

200 attendees x 15% purchases = 30 purchases within the next 30 days 

30 purchases x $1,000 AOV = $30,000 total event revenue 
$30,000 total event revenue (with texting) - $18,000 total event revenue (without texting) = $12,000 in additional total event revenue (with texting)

By simply reaching out to more customers via texting, Leroy’s increased their event attendance and ultimately increased sales.

ROI of business texting: Reduce order pick-up no-shows  

Many retail stores now offer curbside or in-store order pick-up to make purchases easier for customers. But they technically don’t close a sale until the customer comes to collect their order.

Business texting is a great tool to remind customers about their order pick-up gently, and it can also be used throughout the whole order process to keep customers in the loop about their purchases. Better transparency and clear communication with customers can help keep their expectations realistic and aligned with your business, ensuring a better customer experience.

To better demonstrate the difference business texting can make for reducing order pick-up no-shows, let’s say we have a department store called The Mano that offers curbside and in-store pick-up for customers. Every month, The Mano customers place 500 order pick-ups (curbside and in-store), but only 60 percent of customers collect their orders.

500 monthly orders x 40% no-show rate = 200 no-shows
500 monthly orders - 200 no-shows = 300 completed orders 

For the example, let’s say the AOV is $50.

300 monthly orders x $50 AOV = $15,000 monthly order pick-up revenue

The Mano wanted to find ways to decrease their order pick-up no-show rate, so after extensive research, they invested in a business texting software to help them send order pick-up reminders. The number one reason no shows occur is due to forgetfulness, and as previously mentioned, texting is a gentle way to remind customers of their appointments or orders.

After sending order pick-up texts and reminders to customers, The Mano reduced their no-shows from 40 percent to 25 percent. 

500 monthly orders x 25% no-show rate = 125 no-shows 
500 monthly orders - 125 no-shows = 375 completed orders 
375 monthly orders x $50 AOV = $18,750 monthly order pick-up revenue
$18,750 monthly order pick-up revenue (with texting) - $15,000 monthly order pick-up revenue (without texting) = $3,750 monthly increase in order pick-up sales

Other ways to use business SMS to increase retail sales

Increasing event attendance and reducing order pick-up no-shows are just a couple of ways to use business SMS to increase retail sales. Retailers can use texting for other retail-specific use cases. Here are some different ways businesses can use texting to improve their retail sales:

  • Text customers product links to increase sales (links in texts have an eight times higher click-through rate than other mediums)
  • Resolve product issues or customer complaints via text to prevent returns or lost business
  • Send customer surveys to improve your in-store experience
Browser window with link icon and 8 times
Links in texts have an eight times higher click-through rate than other mediums.

The bottom line: Business texting gets customers through the door

Retail companies can still thrive in the digital age with tools like business texting. Sometimes, all customers need is a reminder that these stores are available to fulfill their shopping needs, and it’s always best to see a product before you buy it.

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