The term “text loans” came into use after companies began to offer loans via text message. However, you can also use text messages to reduce your default rates and communicate with your customers more efficiently.

While working with short-term loan providers before joining TextMagic I could say default rates have always been the biggest concern for businesses offering consumer credit.
But by keeping the lines of communication open with clients, risk management and careful planning, the default rate can be dramatically reduced.

Here are some tips how you can reduce your default rates using text messaging:

1. Verify your customer’s contact details

The level of fraud in the UK is growing and short-term loan providers are one of the easiest targets for fraudsters. To avoid fraudulent activity in your business, make sure you verify each customer who signs up on your website is a genuine customer in search of a loan.

When customer signs up on your website, make sure that you have all the correct contact details that are unique and belong to the specific customer who is applying for a loan. This includes all contact details, including a home telephone number and mobile number.

When the customer has signed up, you can offer the option to activate an account by sending a text message to your customer’s mobile. The text message should include a unique code that the customer needs to enter on your website to confirm that the mobile number provided belongs to the applicant and is an active number.

By verifying your customers mobile number you make the first step towards reducing your default rate and preventing fraudsters from signing up on your website.

2. Send customer reminders before the due repayment date

It is very important to remind your customers notification of the repayment date of the loan before the actual due date elapses. It shows that you are a responsible lender and you do not want your customers incur penalty charges for late payments. It will also reduce the possibility of the customer inadvertently defaulting through being ignorant of the due date, or simply forgetting.

Your customer might not remember the exact repayment date of the loan, especially if it was an installment loan with multiple payments, or a loan spread out over a longer period of time.
Sending a reminder email is one option, but it is worth bearing in mind that only 22% of emails are actually opened and read, compared to the 98% of text messages that are seen.

There is also the risk that your emails might go directly to your customer’s spam folder, which reduces the possibility of them opening the email even more. So, send your customer a polite reminder by text message, just to let them know that the repayment date of the loan is approaching. It might be a little bit more expensive than a free email, but a defaulted loan will definitely cost you much more.

3. Send a text message after your customer has missed the first repayment date

If you have not received the payment from your customer on the due date, contact your customer immediately. Send them a text message to make sure they are aware of the outstanding debt, but make sure that you follow the Debt Collection Guidelines by OFT when pursuing your debts.

In practice sending a text message to customer’s mobile works a lot better than email and the response rate is at least 70% higher compared to email. Make sure you put your contact number and company name into the message, so that customers can call you when they need to discuss the  payment.

Remember that with a text message, space is limited to just 160 characters. So ensure that your message is succinct and contains only the most important information. You can also use your company name as the Sender ID instead of the number to make sure your customer knows that the message is from you.

SMS marketing is an exceptionally powerful tool through which businesses can reach their customers – as long as it is utilised correctly. It’s often the case when a particular marketing medium becomes popular that companies ‘jump on the bandwagon’ as it were, without fully considering how to get the best out of their efforts. With that in mind, here are a few guidelines to help you maximise the results of your SMS marketing.

Keep it short and relevant

SMS texts are by their very nature relatively short, but it’s important to keep your messages to exactly the length they need to be. SMS marketing messages have an unparalleled open rate, so you have a much higher chance of those opening lines being read by almost everyone who receives the message. But it only takes a press of a button for recipients to leave/delete your message out of boredom or annoyance. So as well as avoiding unnecessary waffle, you should keep your messages on topic and always relevant to what the recipient is expecting from you.

Always ask for permission before you send

Most people enjoy receiving text messages, but only from people whom they have given their number to. While many mobile users are now quite open to the idea of receiving marketing messages on their phones, they still want control over who sends them. The most common responses to unsolicited marketing messages are anger and annoyance – two emotions which are never conducive to good customer relations. Always ask permission before you send marketing messages to a customer’s mobile phone, and make sure they understand what these will entail. TextMagic’s Mobile Marketing forms are a great way to get some extra mobile subscribers out of your website.

