You’ve read the stats about how SMS technology is the most direct and effective way to connect with your customers, but how can you actually measure the success?
SMS technology, particularly bulk text messages, have been around for quite some time now and have become a fairly common tool for many marketers. But just like with any other marketing initiative, it’s important to be able to measure the performance of your SMS campaign. Regardless of how great your SMS campaign may seem, unless you measure it, you will never know for sure whether it’s working.
The success of any marketing campaign is, to a great extent, dependent on its return on investment (ROI). In fact, according to a study by HubSpot, marketers who show their ROI are 1.6 times likely to get a higher marketing budget.
It’s therefore essential that you analyze the key ROI metrics in your SMS campaigns to see what’s working and what’s not, and make changes where applicable.
With this in mind, we’ve put together a list of ways you can measure the ROI of your SMS campaign:
1. Click through rate
The click-through rate measures the percentage of subscribers who initiated an action by clicking a link in an SMS, directing them to another location where they might make a purchase or learn more about a product, service or offer. It gives you direct insight into how many people on your list are engaging with your content and are interested in learning more about your brand or your offer.
Using SMS software and tools such as Google Analytics, you can track the number of unique clicks from your SMS campaigns. Once you have the figure, you can easily calculate your click-through rate. Simply take the number of the clicks and divide it by the total number of delivered SMS and multiply by 100. The higher the click-through rate, the higher your ROI!
2. Opt-out rate
No SMS campaign is completely devoid of opt-outs. There will always be some subscribers who opt out after receiving a marketing text message regardless of how good your SMS software or campaign is. It can be that they simply need to trim the number of text messages they receive or that they no longer need your brand’s services or products.
Still, a high opt-out rate should raise a red flag. It could be a signal of a number of problems in your bulk text messages such as poor timing and audience targeting, high frequency or irrelevant message content.
Monitoring your opt-out rates will allow you to test different texts and opt for the content with the best results.
3. Conversion rate
The conversion rate indicates the percentage of visitors who take a valuable action by responding to a call to action. This can be a reply, a phone call, a sign up, a purchase or simply a visit to your e-commerce site. In many instances, however, conversions are purchase-related making it possible for marketers to relate the success of their SMS marketing to a hard number.
Measuring your conversation rate will enable you to have a better understanding of the products, services or offers that are actively engaging your audience and generating conversions. This can guide you to eliminate or tweak the poor performers and expand the good performers, resulting in even more conversions.
To calculate your conversion rate, start with the number of subscribers that take action, and then divide it by the total number of subscribers in your campaign.
4. Growth rate
The growth rate for your subscriber list is another important metric you should look at when determining success. As your subscribers increase, so does your ROI. As such, you'll want to be keeping tabs on your list growth and loss.
Growing your list allows you to extend your reach, expand your audience and position yourself better in the industry. Given that there will always be opt-outs, it’s important to pay attention to growing your subscriber list and keeping it at a healthy size.
To determine your growth rate, deduct the number of previous subscribers from your current number of subscribers and divide it by the number of previous subscribers. From the figures, you can tell how fast you are growing your list of subscribers.
5. Cost per redeeming subscriber
Before you deem your SMS campaign a success, you need to know the exact cost of each lead and determine whether it’s profitable. Tracking how much you spend for each converted subscriber will help you know your ROI per campaign.
To work it out, divide the cost of each delivered SMS message by the conversion rate. Simple. If your cost outweighs your campaign, something is very wrong. Even if your cost is lower than your redemptions, you’ll still need to make sure you are earning enough to justify investing in the campaign.
Tracking your SMS campaign ROI metrics will allow you to optimize your SMS campaigns and scale up the most successful areas boosting your ROI even more.
For more information on how you can measure the ROI of your SMS campaign, feel free to contact one of our SMS technology experts on 1300 883 400.