SMS marketing campaigns capture consumers’ attention with quick, captivating messages about your business. Whether it’s an ad for your latest line of products or services, texting is an instant, cost-effective, and compelling means of reaching large swaths of potential customers.
However, you’ll need to understand your SMS marketing ROI to gauge a campaign's success and value. ROI, or return on investment, is a key analytical metric that tells you how much money a project makes compared to how much it costs.
The ROI SMS marketing generates can be more complicated to calculate than that of traditional investments, such as property. To help you improve your campaigns and better understand their profitability, we’re demystifying SMS marketing ROI, explaining how to calculate it and sharing some techniques to maximize SMS revenue.
Understanding SMS Marketing ROI
Whether it’s an SMS campaign or any other type of investment, ROI is calculated as a percentage using a simple-to-follow formula:
- ROI = [(Revenue generated - Initial investment) / Initial investment] X 100
Tallying up ROI for traditional investments, in some cases, can be simple. If you invest $25,000 into a food truck, for example, and it generates $100,000 in revenue, and you get a cool 400% ROI.
As figures and concepts become more complex, reliably determining ROI can become increasingly difficult. Returning to our fictional food truck, it’s easy to follow the path from investment to revenue. You pay for ingredients and labor that become food, customers buy lunch, and money goes into the till.
SMS campaigns, however, don’t have the same clearly defined, traceable revenue trail for a wide variety of reasons:
- Many SMS campaigns contain links, unique coupon codes, or another means of determining their effect on customers. However, others may act as informational or general promotional brand content with no way of tracing the exact value they generate.
- An SMS campaign may subconsciously influence customers to purchase goods or services—meaning they wouldn’t even acknowledge its effect if directly asked.
- Customers encounter brands across a myriad of touchpoints. While a text message may have gotten them to make a purchase, they’re also influenced through social media, video ads and other marketing channels before finally giving in.
All of these complexities are problems with attribution—determining a marketing strategy or campaign’s contribution toward a determined goal, such as click-through rates, sale or service booking. While SMS marketing ROI is calculated via the traditional formula, determining attribution, cost and revenue figures can be far more difficult than straightforward investments.
How to Measure SMS Marketing ROI
Despite attribution difficulties, marketers can and do track ROI for SMS campaigns. To most accurately determine how well your SMS investment is performing:
- Add up your investment. Total how much you’re paying for marketers, software, content creation or anything specifically involved in establishing your campaign. Be sure to track your cost per text and scale it by the total messages sent before factoring it into your final sum.
- Determine how much revenue was generated. As noted, this can be a complex figure to ascertain for SMS campaigns. Nonetheless, you can use various analytical metrics to determine if your efforts are performing as intended, including click-through, conversion, open rates, delivery and response rates. Tracking your company’s total change in revenue throughout a campaign can also provide crucial insight into its value and profitability.
- Plug those figures into the magic formula. To refresh: ROI = [(Revenue generated - Initial investment) / Initial investment] X 100. So, if your campaign generates $10,000 on an initial investment of $5,000, you’d be looking at:
ROI = [(10,000 - 5,000) / 5,000] X 100,
which becomes [5,000/5,000] X 100,
then 1 X 100 or, most simply, 100% ROI.
Tools for Measuring SMS Marketing ROI
Using the right tools and platforms can simplify tracking SMS performance analytics. Some key mediums to consider utilizing and optimizing for your next text message marketing campaign include:
- Shopify allows you to track the origins of traffic coming into your store, including from direct sources such as tailormade links for SMS campaigns. This analytical tool provides some of the easiest to access and most reliable conversion rates for assessing the effect and reach of your messages.
- Pipedrive’s interactive CRM dashboard allows you to track revenue across different streams, including customizable categories for SMS. This dashboard enables you to isolate money from particular campaigns and compile it into a figure for total revenue.
- Quickbooks has long been the standard for accounting in digital marketing and beyond. If you’re not already using it or similar tools to track revenue, calculate how much you’re investing in campaigns, and complete other essential bookkeeping tasks, you’re missing an easy opportunity to collate and simplify your business’s accounting practices.
Texting Base has built functional integrations for all of these tools, making your SMS message campaigns a breeze. So, on the same platform that develops and sends your messages, you can now track their performance and collect key information to help you determine your ROI.
Strategies to Maximize SMS Marketing ROI
Despite the complexities involved, calculating a campaign’s ROI is only half the journey for digital marketers. After determining the value their SMS marketing generates, the first thought on most business owners’ minds is optimizing. If you’re in the same boat, we’ve got some helpful suggestions to maximize the revenue your SMS investment generates:
- Adjust message content, timing and frequency. Messages should be clear, concise and memorable. A bit of humor, wordplay or emotion in the proper context can elevate your texts over traditional bulk messages, compelling more consumers to click through to your content. Similarly, a message sent at 3 AM or in a barrage of unsolicited texts is more likely to be ignored than a singular, impeccably-timed text.
- Segment and personalize messages. Crafting texts for different demographics within your user base creates a stronger, more niche appeal than generic messages sent to thousands of recipients. If you personalize texts to individual users, you’ll have an even better chance of capturing their attention and enticing them to consider your message.
- Implement A/B testing. A/B testing pits two marketing efforts against each other to measure their relative effectiveness. You may, for instance, want to track the revenue or click-throughs generated by your SMS campaigns with one style of messaging and then another to see which is more effective long term.
Aside from these practical SMS marketing strategies, we’ve got one more crucial tip for all business owners and digital marketers hoping to increase their SMS ROI: use Texting Base on each and every campaign.
Optimize Your Messaging and ROI with Texting Base
If segmenting, optimizing, and personalizing messages to speak to your base is too difficult, time-consuming or costly for your current resources, consider optimizing your SMS presence with Texting Base.
Texting Base lets you tailor custom messages for individual customers, allowing you to show them the products or services they’re most interested in and, thus, most likely to purchase. Additionally, it enables you to collect customer feedback at a moment’s notice, leading to more accurate, useful data to inform future marketing efforts.
If you dream of elevating your SMS revenue and need the right tools to get the job done, implement Texting Base into your next campaign and begin optimizing your ROI.