Regaining the Personal Edge
To our Valued Investors:
Ask about the culprit most responsible for the decline in American brick-and-mortar centers of commerce, and many people might quickly point toward social distancing and the lockdowns that came along with the COVID-19 pandemic. While it is certain that this extreme disruption didn’t help matters for retailers, the health crisis began to have an impact only two years ago this month. Many stores were on life support before that, largely due to the steady increase in online shopping. In 2019, before COVID was known to many people, major retailers closed more than 9300 stores. In 2020, more than sixty former high-fliers filed for bankruptcy, including Brooks Brothers, J. Crew, Guitar Center, and Pier 1, joining other recent casualties like Sears, Lucky Brand, Forever 21, and Circuit City. UBS predicts that another 80,000 individual retail outlets — 9 percent of the nation’s total — will close in this “retail apocalypse” over the next five years as e-commerce sales grow. Shopping centers, once a staple of American life, are quickly falling out of favor, with hundreds shutting down over the past decade. In an ironic twist, about 25 of them were repurposed as distribution warehouses for Amazon.com between 2016 and 2019. Most of the remainder were simply left to deteriorate in silence, giving websites like this one the chance to show us just how creepy an abandoned mall can be.
None of this should be terribly surprising. Internet technology made it possible to compare hundreds of unbiased reviews before settling on which toaster oven to buy, or to check off every box on a holiday shopping list in one late-night seating, or to purchase a pair of boxer shorts while wearing nothing but the boxer shorts you seek to replace. With such conveniences made simple, it’s no wonder that the masses became less inclined to drive to a remote location, search for a parking spot, and wander through several levels of needy marketing, only to overspend on a dozen impulse items as a result of idle browsing. Internet shopping beats the old-fashioned way by the all-important measures of speed, convenience, efficiency, and (usually) economy. The only obvious upper hand for in-person shopping has been in the area of customer service. Walk into a Gap store, and before too long you will be approached by a friendly and well-trained sales associate who will ask you a question or two, and then assist you in finding what you need, or something close to it. This kind of personal interaction fosters a feeling of value and importance in the consumer, and it has historically been very good for sales. Unfortunately for brick-and-mortar outlets, though, the margin of even this advantage is narrowing. Companies like New York’s Attentive Mobile, Inc. are creating unprecedented levels of interpersonal communication between online retailers and their customers, and they are doing it in the 21st Century style with which the most impactful spending demographic feels most comfortable.
Founded in 2016, Attentive recognizes and leverages the benefits of directness in customer engagement. There is currently no option for a sales associate to sneak up on at-home online shoppers and offer suggestions, and even if that could be done it would be quite unnerving for the buyer (who might be wearing nothing but boxer shorts). Attentive’s solution is to move the conversation into Simple Messaging Service (SMS) platforms, better known simply as “text messaging”. Brian Malkerson, Attentive’s Chief Revenue Officer, explained the revolutionary concept in an interview with MarTech: “Consumers don’t like how businesses interact with them – between ads, spammy emails and intrusive messaging, brands are talking at their consumers. Attentive is building a platform to change that to focus on delivering personalized, relevant two-way and compliant communications. [Text] messaging is ubiquitous, it is how people talk to each other and it is how businesses should communicate with consumers. When done right, SMS delivers a personalized experience. Consumers shared they want to receive relevant content from brands they have opted into. Our platform enables brands to deliver personalized messages across the customer lifecycle and we help them create personalized, direct campaigns that strengthen customer loyalty and drive traffic.”
Attentive has mastered “conversational commerce” — the convergence of text messaging and shopping. It’s the interactive, people-driven encounters that support the buying experience through the entire cycle, from awareness and product discovery to consideration and asking questions, to customer service and post-purchase follow-ups. By nature, conversational commerce fulfills a core need of e-commerce consumers that goes beyond the transaction. The demand for personalized shopping experiences isn’t going away, and the SMS dialogue is helping brands restore one-on-one relationships with shoppers. Even in the absence of flesh-and-blood sales associates, buyers will continue to insist upon personalized experiences. True conversations—especially those happening via text messaging—naturally lend themselves to building relationships between brands and consumers. Shoppers willingly and actively engaging in a back-and-forth with a marketing platform is an unmistakable sign of a grand slam.
It’s an inescapable reality, if a sad one, that texting has long been encroaching on the art of verbal communication. What was once a joke has become a common truth, with groups of teenagers sitting in close proximity as they silently engage in a group chat with one another. Like it or not, this is the direction in which things have been moving for years. As such, Attentive Mobile in a way represents an innovative and lucrative adaptation to a technological evolution. The employment of SMS communication is a step in the direction of creating a warmer, more personal association with the consumer. Text messaging is how most people today stay connected with friends, spouses, children, and other loved ones. Attentive enables its corporate clients to engage with their own customers in ways that transcend the tiresome hawking of products. Messages might be more along the lines of “Hey, we hope you’re getting a lot of use from your new running shoes,” or “Hi! It’s Beth from the pet store. How does your puppy like his new chew toy?”, or even “You seemed to like our chocolate protein bars. Did you know we also have them in peanut butter crunch?”. Importantly, these messages are interactive. Recipients can respond by texting a reply like, “I would love to try that flavor. Where can I get it?”. The customer would then be directed via SMS to the closest retailer. The benefits of this kind of dialogue are almost too obvious to point out, but, as CRO Malkerson spelled it out, “SMS drives 10 times more revenue than email per message, with 99% open rates and 30% click-through rates. Text messaging is the consumers’ channel of choice with mobile making up 75% of e-commerce this year, and Attentive helps to humanize the ecommerce shopping experience by focusing on personalization and the customer experience. In 2021, brands using Attentive will collectively earn $12.5 billion in revenue through SMS marketing”. Let that sink in — $12.5 billion in revenue that is directly attributable to Attentive’s text message marketing, almost tripling the $4.5 billion in revenue generated in 2020. More than 4,000 brands work with Attentive, engaging over 200 million consumers, with billions of text messages sent thus far, and yet the practice is still very much in its infancy. As a Software as a Service (SaaS) platform, the rates Attentive can charge for their licenses are directly related to how much revenue they generate for their corporate users. Those astonishing numbers are almost certainly poised to hit “hockey stick growth”, and Attentive’s revenue numbers will move in tandem.
The massive potential of this collision between the physical and digital worlds has been noticed by the best in the business. IVP, Bain Capital, Coatue, Sequoia, and Tiger Global have all been very consistent participants in Attentive’s funding. Iron Edge VC is extremely proud to join this distinguished group with our investment in Attentive. Of course, Attentive Mobile is a privately held company at the moment, making it impossible to buy on any of the public exchanges. Iron Edge can, nonetheless, provide you with access to our Funds that have ownership interests in this company that supercharges commerce through intelligent and truly personal marketing. If you would like to learn more, or if you know anybody else who would, please don’t hesitate to contact us by clicking “Get in Touch” below.
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All the Best,
Founder & Managing Partner
Founder And Managing Partner