How to Start a Text Message or SMS Loyalty Program (+ Benefits)

When it comes to purchasing power, loyal customers are king. Not only do they repeatedly buy your products and services, they reduce your cost of acquiring new customers and have a higher lifetime value for your business.

For these reasons, rewarding them is crucial, and that’s where customer loyalty programs come in. According to John Sellers, Rewards Executive at Bank of America, appreciating their customers has produced these incredible outcomes:

• Customer retention rate of almost 99%
• Increased customer spending, resulting in more profit
• Great customer satisfaction, with 8 out of 10 program participants inclined to recommend them to their loved ones.

One effective way to reward customers is by creating an SMS loyalty program. In this article, you’ll learn about how to start your SMS loyalty program, including the benefits of creating one. Let’s begin with the basics.

Customer loyalty program definition:

A customer loyalty or rewards program is a strategy that keeps customers while increasing sales. If executed well, this program can give your customers a reason to continue buying from you.

According to a report by Bond Brand Loyalty, the average American consumer takes part in 16.7 customer loyalty programs. These programs come in all shapes and sizes.

But these loyalty programs also share one thing in common: They give consumers rewards such as free merchandise, discounts, exclusive rewards or VIP access. Plus, they could be based on tiers, points, cashback, subscription, refer-a-friend, and spent amount.

SMS loyalty program definition:

An SMS loyalty program is a loyalty program that’s executed with text messages. These programs are an inexpensive way to get repeat buyers.

Here’s how it works:

1. Customers sign up online or in-store by giving their numbers.
2. You send text messages with loyalty rewards.
3. Customers come in more frequently to redeem the rewards.

That’s it. There’s nothing complicated about it, and it works.

Why?

Because you’re not wasting time, money, or effort messaging people who aren’t interested in your rewards. If someone signs up, it’s because they’re eager to get SMS texts that incentivize them to come back.

There’s no need reinventing the wheel when creating your SMS loyalty program. Learn from brands that have done it and you’ll do just fine. Here are three examples of innovative SMS loyalty programs from Club Marriott, Tarte, and Olive and June:

1. Club Marriott

The Club Marriott loyalty program lets customers redeem points based on their membership tier. Customers with a premium or classic membership card get up to 20% off dining, accommodation, and spa treatments.

Program type: Tiers

Why this loyalty program works: It gives Marriott customers quality reasons to take part in the program. For instance, the ability to redeem points at over 8000 hotels in the world is compelling. Marriott benefits, too. They can analyze and use their customer preferences to create better experiences for guests.

2. Tarte

Tarte is an organic cosmetics brand that brilliantly uses points and tiers in its loyalty program. Customers can start earning points by sharing their birthday, signing up for Tarte perks and SMS, and taking a quiz.

To create a feeling of exclusivity and also the fear of missing out, Tarte has three tiers that customers can join to earn more points.

Program type: Points and tiers

Why this loyalty program works: Tarte generates sales as customers spend more to collect points. Customers also win perks as they reach a particular tier, but spend more to unlock the benefits of the next tier.

3. Olive and June

The Olive and June rewards program allows customers to earn points on every purchase. 

The structure of the program is like Tarte, which we discussed earlier. Members can earn points immediately by:

1. Making a purchase
2. Leaving a review
3. Attending a masterclass 

Program type: Points

Why this loyalty program works: It gives customers a reason to shop at Olive and June. Customers get exclusive access to products, including discount purchases.

Now that you know the basics of what an SMS loyalty program is, let’s discuss eight steps for setting up one that’s effective.

1. Know what drives your customers

Without knowing what drives your customers, you default to assumptions. Assumptions are bad for business. To nip assumptions in the bud, ask your customers what they want. If you can, directly communicate with them.

You can also send surveys to know why your repeat and one-off customers buy from you. Find out what they value most. Do they like general or exclusive discounts? Early access to new products? Free shipping? Birthday gifts? Free product returns? Include their preferences in your program.

Competitors can also help you know your customers’ preferences. Check out those that run loyalty programs and use theirs to inspire yours.

Also, dig into your customer data to know if certain elements trigger a purchase. That could be free shipping, a discount, an extra perk, and more. Understanding these helps you set up your SMS loyalty program for success.

Here are five questions you can ask your customers to understand what motivated them to purchase from your business:

1. What initially attracted you to our product/service? This question helps you understand the key factors that caught their attention and drew them towards your offering.
2. What specific features or benefits do you value the most about our product/service? This question allows you to identify the unique selling points or aspects of your offering that resonate with your customers and provide value to them.
3. How does our product/service solve a problem or fulfill a need for you? This question helps you uncover the specific pain points or challenges your product/service addresses for customers, giving you insights into the core motivations behind their purchase decisions.
4. What makes you choose our product/service over competitors in the market? This question provides valuable information about your competitive advantage and the factors that set you apart from other options available to customers.
5. Can you describe a recent positive experience you had with our product/service? This question allows customers to share a specific positive experience, enabling you to understand the aspects of your product/service that resonate with them and contribute to their satisfaction.

You can use the information you glean from these answers to inspire your text messages.

2. Get a memorable name

The name of your customer loyalty program should be impactful, yet quick and easy to remember. It should also stand out among competing rewards programs. You could keep it simple by including your brand name in the program. For example, the name of Tarte’s program is ‘tarte perks.’

