Your SMS marketing ROI is your North Star. Learn how to calculate, monitor, and improve it.
Your SMS marketing ROI goes to the heart of your text marketing program.
When it’s up, life is good and you can keep trucking. When it’s low, it’s time to look for leaks and begin fixing missing or flawed aspects.
That said, it pays to know what your SMS marketing ROI is, how to calculate it, and what to watch to make sure it stays sky-high.
Luckily, as a text marketer myself, I’ve condensed it all right here.
SMS marketing ROI is your return on investment from your SMS marketing efforts. Basically, it’s how much you get back compared to what you spent in the first place.
You can determine your ROI by finding the difference between what you earned and what you spent on your SMS marketing efforts.
(what you earned / what you spent) x 100 = ROI
That might be a little difficult to visualize for your texting program, so here’s what calculating your ROI looks like with SimpleTexting. With our platform, you can send 500 SMS messages for $29.
SMS conversion rates range from 25 to 45%. Given that, if your business profits $5 per purchase and you send a campaign to 500 contacts, a 25% conversion rate will give you $625 in revenue. That’s a 2,155% ROI!
((500 contacts x 25% conversion rate) x $5 average revenue per unit) / $29 SimpleTexting plan) x 100 = 2,155% ROI from SMS marketing
Want to know what a strong SMS marketing ROI looks like in a real business? How about three businesses?
When retailer Baby Tula’s emails just plainly weren’t working anymore, they turned to text messages to inform fans and subscribers of their new product drops.
With one campaign, Baby Tula drove (you may want to sit down) a 1,668% ROI.
That’s one text that took seconds to send, by the way.
Similarly, tanning salon Year Round Brown (YRB) turned to SMS marketing as a way to let customers know about their biggest sale of the year and drive more in-store purchases.
After promoting their major annual sale, YRB saw a 20% increase in revenue over the previous year’s sale.
We can attribute the 20% increase in revenue to using text messages to promote this year’s sale. We’re delighted with SimpleTexting.
When Black Friday rolled around, they leveraged that booming subscriber list to see a 563% ROI on one single campaign for the holiday.
One of the issues we had is that email deliverability is dropping and customers sometimes don’t even see the message. So we were able to use SimpleTexting to reach out and make sure that these customers actually get the message.
Of course, a high ROI is the goal, but how do you know if you’re headed in the right direction? You’ll need to look into some key metrics to find out.
This has to do with whether or not your messages are sending successfully (in SimpleTexting, this is your “success rate.” Your customers can’t act on what they never see, so a high delivery rate gives your texts their best chance to do their work.
As a best practice, we here at SimpleTexting suggest shooting for a delivery rate greater than 90%.
Text marketing typically yields high open rates, sometimes as high as 98%. This means that your audience received your text campaign and viewed the message.
Open rates are a leading indicator of SMS marketing ROI because this engagement is necessary to drive profitable customer activity. If you look at one metric, open rates is a good one.
Your CTR tells you how many people have clicked any links you’ve sent in your texts. Basically, it’s a great way to monitor whether people are engaging with your texts and following your calls to action.
A high CTR means more of your customers move closer to a sale, which lends itself to a higher ROI.
You can see your SMS campaign click-through rates in your texting provider’s software. With SimpleTexting, you’ll simply log in, navigate to Analytics, and see your campaigns’ performances.
Your conversion rate is the percentage of subscribers who took the action you asked them to take compared to how many received the message in the first place (usually that’s customers who make a purchase, but it can vary).
A high conversion rate means customers are seeing your brand’s value, taking advantage of your offers or requests, and that you’re on the right track with your messages.
Just as you want to know where you’re succeeding, you’ll also want to know where your performance gaps are and what to fix.
Opt-outs might be discouraging, but they happen. The only time you need to worry about opt-outs is when you begin seeing an unusually high number of them in a short period of time (that’s generally above 3% per campaign).
When that happens, it could be a sign that your campaigns aren’t being received well and it’s time to make a change in your content, message frequency, call to action, or other variables.
For every message you send asking for a response, how frequently do you get one?
Even if your messages are delivering successfully and subscribers are opening them, you may not be getting the responses you want.
Be on the lookout for low response rates to your messages. Unresponsive contacts can negatively impact your ROI, so work on ways to keep them motivated and engaged if this number dips.
💡 Recommended reading: How to send text messages that get responses
Of course, you want to keep the number of subscribers who opt out of your list low, but you also want to make sure plenty of your customers opt in to begin with.
Now that you have a clear picture of why a positive SMS marketing ROI is worth working toward, let’s dig into a few ways to make it happen.
While personalization might sound like a “nice to have” and not a necessity, it’s crucial for a positive ROI.
The data says that 89% of marketers get a positive ROI when they personalize their campaigns.
There are a few reasons behind this:
So, how do you personalize your texts? The short answer is, with any relevant details your contacts have shared with you. That could mean filling out your texts with:
Tools like custom fields and contact segments make personalizing your messages both easy and efficient. You can set your fields to autofill information you’ve gathered from your contacts and send targeted messages to each of your segments.
A/B testing is a low-effort way to get major insights into what your customers respond to. A few tweaks in your campaigns can help you build up more effective SMS messages piece by piece.
When A/B testing your messages, try these ideas:
Speaking of figuring out what your customers respond to, you’ll get the most reliable data from your Analytics board.
Once there, you can see:
Staying in compliance with the laws and regulations in the text marketing industry not only helps your messages send consistently, but it increases your customers’ trust in your messages and makes them more likely to engage with your texts.
We have a full guide on compliance in SMS marketing, but the basics are:
Simply put, a positive SMS marketing ROI helps give you clear, actionable insight on which of your investments are paying off and which aren’t at the moment.
With that information, you can double down on the channel with a positive ROI and the strategies and tactics that got you there. You can also identify gaps that you could improve.
That’s valuable insight you can use to map out a profitable future for your business.
Also, not to put too fine a point on it, a high ROI means more money for you with no more investment needed.
That’s valuable in general.
Still got questions? No worries. Here are the most common questions business owners have about their SMS marketing ROI.