How to Boost Your SMS Marketing ROI in 7 Easy Steps

In today’s fast-paced digital landscape, SMS marketing has emerged as a crucial channel for businesses aiming to engage customers directly and effectively. With the rise in usage of mobile devices, text message marketing offers unparalleled immediacy and personal touch, leading to impressive returns.

Notably, Bare Performance Nutrition, a sports nutrition company, harnessed this potential by generating $1 million in SMS-attributed revenue within just four months.

SMS marketing is becoming a powerhouse for e-commerce brands, and businesses are ramping up their investments in this channel. U.S. businesses are expected to spend $12.6 billion on SMS marketing by 2025, with the industry growing at a 20.3% compound annual growth rate (CAGR). This upward trend signals that brands that prioritize SMS campaigns now will be ahead of the curve in capturing potential customers and driving higher ROI.

This article explores actionable strategies to help you understand and maximize your SMS marketing ROI. We’ll delve into key approaches such as targeted segmentation, personalized messaging, timely campaigns, clear CTAs, integration with other marketing, A/B testing, and leveraging automation. 

By implementing these tactics, you can enhance your marketing ROI and foster stronger customer relationships.

Understanding SMS marketing ROI is crucial if you want to maximize the effectiveness of your text message marketing efforts. Let’s define ROI in the context of SMS marketing, learn how to calculate it, discuss key performance metrics, and emphasize the importance of focusing on revenue over vanity metrics.

Return on Investment in SMS marketing measures the profitability of your SMS campaigns by comparing the revenue generated to the costs incurred. A positive ROI indicates that your SMS marketing efforts are yielding more revenue than the expenditure, making it a cost-effective strategy for your business.

To calculate SMS marketing ROI, use the following formula

ROI (%) = [(Revenue from SMS Campaign – Cost of SMS Campaign) / Cost of SMS Campaign] x 100

For example,

• Revenue from SMS Campaigns: $5,000

• Cost of SMS Campaigns: $500

ROI = [($5,000 – $500) / $500] x 100 = 900%

This means that for every dollar spent, the campaign generated nine dollars in return. 

To effectively gauge the success of your SMS marketing campaigns, monitor these key metrics:

• Open Rates: The percentage of recipients who open your text messages.

• Click-Through Rates (CTR): The percentage of recipients who click on links within your SMS messages.

• Conversion Rates: The percentage of recipients who complete a desired action, such as making a purchase.

• Revenue Generated: Total income produced from your SMS campaigns.

• Churn Rate: The rate at which subscribers opt out of your SMS marketing list.

• Cost Per Acquisition (CPA): The cost associated with acquiring a new customer through SMS marketing efforts.

• Customer Lifetime Value (CLTV): The total revenue expected from a customer over the duration of their relationship with your business.

• Subscriber Lifetime Value (SLTV): The average amount each subscriber spends during their subscription period. SLTV is influenced by factors such as acquisition rate, revenue per message, messages per subscriber, and retention rate.

• ARMR Metrics: A comprehensive framework used to track SMS marketing ROI, focusing on four core components:

  • Acquisition: How many new subscribers are gained?

  • Revenue Per Message: How much does each message contribute to overall revenue?

  • Messages Per Subscriber: Frequency of engagement with each subscriber.

  • Retention: How well does the SMS marketing strategy maintain long-term subscriber engagement?

Focusing on ARMR metrics can help you gain a deeper understanding of SMS marketing performance beyond traditional engagement stats. This approach ensures that brands focus on long-term ROI rather than just short-term campaign results.

Focusing on metrics like revenue generated and conversion rates provides a clearer picture of SMS marketing effectiveness compared to vanity metrics such as open rates. While high open rates indicate that messages are being seen, they don’t necessarily translate to increased sales or revenue.

Prioritizing revenue-centric metrics ensures that your SMS marketing strategy aligns with your business objectives and delivers tangible returns.

Understanding SMS marketing ROI is just the first step—now it’s time to learn how to optimize your approach. By implementing strategic tactics, you can enhance your SMS marketing campaigns, improve conversion rates, and ultimately drive more revenue.

Let’s look into some of the proven methods that will help you get the most out of every text marketing campaign.

Segmentation involves dividing your contact list into distinct groups based on shared characteristics. This approach ensures that each text message resonates with its intended audience, leading to higher conversion rates and a more substantial return on investment.