Offer value

It’s not enough to simply promote your company and its services via text message. You need to offer them something that is both useful and beneficial to them. That could simply be notification of when your latest product is available, service messages relating to customer appointments, or some other message which provides them with useful information. SMS coupons or voucher codes that can be exchanged in-store or online for a discount or special offers are also particularly effective at creating added value. Offer value and they will come, go for the hard sell and they will likely go elsewhere.

Show respect

When people give you their mobile number and the permission to use it, they expect you to show respect when taking the opportunity to send them messages. As well as avoiding overt sales messages, you should pay close attention to the details of the messages your send. For example, ensure that your SMS messages are sent during normal business hours, or at least no later than mid-evening. However polite and respectful the actual content of the message, it will be met with hostility if received at two in the morning.

Make it easy to opt out

Obviously you don’t want people to decide to stop receiving your messages, but it’s important that they feel they are able to leave whenever they want. In fact, in some countries (notably the UK, US, Canada and Australia), you must give them a clear ‘get out’ option by law. When you send message using TextMagic, your recipients can unsubscribe by simply replying ‘STOP’ to your message.

Have you received an SMS message recently from a business, brand or company and wondered to yourself why their name appears as the SMS sender even though you haven’t entered their number into your phone book?

That business brand was using what is known as a customised Sender ID, and it’s a great way to quickly connect with your SMS customers. This is because people intuitively understand and relate to names; a name carries with it a recognition that a phone number alone will never match, no matter how much you mention it in your marketing.

How Sender ID works

All SMS text messages carry with them a unique identifier – a sending number – that is most often called an ‘originator’ number. This identifier tells the network (and the customer) where the message was sent from.

It is possible to replace this identifier phone number with a text version (an ‘alphanumeric originator’) of your name or number that your customer will quickly recognise.

In other words, you can set a custom Sender ID that is your company name, a specific phone number for customer support, brand name, trademark, or any other uniquely identifiable word, phrase or number set that characterises you.

As long as it is 11 characters or less:

TextMagic

the12Brand

Miss_Fix_it

HighStAutos

Sender ID is a perfect option for situations where you are distributing a message to a large group, where the message isn’t expected, and times where you don’t require a response. It’s an unfortunate consequence of using an alphanumeric Sender ID that your recipients can’t reply to the SMS itself, because it no longer carries the originating number.

How to set a customised Sender ID

TextMagic makes it easy to customise your Sender ID. The first step is to apply for a custom Sender ID in your customer account through the My Services section, ‘Reply Options‘ area.

To create your custom branded Sender ID, you can choose from any letter from ‘A’ through ‘Z’, including the lowercase letters ‘a’ through ‘z’. You can also choose any number from 0 to 9 and the _ (underscore) character to create your 11-character custom Sender ID.

As long as you stick to these parameters, you can be as creative as you like. Just remember that you should choose a name that your customers will recognise, otherwise they may see your message as unsolicited and not bother reading it.

You can find out more about Sender ID and other reply options here: http://api.textmagic.com/https-api/sender-id

If you own a mobile device, you’ve probably already seen the wrong kind of content.

You know what I’m talking about: cryptic SMS messages with links that you aren’t too sure about, long paragraphs that take two or three scrolls on your screen to read, huge images that eat up your data and take up the screen, or the Flash animations that don’t work because you’re on an iPhone.

When it comes to mobiles (smartphones or otherwise), readers prefer content that’s optimized for the device.

But what makes it different and how do you put this kind of content together?

Mobile readers want bite-sized info

Whether your readers are using smartphones or you are communicating via SMS, they really do want brief, easy-to-read content.

That means shorter paragraphs, fewer jargon-filled expressions, more objective information and (please, please, please) not so many images, thanks.

Where to get your content

If you already create or curate content on your own website, you should be spinning off a mobile-optimised version for your readers.

Just edit down the copywriting, break it into smaller chunks and focus on the most important bits.

If your mobile audience is a specific type of user (such as a salespeople), then you can further target the content you gather and share with them around that topic.

Using a tool like Twitter is a great way to find lots of interesting and useful information from others in your niche. (It’s also a great way to share your own content with mobile readers!)

The Verge provides one of the best mobile web experiences that I’ve had. Some other websites that are popular with mobile audiences could do better work, for example 9to5Mac.

