SMS Chatbots: How to Empower Customers Without Lifting a Finger

April 27, 2023 | By Grace Lau
SMS Chatbots: How to Empower Customers Without Lifting a Finger

With so many of us relying on our phones everyday, it is perhaps surprising that more companies aren’t focusing their efforts on mobile e-commerce.

Combining the emerging technology of digital assistants with the reach and convenience of text messaging could be the answer for empowering your customers and improving your business.

But first…

What is SMS?

In English-speaking countries, “SMS” seems to have fallen out of use in everyday language - you’re more likely to refer to these messages simply as “texts.” Regardless of the term used, SMS, or Short Messaging Service, remains a part of our daily lives. Communicating via message is such an intrinsic part of our daily routines, that you may even say we are a society of texters.

Via SMS, you can send and receive messages without internet access and without the need for any downloaded apps.

Retranslated: Via SMS, you can reach users regardless of whether they have internet access or any downloaded apps.

It follows, then, that businesses should be making use of this communication channel.

Good customer service relies on convenience and effortlessness. Rather than downloading third-party or company-specific apps, many customers prefer texting on the native app on their phone. This way they can keep messages organized and be sure not to miss anything.

What better way to meet your customers than via their preferred method of communication?

SMS is already used by businesses for a range of communications:

  • Time-sensitive offers and promotions
  • Event reminders
  • Confirmation texts
  • Shipping updates
  • Transactional messages

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If you’ve received any of the above from a business, you may notice they often end with phrases like “do not reply,” “this number does not receive return messages” or simply a link to follow back to a main site.

These are examples of one-way communication. It’s worth noting that many customers won’t click on a random link, especially if they are worried about spam.

So, what if this did not have to be the end of the conversation?

What is a chatbot?

You may remember chatbots from the 2000s - internet chatterbox applications designed to mimic human conversation for entertainment purposes - but the technology has come a long way since then.

These days AI chatbots tend to be found running on websites or messaging apps, solving a practical purpose rather than existing for amusement.

Chatbots continue to gain momentum in the business world, and are especially commonplace for e-commerce stores. While browsing online, a chatbot will often pop up in the corner of the screen offering assistance.

These artificial intelligence (AI) agents can create an effortless experience for your customers and solve simple problems - making it easy for users to find what they’re looking for with minimum effort.

Different chatbots range in complexity, but the idea is to use conversational AI technology as a virtual agent, taking pressure off human employees.

While not every chatbot will have/need these abilities, many will be able to understand context, analyze emotion, and learn from each interaction. Additionally, they can be programmed to interact when needed, either scheduled or on demand.

Chatbot example from Peloton

Combining chatbots and SMS

An SMS chatbot simulates conversation via SMS. This combines the ubiquity of SMS, available on most mobile device systems, with the useful powers of automation, in order to enhance business to consumer communication.

The goal is for the chatbot to engage naturally and intelligently with your customers while using their preferred channel of communication.

A chatbot can process input from a user, then perform a preprogrammed action.

Consider the example of an event reminder. An SMS message may simply say “click here to amend your booking.” An SMS chatbot, on the other hand, could say “reply Y to confirm.” This small change is the difference between one-way and two-way communication - it can mean a lot in terms of customer engagement.

Why use an SMS chatbot for business?

Reach a wider audience

As mentioned above, texting is a part of daily life for many of us. Potential customers likely have their phones in their hands or in arm's reach for a large part of the day. From a business standpoint, you may be interested in the statistics surrounding phone use.

According to Statista, there were 6,529 million smartphone users in 2021, and this number was set to increase.

smartphone subscription chart

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While it can be tempting to use messaging apps to reach a wider pool of potential customers, SMS will be available by default on the majority of these devices, even without internet connection.

Stand out from the competition

Despite the statistics above, SMS is an underrated communication channel. Use this to your competitive advantage. While other companies target messaging apps or web-based communications, if you focus on SMS then your messages won’t get lost among masses of notifications from competitors.

Provide a simple offline touchpoint

You want to be able to reach your users regardless of their age, country, financial status, or digital literacy level. SMS is the perfect channel for this as it works on almost all models of phone - also eliminating worry about adaptability and quality assurance before launching campaigns to a range of devices.

Regardless of their location or device, customers want to be able to get answers as quickly and simply as possible. If an offline chatbot can provide a solution to their problem, you demonstrate respect for your customers’ time.

Increase response rates

SMS open rates are as high as 98%, compared to just 20% for emails. This makes sense - you’re more likely to delete or ignore an unopened email, but open a text message to clear the notification.

The response rate for SMS is around 20%. For email, response rate is as low as 6%.

These are important figures to keep in mind, as your goal is to get as many respondents as possible for effective communication.

Also, these statistics are for straightforward SMS messages. Imagine the response rates to an engaging and helpful automated agent.

Transform customer service

Crucially, SMS chatbots should be employed to help with existing problems. Many digital customers experience frustration with the modern world, fatigue from navigating complex systems, and unwillingness to waste time on hold with a company which does not value their time.

If your firm receives a large amount of messages, it may be difficult to keep up with customer support. There are many new ways of outsourcing to technology to help deal with this (e.g., what is a visual voicemail?).

Chatbots can form an excellent first line of defense in handling simple queries and filtering out spam, leaving the more complicated cases to your human agents.

Alternatively, chatbots can streamline the buying process in other areas, and even allow customers to reach out to the business via SMS rather than performing an action online. Take a look at the Domino’s AnyWare Campaign.

Demonios text system example

How to ensure great customer service via SMS chatbot

An SMS chatbot can be a great way to improve the customer experience, but it requires a deft hand.

1. Be mindful of boundaries

SMS can be seen as quite a personal channel, so avoid being intrusive. User consent is key. Make sure customers know that they’re signing up to be contacted via text when they opt in, and provide ways to opt out.

2. Keep it short

When you send an SMS, communicate properly. Ideally, keep to below 160 characters so updates aren’t broken up into multiple messages. Don’t drive up data and usage fees with unnecessary waffles. If appropriate, you can use emojis and other messaging-first communication styles.

3. Include a clear call to action

Unlike messaging apps or online chatbots, SMS does not have quick reply buttons. This means you need to be clear about the type of response the bot is expecting, and what the users need to type to continue the conversation flow.

4. Connect seamlessly to other channels

If a problem is not fully resolved by the chatbot, don’t leave the customer to start seeking help from scratch. Offer a frictionless way to loop a human agent into the conversation, or let the customer opt in for a callback. Good customer service flows intuitively, and is an integrated experience - combining channels (for example when you automate Gmail) is ideal for customer convenience.

What now?

To get started you’ll need a dedicated phone number - preferably a new one for the chatbot only. Vanity phone numbers for business are worth looking into. Next, decide on an implementation method. You’ll need a platform or vendor to set up and run an SMS chatbot, but from there you’ll be able to set up and customize the bot yourself.

To get found, advertise the option to “call or text us” anywhere that your phone number already appears, such as on your website, business cards, or email signature.

As your company grows, tools like virtual business phone systems help to tie everything together and make your business to consumer communication as simple and efficient as it can be.


Grace Lau - Director of Growth Content, Dialpad

Grace Lau is the Director of Growth Content at Dialpad, an AI-powered cloud communication platform for better and easier team collaboration with the help of Dialpad's conference bridge. She has over 10 years of experience in content writing and strategy. Currently, she is responsible for leading branded and editorial content strategies, partnering with SEO and Ops teams to build and nurture content. Grace Lau also published articles for domains such as Together Platform and Zumvu. Here is her LinkedIn.

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