What is a US Short Code?

Defining Short Code

Moving into the new space of conversational commerce, there is the use of short codes, which are 5-digit or 6-digit SMS numbers that are used to automate large-scale marketing messages. Abiding by the TCPA, the various service carriers, such as AT&T and Verizon, have firm requirements for the specifics of time, content and volume of the messages. There are only 13 states (Arizona, California, Colorado [exception that requires written consent], Connecticut, Florida, Indiana, New Jersey, North Dakota, Oklahoma, Rhode Island, Utah, Washington and Wisconsin) that have prevailing laws to consider when setting up and applying for a short code. The relevant laws can be found here.

In fact, marketing companies must adhere to the regulatory laws, abide by the requirements set by the service carriers, and uphold the industry standards.

Essentially, a user sends a message to the specific Short Code of the company in order to subscribe to receiving the relevant SMS marketing content. [Expand with a graphic placed under this for how the subscribing process goes from the User's POV]

How can your company make use of a Short Code?

Over the years, the term has been broadly applied to any conversations, automated or agent driven, between the user and an e-commerce brand. It has included both marketing related and customer service related conversations.

Conversational commerce has been steadily gaining ground, but has now reached an inflection point. It is now poised for rapid adoption by brands. There are several reasons for this:

• Mobile adoption: a smartphone is the primary device for a majority of the users in the US now. Brands are reporting that more than 70% of their users are interacting with them exclusively using smartphones. And mobile users prefer to use messaging platforms as opposed to email.
• Popularity of messaging platforms: messaging platforms like SMS, Messenger, Instagram, and WhatsApp have seen an unprecedented growth in popularity. While they initially gained popularity primarily as user-to-user communication platforms, they are fast becoming the primary channel for business to user communication as well, especially for the mobile consumer. Users are far more engaged and active on these channels than they are on email. This is reflected in high message open rates (95%), reply rates (30%), and conversion rates (2X compared to mobile browsers).
• SMS marketing: 2021 was unquestionably a breakout year for SMS Marketing. It is now a mainstream marketing channel for e-commerce brands. While the specific marketing strategies brands are using on SMS are still heavily borrowed from the one-way email marketing playbook, nevertheless, it has helped with the widespread adoption of text messaging as an important channel of communication between e-commerce brands and their customers. This sets the stage for using SMS and other messaging channels to be used as commerce destinations.
• Headless Checkout & Payment Vaults: One of the key factors that has limited widespread adoption of Conversational Commerce by e-commerce brands has been the inability to complete a checkout inside SMS or other messaging channels. This has been due to (a) a lack of payment methods integrated into messaging channels, and (b) a lack of headless checkout APIs in e-commerce platforms. Absence of easy checkout through messaging means that the user has to go to the website to complete their order, where they encounter the usual friction of logging into their account or creating a new account and entering all of their information.

2021 saw a rapid acceleration in the emergence of headless commerce platforms - both new platforms as well as existing commerce platforms adding headless capabilities. Headless checkout, in particular, has gained a lot of ground, making it possible for merchants to sell their products on channels beyond their website. This combined with growing adoption of cross-merchant payment vaults like Shop Pay, Bolt, and Fast has paved the way for frictionless checkout initiated through messaging.

Since checkout is the most strategic and valuable part of the e-commerce journey for a brand, availability of conversational checkout, which increases the conversion rates by 2X, will dramatically increase the adoption of Conversational Commerce by brands.