Everything You Need to Know About SMS Marketing ROI

Staff Writer
Staff Writer

Published: Oct 12, 2022

SMS Marketing ROI

We’ve talked about this over and over again—SMS marketing works. And it works because it combines accessibility (we always have our phones with us), relatability (we reserve texting for those close to us), conciseness (texts are short and to the point), and immediacy (we look at texts as they come). But even more than that, SMS marketing gives you:

  • More personal and meaningful engagement with customers
  • An edge over the mass of other marketing messages people receive
  • A bigger ROI through:
    • Increased sales and revenue
    • Reduced churn and purchase friction
    • Increased customer lifetime value (CLV)

Even though email may be an overall lower-cost channel, SMS provides a higher return on investment. Let’s see how.

What is SMS ROI?

To understand the real cost-effectiveness of an SMS marketing strategy, you need to measure its ROI, or return on investment. An analysis of your SMS ROI is a simple comparison between its expenses and the revenue it brings in.

While getting the exact ROI of SMS marketing campaigns across all industries is difficult, brands can typically see a 5x to 10x SMS ROI, with far bigger success stories out there.

But don’t just think in terms of purchases. A missed appointment can cost healthcare providers and doctors valuable time and money, and if SMS appointment reminders can cut that even a fraction down, they’re already paying back far more than they cost.

And things like two-way communication through SMS can nurture a lead far before they make a purchase. It’s hard to measure that value, but SMS communication does more than just compel your audience to take action here and now—it creates and develops relationships.

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How to Measure Text Marketing ROI

When measuring text marketing ROI, there are two main costs to consider: price per message and monthly fees. You can expect to pay from as little as a penny per SMS up to $0.1 for certain countries. There are generally bigger discounts for bigger volumes. Some SMS providers have monthly plans or tiers but may charge you a fee regardless of how much you send.

Check out our SMS pricing calculator for basic pay-as-you-go cost per SMS. Dexatel has no sign-up fees, no monthly fees, and low-cost bulk services.

Also, consider the costs associated with digital advertising involved in getting people to opt-in to your SMS lists and the costs of maintaining and growing those lists.

Once you’ve figured these out, you can measure text marketing ROI in several ways depending on your campaign goals and SMS strategy, but the main metrics are usually:

Clickthrough Rate

Measuring how many clicks a link in a text message receives is a straightforward way of seeing how attractive your product, offer, or content is to your text message subscribers. You can easily track how many visits a link has had through tools like Google Analytics and use that link just for your SMS campaign.

Conversion Rate

Conversion usually means sales, but it can be any action you want your recipients to take. It can be signing up for a newsletter, referring a friend, or even just replying. By measuring your conversion rate, you can better engage your target audience, and see which products or services are popular and which messages work.

Cost per Subscriber

Knowing how much you spend on subscriber acquisition, how many of them are purchasing, and what they are spending can help you calculate the real cost of your subscribers. But most importantly, it can tell you the return you are getting on each of them.

Unlike other marketing channels, SMS is a low investment with a high conversion rate regardless of the industry and the size of your business. And the best way to experience its benefits is to try it out for yourself.

Top Tips to Maximize SMS Marketing ROI

With its relatively low cost and high success rate, it’s easy to see why more and more brands are choosing SMS marketing. And most SMS platforms like Dexatel make it easy to get rolling, so you can start successfully measuring and optimizing right off the bat. Here are tips to get you started.

Personalize Your SMS Marketing Efforts

Personalization is more than just addressing your recipient by name. Think about how the content and purpose of the message relates to each customer. If they have purchased a specific type of product before, then sending another offer that’s relevant to their interests and past purchases will be far more relatable and useful than a mass SMS blast. Although that can work too since you can segment your targets into large or small groups.

Optimize Your SMS Marketing

Test out different phrasings, calls to action, and other variations in your messages. You can create separate landing pages to see which SMS message recipients followed your links, or set up different reply keywords and see which messages get responses. It’s also important to use an SMS provider with worldwide availability and high platform uptime (Dexatel has 99.9%) to ensure that your messages actually get delivered.

Measure Opt-Out Rates

If your targets are opting out of your subscriber list, you may want to rethink your strategy and try out different tactics. A high opt-out rate can signify problems with wrong content, wrong audience, wrong timing, or just sending out too many messages. See what works and what doesn’t, and remember that you can create effective campaigns at each stage of your customer journey.

Pick a Great SMS Provider

To get the best text marketing ROI and bring the most benefit, partner with an SMS provider that can fully support your SMS campaigns from start to finish. Look for platforms with a strong SMS API that will support your tools and can easily integrate with existing customer operations. Choose a provider that comes with a strong support team that can meet both your business goals and your budget—start for free.