• Demographics: Categorize subscribers by age, gender, location, or income level. For instance, a boutique might send exclusive offers to customers in a specific city/

• Purchase History: Analyze past buying behavior to recommend related products or services. For example, customers who purchase running shoes might appreciate a discount on athletic apparel.

• Website Behavior: Monitor actions taken on your site, such as pages visited or items added to the cart. For example, a user browsing winter coats could receive a timely promotion on seasonal outwear.

• Engagement Level: Identify how often subscribers interact with your messages. Offer exclusive deals to loyal customers and special incentives to re-engage inactive users.

Personalized messaging fosters a sense of connection and trust. According to a study, 91% of consumers are more likely to shop with brands that provide relevant offers and recommendations. By aligning your content with subscriber preferences, you not only enhance user experience but also drive higher conversion rates.

Personalized messages are a powerful tool in modern marketing. They enable you to connect with your customers on a more intimate level. You can enhance engagement and drive conversions by tailoring content to individual preferences and behaviors.

• Using Customer Names: Addressing recipients by their first name adds a personal touch. For instance: “Hi [Name], enjoy a 15% discount on your next purchase with us! Shop now: [Link]”.

• Referencing Past Purchases: Reminding customers of previous buys can prompt repeat business. For example, “Hi [Name], your favorite [Product] is back in stock! Grab yours here: [Link]”.

• Offering Tailored Recommendations: Suggesting products based on browsing history or preferences shows attentiveness. For example, “Hi [Name], based on your interest in [Category], you might love our new [Product]: [Link].”

Research indicates that a significant 74% of consumers are open to sharing personal information with brands—provided they receive valuable incentives in return. Key motivators include access to exclusive deals, competitive pricing, and personalized perks that enhance their shopping experience.

Source: The Current

Creating a conversational tone in these messages fosters a sense of dialogue and connection, making your customers feel valued and understood.

A study reveals that 52% of consumers reported being influenced to purchase a product after receiving a marketing SMS message, illustrating the impact a personalized marketing message can have on customer engagement and sales.

Source: Adam Connel

Timing is crucial in SMS marketing to ensure messages resonate with the recipients and prompt engagement. Sending messages at optimal times can significantly enhance open and conversion rates.

The best times to send SMS marketing messages to your customers are:

• Midday (12 p.m.): Many individuals check their phones during lunch breaks, making it an opportune moment for engagement.

• Evening (8 p.m.): As the day winds down, some people are more relaxed and likely to engage with promotional content.

• Promotional Offers: Announce flash sales or special discounts during midday or early evening when engagement peaks.

• Abandoned Cart Reminders: To encourage purchase completion, send these shortly after a cart is abandoned, preferably within a few hours.

• Order Updates and Shipping Notifications: Dispatch these updates in real time to keep customers informed, enhancing trust and satisfaction.

• Product Restock Alerts: Notify interested customers promptly when popular items are back in stock to drive immediate sales.

• Loyalty Program Announcements: Share updates or exclusive offers with loyal customers during evenings when they have more leisure time to engage.

• Birthday and Anniversary Messages: To start the recipient's day on a positive note, time these personalized messages to arrive on a specific date, preferably in the morning.

• Event Announcements: Promote events well in advance, with reminders as the date approaches, ideally sent during peak engagement times like midday.

Incorporating clear and compelling call-to-actions (CTAs) in your SMS marketing messages is essential for guiding recipients toward desired actions and enhancing engagement and conversion rates. A well-crafted CTA provides direction and motivates customers to act promptly. 

• “Don’t miss out—Shop now to grab your exclusive deal!”

• “Learn more about our latest offers and save big today!”

• “Your discount is waiting—Redeem your offer now!”

Effective CTAs are action-oriented and create a sense of urgency, prompting immediate responses from recipients.

Utilizing shortened links within your SMS not only conserves character space but also enables effective tracking of user engagement. Shortened URLs make messages concise and aesthetically pleasing, enhancing the overall user experience. Moreover, they allow you to monitor click-through rates, providing valuable insights into campaign performance.

Integrating your SMS marketing with other channels like email and social media can significantly enhance your overall marketing strategy. This multi-channel approach ensures consistent messaging and a seamless customer journey, leading to improved engagement and higher conversion rates.

Your SMS marketing can serve as a powerful tool to reinforce messages delivered through email and social media. For instance, while an email might provide detailed information about a new product launch, an SMS can serve as a timely reminder with a direct link to purchase, creating a sense of urgency. This combination leverages the strengths of each channel, enhancing the likelihood of customer action.

