How to Measure The Success of Your Automated SMS Campaigns

SMS marketing is a powerful communication channel that delivers high open rates with direct and immediate interactions. But how do you measure the success of SMS efforts? To measure success, you first must define it. Start by calculating your return on investment (ROI), or comparing the costs of SMS marketing to its profits.

How Profitable is SMS Marketing?

SMS is one of the most profitable ways to grow your business and brand. Why?

1. SMS offers unmatched reach. Over 95% of American adults have a mobile phone, and they check it an average of 47 times per day. 
2. Text campaigns are opened over 90% of the time. Capturing the attention of these 250 million phone owners with a text is a proven tactic that delivers an extraordinarily high open rate.
3. Text messages have an average click-through rate (CTR) of 19%. This metric compares very favorably to CTRs of just 4% in emails and 1% on Facebook.

With SMS campaigns, you can reach nearly everyone with a message that will be seen, and that will drive meaningful responses. With these unbeatable numbers, SMS marketing has the potential to be the most profitable tool in a marketer’s arsenal.

What is The Success Rate of SMS Marketing?

SMS marketing drives results! The overall response rate for SMS campaigns averages 45%, significantly outpacing email marketing (6%) and other digital channels. This higher response rate translates into increased customer interactions, stronger brand connections, and greater sales.

The secret to leveraging SMS marketing's high success rates lies in utilizing intelligent platforms like Sakari that streamline targeted campaign creation and allow you to track your campaigns effortlessly.

Interested in learning more about specific strategies for optimizing your campaigns? Our previous blog post, SMS Marketing Best Practices for Better Engagement & ROI, dives deeper into strategies for exceptional success. 

What is The Average SMS ROI?

SMS can deliver exceptionally high returns on investment. For example:

• Urban Outfitters created an SMS marketing campaign that achieved an ROI exceeding 27 times their initial investment and sparked a dramatic 230% year-over-year increase in sales.
• Claires drove a 17x increase in ROI using text campaigns.
• Apple achieved a 78x ROI with SMS.
• Guess drove a 30x ROI with text-based marketing.

These outcomes reflect SMS's efficiency in driving conversion rates upwards by over 30% year over year. 

How Do You Calculate ROI for SMS?

In its simplest terms, you can calculate a return on investment with this formula: ROI = {Campaign Revenue} / {Campaign Cost} x 100. This formula compares the net economic gain to the initial expenses, offering a percentage that signifies the efficiency and profitability of the campaign.

Let’s look at an example. Imagine that a campaign generated $8,000 in sales. This particular SMS marketing campaign cost $1,000. 

How would you calculate ROI? Here’s the formula.

$8, 000

                                       —------------------    x   100   = 800% ROI

      $1,000

Sounds simple, right? Yes and no. Most marketers struggle to find these numbers in the first place. Here are our recommendations:

Identify the Campaign Revenue using your KPIs

Look at the original goals of your SMS campaign. Were you hoping to boost sales during a specific period of time? Or increase event attendance? 

This clarity in purpose helps select relevant key performance indicators (KPIs) tailored to your campaign's objectives. Common KPIs in SMS marketing include conversion rates, click-through rates, customer engagement levels, and opt-out rates.

Each KPI should be directly linked to revenue. This connection establishes your Campaign Revenue. Common methods of connecting KPIs to ROIs include cost-per-customer-acquisition (CAC) or the revenue value of marketing qualified leads (MQLs). 

Setting up robust tracking mechanisms is crucial to capturing the necessary data for ROI analysis. Techniques such as employing UTM parameters for URL tracking, dedicated phone numbers for call-ins, and unique discount codes for sales promotions ensure you can trace campaign outcomes to specific SMS efforts. Check out how Sakari incorporates analytics into our various SMS marketing features.

Subtract Campaign Costs 

Next, calculate the costs associated with your campaign. These Campaign Costs might include platform use fees, charges for sending messages, and any other expenses related to the campaign's development and execution (such as your team’s time). 

