Whatever your line of business, you can always find space to integrate SMS marketing into your communications strategy. While SMS is often described as an outdated marketing tool, the fact remains that it targets an essential and sizeable chunk of almost every target market, irrespective of geographic location.
Why your business should prioritize SMS marketing messages
The power of SMS as a marketing tool is only increasing, especially with newer technologies such as geo-mapping and geotagging getting closely and intricately integrated into traditional SMS strategies.
SMS marketing opens up existing yet often unexplored direct lines of communication to major chunks of target audiences.
It is often compared to other marketing channels, such as email and phone calls, and comes out on top in terms of accessibility, scalability, cost, platform independence, and customer responsiveness.
SMS marketing is not only cost-effective; it also offers more value for your money compared to other costly marketing tools that may be a part of your communications strategy.
To understand just how cost-effective your strategy is, you need to measure the Return on Investment or ROI of SMS marketing. An ROI analysis is an insightful process that compares the total text message marketing cost versus the revenue that your campaigns generate.
5 ways to measure the success of your SMS marketing strategy
In order to understand the true return you are getting out of your efforts, you must take into account some key performance indicators that can help measure the effectiveness of your SMS marketing strategies. These are certain tried and tested metrics that can be used as a measure of return on your digital SMS investments.
1. Calculating the click-through rate
The click-through rate or CTR typically measures the total percentage of users who initiate an action concerning your brand by clicking on a given link in an SMS. The link generally guides them to a webpage where they can either make a purchase, learn more about your products or services, or both.
In simple terms, the click-through rate typically measures how many users were compelled to do something about your SMS message after they received it. It is a great way to gain insight into how many users interact with your content and find it interesting.
To measure a campaign's CTR, marketers typically use Google Analytics to check for the exact number of unique visits or clicks on their website or any other pages as a result of an SMS campaign. The number that you get is then divided by the number of text messages you sent out as part of your campaign and multiplied by 100. A high CTR translates into a high SMS marketing ROI.
2. Calculating the opt-out rate
The opt-out rate measures the number of users that unsubscribe from receiving an SMS from you in the future. Users opting out can often happen after a new marketing campaign of yours sends them a text message, and they subsequently feel compelled to opt out of your SMS subscribers list.
The reasons why users opt out can be many. They may not be personal, such as when a user merely wishes to reduce the number of text messages they receive daily, or they realize that they no longer need or want to buy the product or service you are selling. Other times, it can be very personal, for example, when a user does not wish to hear from you at all because something your business did or said offended or annoyed them.
A high opt-out rate can point towards a lack in your SMS marketing campaigns: it could be wrong content, wrong audience, wrong timing, or perhaps too many messages bordering on spam. By monitoring your opt-out rates regularly, you can determine what type of content in your campaigns works and what doesn't without incurring too high an SMS marketing cost.
3. Calculating the conversion rate
The conversion rate measures the percentage of users or visitors on your website that make a notable action on your website by responding to your marketing messages. This desired action or goal for each text marketing campaign is decided beforehand. The action that they take can be a comment, a reply, an inquiry phone call, or a purchase. However, many marketers measure conversions in terms of individuals who actually purchase in response to their SMS marketing message.
To calculate the conversion rate, you need to find out the number of individuals that take the desired action and divide it by the total number of individuals that are a part of your campaign.
By measuring the conversion rate, you can better understand how to engage your target audience, which products or services are popular, which promotional text messages work and which don't, and so on.
4. Calculating the cost per redeeming subscriber
The cost per redeeming subscriber refers to the marketing spend on each conversion from a member of the target audience. Simply put, it measures the amount of money spent to acquire a customer. This can also be described as the cost of each lead in a marketing campaign, and it helps marketers understand whether or not the SMS marketing pricing they budgeted for is justified.
To calculate the cost per redeeming subscriber, you simply divide the cost per SMS message by the conversion rate.
This measure will help you understand whether you are earning enough money from a marketing campaign in comparison to what you are spending in SMS fees and such, and how big or small the disparity between the two is.
5. Calculating the growth rate
The growth rate here refers to the growth in your company's subscriber list. A growing subscriber list represents that your brand is expanding its reach and getting in touch with more members of its target audience. It indicates that an increasing number of people are interested in hearing from you and knowing more about what you are offering.
To measure your growth rate, you should find out the number of your current subscribers and, from that, subtract the number of your previous subscribers. The resulting number should then be divided by the number of previous subscribers.
Marketers can derive from their growth rate just how well their overall SMS marketing campaign is doing. Lower growth rates may indicate that you should work on boosting your reach and increasing the span and scope of your campaigns.
How to maximize your SMS marketing ROI: Tips and best practices
No amount of complex calculations will be of any use if you don't take the action required to see actual improvements in your campaign performance.
Here are some ways to ensure that your SMS marketing channel bears fruitful results.
Segmenting your customer base accurately
Conducting comparative A/B tests
Optimising SMS deliverability to maximize delivery
Promoting customer engagement with two-way conversations
Gathering customer feedback
Monitoring user behaviour
Focusing on personalized text messaging
Writing creative yet compelling SMS copy
Setting up SMS marketing automation processes and workflows
Ensuring the success of your SMS campaigns: Key takeaways
SMS messages are an oft-ignored marketing tool that takes some time, effort, and experimentation to master. It is essential for every marketing team as SMS marketing has proven to be an important part of almost every integrated marketing channel. However, it is also crucial to measure how your campaign is performing so that you can get the maximum benefit out of the effort and cost of SMS marketing.
Despite the emergence of other sophisticated marketing tools, the power of SMS marketing is unmatchable in numerous ways. Due to the potentially massive SMS marketing ROI that your business could achieve, it is highly likely to be irreplaceable in the near future.