To get some inspiration, you can use AI tools like ChatGPT. Here’s a prompt I gave to ChatGPT:

I run a retail store called “Puppies corner.” To reward my loyal customers, I’d like to create an SMS loyalty program. Suggest 20 of the most suitable names for this program. Each name should be under three words.

The output doesn’t look bad at all.

3. Find your SMS marketing software

To launch your loyalty program, you need software with great features. At SimpleTexting, we’ve created a detailed comparison of how our product stacks against other SMS marketing software.

Be sure to select software that has features like:

• Custom data collection from your contacts
• No charge for incoming SMS messages
• No limits on mass texting
• Phone and email support
• Automated birthday texts
• Two-way messaging
• Easy to navigate UI
• Text-to-win feature
• Link tracking
• SMS polls

4. Decide how your loyal customers will earn rewards

With a text message loyalty program, there are two main ways your customers can earn rewards:

1. A certain amount of time after they join your list, or
2. When they text a certain keyword.

Keywords are words or phrases that customers can text to your business number to sign up for messages. 

There are two ways to use keywords.

1. Create one keyword and send the same offers to customers who sign up.
2. Create multiple keywords and offer them to customers who make a certain number of purchases.

SimpleTexting offers you unlimited keywords, which means the sky’s the limit. 

While either method of using keywords is beneficial, we recommend going with the first method if you lack time to create new keywords.

5. Determine the rewards you will offer

The rewards can range from a simple discount code to an entry into a large sweepstakes. But the key to a successful SMS loyalty program is to offer variation and frequency. You want to reward your customers often, so that they see the value of being a member.

💡 Giving multiple, smaller offers can sometimes be more beneficial than a huge reward to end all rewards.

Again, find a system that works for both you and your customer.

If your loyal customers value free merchandise over discounts, consider that when developing your loyalty program. If you sell service-based goods like gym memberships or salon services, a discount or exclusive add-on may resonate with your audience. It’s important to find the right system to guarantee customer satisfaction.

Here are a few quick ideas for rewards you could offer through your SMS loyalty program:

1. Limited-time discount: Offer a time-limited discount or promotional code that provides customers with a percentage off their purchase or a fixed amount discount. Create a sense of urgency by highlighting the limited duration of the promotion.
2. Buy One, Get One (BOGO) offer: Encourage customers to make a purchase by offering a “Buy One, Get One” promotion. This can be a BOGO free, BOGO 50% off, or a similar variation, depending on your product or service.
3. Free shipping: Waive the shipping fees for a limited period or offer free shipping for orders above a certain threshold. Free shipping promotions can motivate customers to complete their purchases and increase the average order value.
4. Bundle or package deal: Create attractive bundles or package deals where customers can purchase multiple items together at a discounted price. This can encourage customers to try out new products or upgrade to a higher-value package.
5. Birthday rewards: Provide special discounts, freebies, or exclusive offers to customers on their birthdays.
6. Exclusive access: Give loyal customers early access to new products, limited-edition releases, or pre-sales before they become available to the general public.

6. Set up your autoresponders

Autoresponders save your time by helping you automate tasks in your loyalty program.

Instead of welcoming each person who signs up for your program, you can create an autoresponder to do that. You can also set up text messages that go out days, weeks, or months after someone has signed up for your program. Each of these messages should include a reason to come back to your business.

📺 Watch: How to Set Up Autoresponders for a Text Marketing Campaign

7. Get people signed up for your text messages

You have rewards ready to go, and you’ve written your texts. Now there’s just one thing missing — people to message! The good news is that you can get customers to subscribe by:

• Adding a sign-up form to your website
• Collecting phone numbers at checkout
• Promoting your keywords in-store and online

Whichever method you choose, it’s vital that you comply with the law by collecting express written consent from customers.

8. Create additional opportunities for customer engagement

Periodically sending promotions is great, but text message loyalty programs let you do a lot more. 

Here’s how you can create a fun customer experience using SMS:

• Send a text message survey to customers asking them to vote on future products.
• Surprise customers on their birthdays with a special gift or discount.
• Send a campaign with trivia questions. Only send a reward to those who answer correctly.
• Ask customers to text in photos of themselves at your store. Reward those who do with prizes.
• Remind customers to grab some perks. See how Olive and June do this:

We’ve gone over how an SMS loyalty program can help you boost customer retention and increase sales. But what’s the benefit of text message marketing compared to, say, paper coupons or kiosks?

• Most people own cell phones — 97% of Americans, according to Pew Research — and every cell phone can receive text messages without having to download any app.
• Text message loyalty programs are 100% digital. Customers never have to worry about losing their loyalty cards.
• SMS texts are inexpensive to send and you don’t have to spend money on a custom app or pricey software.
• Advanced features in SimpleTexting lets you use your loyalty program to collect customer info such as first name, last name, and birthday.
• MMS allows you to send out multimedia including photos and scannable coupons.
• Automated text messages mean your loyalty program can be set-and-forget. No need to manage it actively!

The average American sends and receives over 50 texts per day. How many are from you? Connecting with your customers through text messages can impact your business beyond measure. Try SimpleTexting by signing up for a free trial and start rewarding your top customers.

This piece was originally published as a blog post on May 22, 2019. It was significantly refreshed and repurposed in July 10, 2023. Alfredo Salkeld contributed to this piece.