Translate the Final Number into an ROI Percentage

Finally, divide Campaign Revenue by Campaign Costs. Since ROI is usually expressed as a percentage, the final step is to multiply the calculated value by 100. 

Calculating ROI can seem overwhelming. Luckily, Sakari's SMS marketing platform is specifically designed to easily and accurately capture this calculation. With advanced analytics and detailed reporting capabilities, Sakari helps businesses track both the revenue generated and the associated costs of their SMS campaigns. Try a free 14-day trial today – you’ll even snag bonus messaging credits and a custom phone number.

How to Analyze and Interpret Your SMS Marketing Campaign Using ROI

Once you have  ROI from your SMS campaigns, you can refine your overall SMS marketing strategy. 

A positive ROI indicates that your campaigns are on the right track, generating more revenue than the costs incurred. However, the magnitude of ROI varies significantly across industries. It’s essential to benchmark your results against industry standards or set internal goals for a more contextual assessment. A high ROI suggests your campaigns resonate well with your audience, leveraging the right messages at optimal times. On the contrary, an ROI that falls short of expectations signals the need for a strategic pivot and the need to refine targeting, message content, or promotional offers.

Sakari’s SMS marketing platform aids in this interpretative process by offering comprehensive analytics. This feature enables a granular examination of every campaign's performance. For example, you can tweak calls-to-action, segment audiences or experiment with new content strategies. You can play around with the tool with our 14-day free trial. 

Challenges in Measuring SMS Marketing ROI

While ROI is straightforward to calculate, there are a few challenges to identifying the actual ROI from SMS marketing campaigns. Here’s what to look out for:

1. Revenue attribution. Accurately attributing sales and conversions to specific SMS activities is complex.  Since digital consumers engage with multiple channels, pinpointing SMS's contributions requires advanced tracking tools and analytical precision.
   
   
2. Cost attribution. Ensuring the integrity of data presents another challenge. To truly reflect investment, capturing all relevant costs, including those indirectly tied to campaign development and management, is essential.
   
   
3. Privacy compliance. Adhering to evolving compliance and privacy regulations introduces additional hurdles. Marketers are tasked with robust tracking while respecting customer privacy and adhering to consent regulations, demanding a delicate balancing act (especially as laws shift). You can read more about compliance in our Complete 2024 Guide to Business SMS Marketing.

How to Leverage ROI Insights for Future Campaigns

Your SMS campaign is over. Your ROI is calculated. Time to pack up the books. Right? 

Not just yet. You can still use ROI to improve future SMS marketing campaigns. Here’s how to optimize based on what you learn:

• Identify Success Factors: Begin by dissecting your most successful SMS campaigns. Look for effective messaging, optimal timing, and compelling calls to action. Replicating these components in future efforts can help sustain and potentially increase ROI.
• Refine Through Testing: Examine less successful campaigns and consider A/B testing to fine-tune variables. Consider altering your messaging, delivery timing, or offers to test performance
• Dive Into Analytics: Use platforms like Sakari to better understand campaign performance. Read our Advanced Business Playbook for SMS Marketing for more tips on analyzing SMS data.
• Segment and Personalize: Use ROI insights to refine your audience segmentation. Analyzing demographic, psychographic, and behavioral data can result in more personalized messaging. Tailoring your approach encourages higher engagement rates.
• Integrate into Omnichannel Strategy: Ensure SMS marketing complements your broader marketing efforts. ROI insights can inform how SMS works seamlessly with other channels, enriching the overall customer experience and lifting your comprehensive marketing ROI. See how Sakari integrates with your existing marketing tools (like HubSpot and Google Analytics) to make your life easier.

Sakari Can Help Maximize Your Automated SMS Campaign ROI: Start Your Free Trial Today!

Knowing the theory is one thing. Having a tool that helps you calculate ROI is another. 

Try our 14-day free trial to test out all of Sakari’s SMS marketing features. Your trial includes message credits and a custom phone number.

Got questions? You can always book a demo or contact us directly. We want to hear from YOU!