How to share

Just like your regular website, you need to share your curated and self-published content through different methods.

For mobile, that means using tools that are popular and accessible to (and used by) your audience. Not everyone has smartphones, and many successful mobile marketing campaigns use SMS to great effect.

Twitter, Facebook and other social sites are a good first channel for sharing. Many smartphone users regularly use these platforms for receiving their information.

When you have an SMS subscriber base, you need to use slightly different methods of sharing as not everyone will have a web-capable device.

Sharing via SMS can be as simple as sharing a bit of news and a source and telling them to check your blog. You can also provide a link so that those with a capable browser can view it via the mobile-optimised version of your content. In fact, SMS can be a really engaging way to get a dialogue going with your readers.

However you do it, finding and sharing specifically for your mobile audience will be good for your customers and good for your business too.

SMS is one of the oldest mobile technologies; it’s been around for over a decade and is still actively used to this date. In fact, it has changed the whole gamut of communication. However, all of a sudden, text messaging has come under serious threat from newer technology because of the explosive popularity of smartphones and apps. There is every chance that text messaging as we know it will change a great deal in the next few years. The ‘old way’ of texting still has some very strong advantages; for instance, it enables cross-platform communication using a cell phone number and does not require usernames.  Most importantly, however, carriers still make a lot of money from text messaging, so they are not going to give up on it without a fight. Let’s review the latest shifts in the global text messaging space.

The first company to succeed in making a phone-specific messaging app was RIM with their BlackBerry Messenger (BBM), which BlackBerry owners use to communicate with other such users over the internet. The prevalence of other smartphones gave developers an opportunity to create similar apps on other platforms, resulting in numerous cross-platform apps like WhatsApp, which automatically finds people in your address book that already use it, so you can send them IM-style messages, pictures, videos, files and your location on the map. The cost of such apps is a fraction of what you pay for SMS – for $2 a year you get unlimited messaging; however, it is only with people who also use this service, not everyone, and that’s the only show-stopper.

SMS is also under pressure from social networks like Twitter and Facebook, both of which are found more and more often on phones and enable text-based communication with your friends. Facebook even went as far as releasing a standalone app named Messenger that is simply a dedicated app for Facebook Chat. Upon release of the app, it quickly climbed to the top of the free app charts on both platforms it was on, but left the charts soon after.

While all those apps are proving to be extremely popular, they still have a long way to go to replace traditional text messaging. The biggest concern is fragmentation. As with instant messengers online, a person using BBM can’t send a message to someone using WhatsApp, which is a problem. So if you would like to use such apps as a primary means of text messaging, you will probably need all of them, as it could be tough convincing a person to switch to another platform once they are used to the one they started with. This way you may end up with a bunch of apps that you use for the same reason but need all of them because that’s the one the recipient is using. And when you get WhatsApp, Kik, Skype, KakaoTalk, Viber, etc, there will still be a need to use SMS from time to time because you won’t find every person you know on those networks.

Also, a lot of businesses rely on SMS for their marketing and it is not yet possible to do that with the messenger apps. Imagine a company asking if you have Kik installed and if they can message you there from time to time. Of course, businesses still prefer to know your mobile number, rather than a Skype handle, so they can send you their special offers via bulk SMS services.

Every sign leads to a world in which carriers, under pressure from free messaging apps and communication giants like Facebook and Skype Microsoft, will lower text message prices so that people keep using them, most likely bundling them with your calling plan at a cheaper price. This will fit perfectly with the future in which people pay not for texts sent and minutes talked, but for the amount of bandwidth they are actually using, which is more efficient and fair anyway. There are serious economic reasons for such a model to take place, and at this point the question is not if but when.

In the previous four posts (see part 1, part 2, part 3 and part 4) in this series we looked at how to set up and deliver an SMS marketing campaign with TextMagic, and how to interact with your customers when they responded. In this final post we’re going to look at some ideas for maximising your return on investment (ROI) from any SMS campaign.

The first thing we need to say is that the investment doesn’t really need to be very much, at least in cash terms. There are no fees for joining TextMagic or starting a campaign – you just pay for the text messages you send. So, if your campaign involves sending a single text to a thousand people on your marketing list, you’ll pay for a thousand texts.

