What Is the ROI for SMS Marketing?
Take the guesswork out of your text marketing campaign with our guide on SMS marketing ROI.
In the world of marketing, nothing stands out quite like text messages.
Did you know that 98% of SMS messages are opened, compared to 18% of emails? Unsurprisingly, SMS marketing is one of the best ways to grow your customer base, promote sales, and drive traffic. While you may be on board with text message marketing for your business, you're concerned about SMS marketing ROI or return on investment.
That’s what we’re here to cover. You’ll learn about ROI for SMS marketing, how to calculate it, and what measurements are involved so your company can grow while boosting its bottom line.
First, you might be thinking, “What’s the difference between SMS vs text?” SMS (short message service) is a version of a text message, just like MMS (multimedia messaging service). So we’ll use “SMS” and “text” interchangeably in this article.
How Much Does it Cost to Send a Text Message?
Before discussing calculating ROI, it’s important to understand the actual cost of sending text messages – because this directly pertains to your campaign’s SMS ROI.
- Cost per message. Sending an SMS text message costs between $0.01 and $0.05. MMS messages cost a bit more because they contain media (like images, gifs, etc.) and more character allowances. Learn more about SMS vs MMS.
- Cost per keyword. When your text message CTA includes a keyword (like “text HELLO to 21212”), that costs money. This cost ranges from $15 to $25 per keyword. Many text marketing platforms include keywords in their plan pricing.
- Platform/service cost. Consider the cost of the text marketing service your company uses, as that affects your SMS marketing ROI.
How to Calculate ROI in SMS Marketing
SMS ROI differs from company to company and depends on the goals of every SMS marketing campaign. For example, what are the objectives of your text marketing campaign? Do you want people to register for an event, purchase a product, donate to a fundraiser, or refer a friend? Make sure to define your goals before launching your campaign so that you know what you’re measuring
Here is a simple ROI formula to keep in mind:
Return - Investment = ROI
The return is the campaign's revenue, and the investment is what it costs to run the campaign (including the costs involved in sending text messages that we noted earlier). To determine the ROI percentage and quickly compare the success of every campaign, you can use this formula:
(Return / Investment) x 100 = ROI percentage
Here are some standard metrics that are used in measuring SMS marketing ROI:
- Conversion rate: This could mean sales, donations, or referrals (whatever your campaign goal is) from the text message.
- Click-through rate: While this doesn’t directly apply to your campaign’s ROI, it does provide a good look at user interest and can give you more context if your campaign wasn’t as successful as you had hoped.
- Cost per acquisition: This is part of your investment and includes costs per message and keyword – what it costs to get a customer to complete an action.
- Lead generation: You’ll also need to consider the initial investment in generating leads to get people to opt into your text messages. Naturally, there will be a higher upfront investment when you’re getting started with text marketing and acquiring contacts.
Advantages of SMS Marketing: Case Studies
Let’s look at a few examples of how text marketing has helped businesses in different industries. You’ll see that the advantages of SMS marketing differ from company to company based on their specific needs.
When a Domino’s Pizza franchise near the University of North Carolina realized that its ads at ball games weren’t increasing social media engagement or sales, it decided to try text marketing. Its initial investment was only $25 and included an SMS message with a keyword and short code; it garnered an increase of 125 orders from this initial text campaign. In subsequent campaigns, the Domino’s Pizza franchise loweredits cost per acquisition while adding more text subscribers, proving to be an overall success compared to its ball game ads.
Lee & Associates
The West Los Angeles division of Lee & Associates, a commercial real estate company, needed more efficient lead generation to increase sales. With EZ Texting, it garnered more buyer interest with simple text messages that assigned unique keywords to specific properties. With detailed lead segmentation based on buyer price points, preferred location, and more, Lee & Associates’ West LA division saw an additional $1 million in fees and was able to close 16 deals in just three years.
How EZ Texting Can Boost Your SMS Marketing ROI
We guess that you’re looking for an effective text marketing solution that won’t break the bank. That’s where EZ Texting can help. When you sign up with us, you’ll get:
- Transparent (and low) pricing because we understand that keeping investment affordable is one of the keys to increasing ROI. Our plans start at $20/month, but the higher your pricing tier, the more messages you can send in a day and the lower the cost per message.
- Contact management that makes your life easy. Upload contacts in seconds and segment them into targeted SMS marketing groups.
- Plenty of text messaging tools, like group texting, two-way texting, SMS and MMS texting, and more, reach more people and nurture customer relationships.
- Textable number options, like local and toll-free numbers, dedicated short codes, and text-enabled landlines, to fit all SMS messaging strategies.
- Robust analytics that do the number crunching for you. Track interactions and measure the success of a campaign to better understand the ROI for SMS marketing with that specific messaging strategy.
No matter your industry – whether it’s retail, nonprofit, real estate, or higher education – your business will be set up for success with EZ Texting. From measuring enterprise texting ROI to garnering insights on SMS ROI for small businesses, EZ Texting’s text marketing solutions tailor to any business need. Learn more about how to write an effective text message and get started with your next SMS marketing campaign. Happy texting!