A majority of marketers surveyed aren't managing a reduced budget this year.

For 44% of marketers, their budget is consistent with 2022, and for 42%, it’s increasing. But, the top marketing goals for 2023 do reflect a return to basic marketing functions that drive results: retaining existing customers by building loyalty (74%), and acquiring new customers (73%). The next highest goal—brand building—is a distant third (38%).

The leading reason for focusing on retention is that brands are aware they are leaving money on the table:

• 78% of those prioritizing loyalty and retention this year see an opportunity to grow existing customer lifetime value.
• 53% believe that a focus on retention can help make their overall marketing more efficient.
• 44% cite the high cost of customer acquisition.

Despite this cost, and while global macro environment challenges make maximizing existing customer value logical, brands are still tasking marketing with finding new customers in 2023. For marketers, both retention and acquisition are must-dos this year. 

A focus on performance means brands are reassessing their marketing budget and allocating to channels that best deliver lower funnel results: leads and conversions. Overall, there's a lot of stability in budgets, with a high percentage of all marketing channels ‘staying the same’. Due to all the macro uncertainty, this may reflect an unwillingness to too greatly shake-up marketing strategy this year. 

52% of marketers surveyed are planning to increase their SMS marketing budget in 2023, on average increasing investment 14% year over year. This percentage of marketers expecting to increase SMS budget is greater than any other paid channel, with 45% expecting to increase their social media budget and 38% expecting their email budget will grow this year. 

Given the direct and measurable nature of ‌SMS marketing, it’s not surprising to see strong growth this year. Conversely, the greatest budget declines are predicted in channels known for lower levels of marketing efficiency and less direct lead generation and conversion: social, influencers, and non-digital modes like linear TV and print.

The continued growth of SMS as a leading marketing channel is unsurprising to those familiar with its performance.

SMS is an effective channel at retaining and growing customers for brands. For 53% of marketers surveyed, SMS is a top 3 revenue driving channel. For 22% of those respondents, over 20% of their revenue is coming from their SMS marketing program. 

SMS acts as a direct revenue-driving channel, with 73% of marketers surveyed saying SMS drives incremental revenue for their business. Additionally, almost one-third of marketers see SMS increasing their average order value, and/or growing overall customer lifetime value. 

SMS is a perfect fit for today’s top marketing goals. 79% of marketers using SMS use it as a retention channel. With its direct access to the consumers’ primary inbox and timely manner, SMS is an effective channel to keep customers coming back and reengage lapsed customers.

SMS is a powerful zero-party data source, and this feeds into its role in retention—powering personalization and segmentation to send relevant and targeted messages to keep customers feeling engaged, connected, and purchasing. Our internal data shows that on average, over 50% of subscribers to an Attentive SMS program purchase more than once from a brand. And more than 20% of a brand’s subscribers are repeat customers monthly (Attentive, internal data, 2023).

Despite the high adoption for retention, there are opportunities for brands to better leverage SMS for loyalty. Less than a quarter of marketers using SMS today have made it part of their loyalty program, instead using SMS as a standalone retention channel. 

Connecting an SMS program to an existing loyalty program can expand and enhance outreach and impact, especially if integrated with a loyalty or reviews partner to connect data and coordinate touchpoints. Of the marketers surveyed, only 22% integrate SMS with a loyalty platform and only 18% with a review platform (see examples of loyalty partners Attentive has integrations with). 

An opportunity also exists in customer service, a powerful way to convert customers into loyal advocates. 25% of marketers surveyed use SMS as a customer service channel. But globally, far more consumers wish they could connect with a brand for customer service via SMS. 86.6% of consumers want to have a 1:1 conversation with a brand when having checkout issues, and 88.4% for any shipping questions (Global State of Conversational Commerce, consumer research, 2023). SMS is an immediate and convenient way to respond to and resolve customer concerns. But a large majority of brands continue to miss out.

SMS also plays well with other marketing channels to grow overall marketing performance.

93% of brands surveyed have some integration with SMS, underlining the connective role SMS can play across a marketing strategy. 

• The most common platform marketers integrate with SMS is an e-commerce solution, with 78% of marketers surveyed saying they’ve connected their SMS program to enhance their e-commerce activities. 

But in other areas where SMS can enhance efficiency and enable data collection and personalization, there is a significant opportunity for marketers to integrate more of their marketing tech stack. From loyalty to customer service platforms and CDPs, marketers have a wide range of options when it comes to enhancing both the impact of their SMS program, as well as leveraging data they’re collecting across other tools.  

• Only 26% of marketers we surveyed have integrated their SMS program with their CRM.
• 9% have integrated with a CDP, not taking advantage of the benefits of using SMS to gather zero and first party data. 
• Given the timely nature of SMS and the speed at which messages are opened, a shipping integration can be an effective way to send important delivery updates. But only 24% of marketers reported having this integration set up.
• Discover the range of integrations possible with Attentive here.

2023 is set to be the year that marketers get organized on identity.

The global impact of the Apple IDFA changes has been clear: a pronounced decline in paid ad performance that's based on third-party data. Google’s cookie depreciation is set to hit in early 2024. Marketers know the value of zero- and first-party data in powering personalized marketing, so planning how to collect and use this data is more important than ever. 

With the decline of third-party identifiers like third-party cookies and mobile IDs, the marketing industry has been in search of a new gold standard replacement to identify consumers for marketing purposes. Email emerged as the most likely successor, and 80% of marketers surveyed are using email as an identity solution today. 

But after a few years, some of the limitations of email as an identity solution are becoming apparent, especially that the average person has many email addresses over their life, and often more than one active email address at any given time—think personal, work, school, college, even the trend of an email address just for shopping purposes.

The phone number is emerging as a valuable alternative to email. 49% surveyed say their business uses a phone number as a way of identifying consumers for marketing purposes. Of those that don’t today, an additional 38% are interested.

The survey results also suggest that marketers may have learned the lesson from past unabandoned data collection and usage, and the media and consumer backlash that followed. Brands want to use data to personalize, but not get too personal. 

In terms of preferred zero-party data, brands’ top preference is data to personalize and add relevance to marketing messages. The preferred data is focused on location and product preferences. Ranked lower is requesting gender and age data, and an even lower preference to ask about height, weight, or hair and skin type.

Brands’ use cases for zero-party data center on sending the most relevant content to customers. The top use case is segmentation—sending text messages based on subscribers’  interests or preferences that the recipient is more likely to find helpful and actionable. Other top use cases are understanding consumer trends and personalizing content. Overall, this suggests a trend in using data to make marketing more valuable to consumers, and reducing waste for brands.