How much you pay will vary depending on the country or countries your recipients are in. We price messages in TextMagic credits (for example, a single text sent to a phone in the UK costs 0.8 credits right now). You can find out how much credits cost on our SMS pricing page – as you’ll see, the first thing you can do to maximise your ROI is to buy credits in bulk, as we offer discounts of more than 30% on large purchases.

So what else can you do to maximise our ROI when you run a campaign? We’ve looked at quite a few tips in the previous posts, but here’s a summary and some useful bits of extra information:

1. Use a high-quality list. This is probably the number one piece of advice we’d offer. A good list won’t guarantee the success of an SMS campaign (or any sort of direct marketing campaign), but it’s the essential foundation you need. Probably the most valuable list you can use is also the cheapest – your database of existing customers. However, if you don’t have a customer list, or you want to expand your customer base with new leads, you can buy a list that includes mobile numbers and demographic information from many list brokers.

2. Base your campaign on a specific, interesting offer. SMS marketing works best when you have something concrete to offer – a competition with a decent prize, a sale on your most popular products, a new product you want to pitch to your customers, and so on. The best way of thinking about this is that you should want to run an SMS campaign because you have a great story to tell your customers. If you decide to run a campaign and then cast around for something to say, things might be harder. You might still have some success, but probably not on the same scale as if you’re offering something brilliant to an interested, targeted audience.

3. Write the message carefully. There’s not much point in having a great offer and a great audience if the message you send is weak or ineffective. Therefore, it makes a lot of sense to spend some time carefully putting together the message you are going to use as part of your SMS marketing campaign. Standard SMS messages are 160 characters in length. You can fit an awful lot of information into those 160 characters if you think carefully about it. The main thing is to make your offer clear, focus on a key benefit, and ensure that your customer knows what he or she has to do to take advantage of the offer. Because SMS messages are sent as plain text, you can’t use any fancy fonts or decoration to drive your message home. The only thing you can do is use capital letters to emphasise certain words. This can work very well, but make sure you only do it sparingly or the effect will be lost and you will send your customers a message that looks like spam and is difficult to read. One final tip: before you send your message to your customer list, send it to your own phone so you can see what it looks like. Is it easy to read? Is the offer obvious?

4. Build loyalty with fast responses. If you’re offering your customers a chance to reply to your SMS marketing messages, make sure that you are polite, efficient and professional when you deal with their responses. Ideally, you should have a workflow in place that is designed to deal with common responses and questions. That way you can ensure consistency even if you are dealing with hundreds of customers and using multiple customer service representatives at your end. TextMagic offers you a robust, flexible and fast system for working with your customers via the medium of SMS. However, it will only ever be as good as the quality of customer care you put into it.

5. Think seriously about testing. A very popular way of increasing ROI in any kind of marketing campaign is to perform a split test. Let’s say for example that you have a list of 20,000 potential customers. You can start off by sending your message to just 200 of them. At the same time you can send a similar message with a slightly different offer to another 200. Which message and offer holds the best response? By using a small portion of your list to test the best approach you can be sure that when it comes to contacting everyone, you have a message and an offer that work. Testing does not have to be time-consuming or expensive, but in the long run it can deliver very substantial returns.

6. Make it part of a larger campaign. One of the beauties of using TextMagic to run an SMS marketing campaign is that you can design and run the project very quickly, sometimes in less than a couple of hours. However, you might find that you get more long-term value from TextMagic if you use it as one part of a larger marketing campaign. Basically, the secret of success is planning. Running a single isolated SMS campaign might deliver rewards, but in the long run you will probably achieve greater things if you embed it in a carefully strategised marketing campaign that encompasses several media over a considerable period of time. At the end of the day, it’s about deciding what is right for your business – an off-the-cuff, quick campaign that is very responsive to market demands, or something more long-term and considered.

So that’s it for our series on SMS marketing with TextMagic. We really hope you found it useful. If you have any questions, comments, ideas, or examples from your own experience, we’d love to hear them. We think SMS marketing is going to be an essential tool for millions of businesses over the next decade – and we want to help yours make the most of it.