Brent Higgins, Director, Marketing, Aztec Partners, has seen the power of the SMS mobile channel for reaching younger consumers. He and his team represent 26 QDoba Mexican restaurant franchises and have integrated text message alerts into their marketing since July.

Thanks to segmentation by location, they’re finding particular success at restaurants near colleges.

"It's a terrific way to interact with our younger customers who use their mobile phones for just about everything," Higgins says.

When the team sends discount offers via text messaging, they see average redemption rates that are 15 to 20 percent higher in areas near colleges. The programs are popular -- only about 8% of subscribers have opted out, and this number is as low as 3% in one location.

Here are four strategies Higgins says contributed to their success. Read further if you’re using SMS alerts and want to learn more, particularly if you’re working with a younger demographic.

Strategy #1. Target text-savvy demos

Several of the team’s QDoba stores are located near colleges such as Purdue University and Indiana University. While they’re noticing SMS alert traction in all locations, the team is seeing the fastest growth and highest redemption rates in college areas, Higgins says.

This is likely due to college-age consumers being the most prominent users of mobile technology. If the team sends a promotional offer redeemable by showing a cashier a text message, they can expect about a 10% redemption rate at non-college locations, and a 25% to 30% redemption rate in college-based areas.

Strategy #2. Keep content relevant

The team considers SMS alerts a loyalty builder, and wants their messages to be relevant to subscribers in specific areas. They do this by segmenting subscribers by location and sending custom messages to each segment.

College-based segments, for example, receive messages reminding subscribers to stop in on their way to a weekend football game or community event. The key is to relate the brand to something that is "top of mind" to customers, Higgins says.

The team also includes small discounts -- such as free beverages -- in these SMS promotions. But Higgins avoids regularly offering steep discounts.

"The main goal is not for us to coupon," Higgins says. "It’s for reminding them of our brand and having them continue to interact with our brand. We believe our product speaks for itself, and people naturally want to seek us out, not because they got a $5 [coupon] from us."

Strategy #3. Promote other loyalty channels

The team saw good results when they used SMS to encourage registrations for the QDoba loyalty card program. The program gives customers an electronic card to swipe at the point of sale to accumulate points for free menu items, redeemable at subsequent visits.

In some college-area locations, in-store team members handed out paper information sheets to customers, explaining how to register for the loyalty card program. The instructions told customers they could request a plastic loyalty card (similar to a credit card) from a cashier, and then enroll by texting the following information to the team’s SMS number:
o QDoba card number
o ICD card number (on the back of the card)
o Customer email address

As an incentive, customers would receive an emailed coupon for free chips and salsa upon registration.

- 64% of customers who requested loyalty cards from a cashier registered for the loyalty program through the SMS channel, Higgins says.

- This is compared to a 28% overall loyalty card registration rate.

Strategy #4. Boost low store traffic

The team avoids using SMS as a coupon channel, Higgins says. However, when store managers notice low traffic numbers during key points of the season, they can send a text incentive for customers to visit the store.

"It can help drive traffic if we need to, within 24 hours," Higgins says. "And in the restaurant business, that can make or break a weekly sales situation."

For example, the team’s college-area locations are open 24 hours a day, Thursday through Saturday. A store manager contacted Higgins this fall and said her traffic numbers were low with an important weekend approaching.

The team crafted a "$2 off any entree" offer and sent it via SMS to local subscribers during the evening. The offer only lasted from 10 p.m. to 6 a.m. the following day -- yet they team realized a more than 30% redemption rate, with an almost immediate response.

"Within ten minutes of sending that out, we basically doubled our volume at the store level at the given moment," Higgins says.

- Use discounts instead of buy one/get one offers

Although the team has had success with buy one/get one offers, Higgins says that discounts for short-term sales can have more influence. For example, a straight discount is more appealing to someone who’s already in the area looking for a place to eat.

Useful links related to this article

How Text Messaging Helps Financial Services Marketer Target College Students
http://www.marketingsherpa.com/article.php?ident=29877

How to Build an SMS Alert Campaign: 6 Steps and Lessons Learned
http://www.marketingsherpa.com/article.php?ident=31302

Tetherball: Helps the team manage and power SMS communications
http://www.tetherball360.com/

QDoba Mexican Grill
http://www.qdoba.com/