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How to Measure the ROI of SMS Marketing

   BONUS MATERIAL: The Psychology of SMS Marketing

Whatever your line of business, you can always find space to integrate SMS marketing into your communications strategy. While it is often described as an outdated marketing tool, the fact remains that it targets an essential and sizeable chunk of almost every target market, irrespective of their geographic location.


Especially with newer technologies such as geo-mapping and geotagging getting integrated into SMS strategies, the power of this marketing tool is only increasing. SMS marketing is not only cost-effective; it also offers more value for your money as compared to other costly marketing tools that may be a part of your communications strategy.

To understand just how cost-effective their SMS marketing is, marketers should measure its Return on Investment or ROI. An ROI analysis is a simple analysis that compares the expenses of your marketing campaign versus its revenue.

There are certain tried and tested methodologies and measures that can be used to measure the ROI of your SMS marketing campaign, and these include:

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 typically guides them to a webpage whether they can either make a purchase, learn more about your products or services, or do both. In layman's terms, a CTR typically measures that upon receiving your SMS, how many users were compelled to do something about it. The CTR is a great tool 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 to be divided by the number of SMSes you sent out as part of your campaign and multiplied by 100. A high CTR translates into a high ROI.

2. Calculating The Opt-Out Rate

The opt-out rate measures the nu mber of users that opt-out from receiving an SMS from you in the future. Users opting out can often be a result of a new marketing campaign of yours that must have sent them an SMS, and they subsequently felt compelled to opt-out of your SMS list. The reasons why users opt-out can be many: they may not be personal at all, and the user merely wishes to trim the number of SMSes they receive on a daily basis, or it may be very personal, and the user doesn't wish to hear from you at all.

A high opt-out rate can signify a lack in your digital marketing campaign: it could be wrong content, wrong audience, wrong timing, or probably too many messages. By monitoring their opt-out rates regularly, marketers can determine what type of content in SMS marketing works and what doesn't.

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 message. The action that they take can be thought of as 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 marketing message. To calculate the conversion rate, marketers should find out the number of individuals that take action and divide it by the total number of individuals that are a part of your campaign.


By measuring the conversion rate, marketers can better understand how to engage their target audience, which products or services are popular, which marketing message works and which doesn't, etc.

4. Calculating The Cost Per Redeeming Subscriber

The cost per redeeming subscriber refers to the amount of money your brand spends on each conversion from a user or subscriber. 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 their spending on the marketing budget is justified.

To calculate the cost per redeeming subscriber, marketers should divide the cost of each SMS by the previously calculated conversion rate.

This measure helps marketers understand whether they are earning enough money from a marketing campaign in comparison to what they are spending 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. Your ROI is ultimately decided by the number of individuals in your subscriber list, and the greater the list, the higher the ROI. Not just that, but a growing subscriber list represents that your brand is expanding its reach and getting in touch with more members of its target audience.

To measure your growth rate as such, you should find out the number of your current subscribers and from that minus the number of your previous subscribers. The resultant 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 marketers should increase their reach and increase the size of their campaign.

Key Takeaways

Managing an SMS campaign can be a daunting task, especially because of the sheer number of SMSes a marketer is responsible for sending to the masses. A simple mistake in content or a typo could be a dent in your entire marketing campaign.

However, with time, trial, and testing, marketers learn to appreciate the art of SMS marketing and gain experience in the act. This is essential for every marketer as SMS marketing is an integral part of almost every integrated marketing campaign. Despite the emergence of other sophisticated marketing tools, the power of SMS marketing is unmatchable in numerous ways and irreplaceable in the near future.


Author Bio:

Myrah Abrar is a computer science graduate with a passion for web development and digital marketing. She writes blog articles for Dynamologic Solutions.

Myrah Abrar
2020-12-09 00:00:00 UTC
2294142