The Beginner’s Guide to Measuring SMS Marketing ROI

SMS Marketing ROI

Measuring SMS marketing ROI is critical. You can boil your campaign down to the numbers it generates to examine what and how well it is working. You can dig into the details of your plan and learn what needs to be tweaked or expanded to increase your success. The tips we’re sharing in this guide will help you understand the metrics your campaign is generating.

Now that you have designed your SMS marketing campaign and gotten it started, it is time to see if what you have created is a success. You need to understand the metrics that you are collecting to see if you are getting the ROI you need for success.

SMS Marketing ROI Metrics You Need to Know

Measure Growth The Snowball Method

If you think of the type of snowball that rolls down a hill and continues to grow (and potentially pick up everything it its path), you are getting a good image of how your SMS marketing campaign should grow. To measure this growth,you need to determine the growth rate.

To determine the growth rate follow this formula:

  • Subtract the number of previous subscribers from the number of current subscribers, then take the result and divide it by the number of previous subscribers. Your result is the growth rate or how fast you are growing your list of subscribers.

Measure Opt-Outs – The Churn Rate

All marketing campaigns lose subscribers for a variety of reasons. They no longer need your services, they move away or they just need to trim their number of messages. The number of subscribers you lose is known as churn, and this is another important number. You may also hear this number called the opt-out rate.

  • To determine the churn rate, take the number of subscribers that opt out and divide it by the total number of subscribers.

Measure Success – Redemption Rate

The success of your SMS campaign is determined by the number of people who act on your call-to-action. Knowing this number can help you understand if your campaign is working and which part of the campaign is successful. This can guide you to eliminate or tweak the poor performers, and expand the good performers, resulting in even more redemptions.

  • To calculate the redemption rate, start with the number of subscribers that take action, and then divide it by the total number of subscribers in your campaign.

What is Your Cost?

It is important to control your costs; therefore tracking your expenses will let you know how you are doing.

If your cost outweighs your campaign, something is very wrong. Even if your cost is lower than your redemptions, you may still not be making enough to continue. Now that you know the redemption rate, you can calculate the cost per redeeming subscriber.

  • Take the cost of each delivered SMS message and divide it by the redemption rate that was calculated above.

These formulas are the key to measuring your SMS marketing ROI to understand the level of success of your campaign. Using the results of these calculations, you can learn what is working, what isn’t working and where to apply changes to your SMS marketing campaign to show improvement. Using guesswork to find the best performing campaign is a mistake, and assuming that you know the answers will also lead you astray. If you don’t track your ROI metrics, you will never know which of your campaigns produces your profit and which you can eliminate. With this understanding, you can boost your ROI even higher with the successful campaigns.

You can scale the successful campaigns up to more customers or prospects to increase your ROI. Take the poor performers and examine why they didn’t work, so you learn something about your target market and how they behave. The more you learn, the better you will be able to give your customers the experience they are asking for.