• Email and SMS Coordination: A retailer can send an email announcing an upcoming sale and follow up with an SMS reminder as the event approaches. This strategy ensures the message reaches customers through multiple touchpoints, increasing the chances of participation.

• Social Media and SMS Integration: Brands can promote exclusive SMS-only discounts on their social media platforms, encouraging followers to subscribe to their SMS list. This tactic grows the SMS subscriber base and rewards loyal customers with special offers.

A/B testing is a fundamental strategy in SMS marketing that involves comparing two versions of a message to determine which performs better. By testing different elements—such as content, timing, and calls-to-actions (CTAs)—you can optimize your SMS campaigns to enhance engagement and conversions.

• Content Variations: Experiment with different message texts to see which resonates more with your audience. You can vary the tone, length, or personalization elements.

• Timing: Test sending messages at different times of the day or week to identify when your audience is most responsive.

• Call-to-Action (CTA): Try different CTAs to determine which prompts the most user engagement. For example, “Shop Now” versus “Learn More.”

After conducting A/B tests, it’s crucial to analyze the results to inform future SMS marketing efforts. To assess performance, focus on metrics such as open rates, click-through rates, and conversion rates.

Utilize this data to refine your SMS marketing strategy, ensuring that each text message marketing campaign is more effective than the last.

Traditional A/B testing can be time-consuming and may not always yield significant improvements. Postscript’s advanced AI Infinity Testing revolutionizes this process by combining predictive analytics and generative AI technology to generate and test thousands of evolving on-brand message variants.

This approach goes beyond conventional A/B tests, ensuring continuous optimization for maximum impact. Brands utilizing Infinity Testing have reported an average revenue increase of 20% from their top-performing flows.

Implementing SMS marketing automation tools can significantly enhance your marketing strategy by streamlining communication and improving efficiency. 

Automation enables you to send timely and relevant messages without manual intervention, ensuring consistent engagement with customers.

• Time Optimization: Automated SMS workflows allow your team to focus on strategic tasks by handling routine communications such as order confirmations and appointment reminders.

• Enhanced Customer Engagement: Personalized and timely automated messages, such as birthday greetings or special offers, foster a stronger connection with your audience and increase loyalty and conversion rates.

• Consistency and Accuracy: Automation reduces the risk of human error, ensuring that messages are sent accurately and consistently, which is crucial for maintaining customer trust.

• Welcome Messages: Greet new subscribers with a warm welcome message that introduces your brand and sets the tone for future communications.

• Abandoned Cart Reminders: Automatically remind and encourage customers to complete their purchase who have left items in their shopping cart.

• Appointment Reminders: Send timely reminders to customers about upcoming appointments to reduce no-shows and enhance customer satisfaction.

• Feedback Requests: After a purchase or service, solicit feedback to gain insights into customer satisfaction and identify areas for improvement.

• Birthday Greetings: Celebrate customer birthdays with personalized messages and exclusive offers to make them feel valued.

Maximizing SMS marketing ROI requires a strategic approach, from targeted SMS marketing and personalized messaging to A/B testing and automation. By implementing these proven strategies, you can increase conversion rates, engage your target audience more effectively, and drive higher revenue from your SMS marketing campaigns.

Unlike other channels, SMS marketing offers unparalleled immediacy, with high open rates and faster customer response times. With the right marketing strategy, you can turn your SMS message campaigns into high-performing revenue drivers.

Postscript is a trusted and leading SMS marketing platform built exclusively for Shopify and e-commerce merchants. It provides the tools you need to launch, scale, and optimize your SMS campaigns. 

With a focus on compliance, segmentation, and automation, our team at Postscript empowers you to:

• Grow your SMS subscriber list with advanced opt-in strategies.

• Deliver personalized, behavior-driven messages that boost conversions.

• Automate SMS workflows for text message marketing campaigns like order updates, birthday greetings, and flash sales.

• Optimize campaign performance using AI-driven Infinity Testing to increase SMS marketing ROI.

Try our platform today and see how our advanced tools can revolutionize your SMS marketing strategy. Whether you want to grow your subscriber list, personalize customer interactions, or optimize campaign performance, Postscript provides the tools you need to achieve your goal.

Let’s build stronger customer relationships together. Contact us to explore how our comprehensive SMS marketing solutions can help you boost ROI and drive long-term success for your brand.