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What is The ROI of Text Message Marketing?

December 21, 2018 Posted by in Text Message Marketing - M360

Text message marketing is a highly flexible and efficient digital marketing solution companies regardless of their size and sector, which is why its implementation has skyrocketed in the in previous years, with 66% of the global population having used text messages for business communication in 2018. Companies and marketers who have found a way to keep up with industry innovation and employ text message marketing for their marketing strategies, whether we are talking about one-time only campaign, recurrent ones, such as holiday campaigns, or on-going campaigns such as loyalty programs, are seeing the positive impact that this digital marketing strategy has had on their overall activity.

Yet regardless of the success a text message marketing campaign has, the impact it has on ROI is not something companies choose to focus on, which might turn out to be a bad business decision, as text message marketing and ROI are in a close-fitted relationship to each other. Analyzing the way your text message marketing campaign is influencing your revenue will give you more control over your investments, and provide you with fruitful data in regards to the implementation of your strategies, whether successful or not. Knowing how to calculate ROI for text message marketing will improve your marketing outcomes and increase your success rates, as long as you follow a few simple yet highly effective steps.

How To Begin And What To Analyze?

The amount of money invested in marketing tools justify the needs for a marketing ROI analysis, and knowing where to begin and what to analyze will help your company and its marketing team find the proper way of knowing how ROI is affected by your marketing strategies, but also how to calculate it. The first step you need to take in this direction is to set goals and objectives in place for all your text message marketing campaigns and other digital marketing solutions you are implementing. Doing so, you are creating the possibility of data gathering and analyzing based on your initial needs, expectations, and goals. This will allow you not only to tailor strategies as you go, and improve their outcomes, but also to know what you are doing wrong, in case campaign has failed to meet its objectives. Keep data on all the steps of your text message marketing campaigns, and use it to draft reports on how said campaigns have performed.

Text Message Marketing vs. Other Marketing Methods

Before diving into text message marketing ROI and how to calculate it, we will discuss some aspects of text message marketing campaigns and why you should choose them over other marketing solutions, aspects which will help you later when analyzing your data and calculating your text message marketing ROI.

With text messages reaching 98% of their recipients and 90% of text messages being read within three minutes of being received, there is no doubt that text messaging is the most efficient mean of business to consumer communication. More and more marketers are letting go both of traditional marketing, but also of digital ones such as email marketing or Facebook marketing in favor of text message marketing. With the development of solutions that automatically mark messages as spam, email marketing has seen as significant decline. As for Facebook, given that there are too many posts in such little space, the average post has dropped from reaching 4% to just 2% of its audience, especially since they have been experimenting with new methods which are highly detrimental to pages. Compared to text message marketing, those numbers seem close to insignificant.

What does that mean for your marketing ROI? If you have a Facebook page with 1,000 Likes that means only 20 people will see your post whereas a text message marketing blast to 1,000 people will have 980 of recipients actually seeing it, and 900 of them reading the text. Also, text messages are more stable, easier to draft and broadcast, and the mean of communication is one preferred by a lot of consumers. Using Facebook or email marketing means you will be depending on third parties such as email apps, the Facebook app, and any decisions they might take which could damage your campaign. A text message marketing campaign requires nothing more than a cellular provider and to be in compliance with industry regulations.

The ROI of Text Message Marketing

Calculating ROI is fairly simple, as it involves costs versus revenue, yet in the case of marketing ROI the metrics are open and you can personalize and tailor them to best fit the needs of your company. You can calculate it based on certain incentives you have given during a campaign, either monthly or annually; you can calculate it per each campaign or type of campaign – one time, recurrent, ongoing, etc. – but regardless of your chosen method, you need to always compare the calculations with your other marketing campaigns, if you truly want to see the power of text message marketing and understand why and when you should make its implementation a priority.

Metrics to have in mind when calculating the ROI of text message marketing:

  • The cost of your text message marketing (per month or per year, depending on your preferred method of calculating ROI)
  • The number of your mobile subscribers (make sure your lists are always well-documented and have enough demographics as to help you provide a personalized experience to your customers)
  • The number of campaigns you will implement in a month or year
  • The average read rate of a text message marketing (which stands between 90% and 94%)
  • The estimated response rate (which can be in between 3% and 90% – use data from previous campaigns to better understand this metric)
  • The average cost of the products or services you are selling or promoting in your text message marketing campaign

You can also use a simple formula such as subtracting your initial investment in the campaign from the gross revenue you accumulated at the end of it.

Regardless of how you choose to calculate the ROI of your text message marketing campaign, it is important to remember that text message marketing provides you with a simple, intimate, and highly successful mean of communication with your customers and promoting your products or services, and that this solution is highly trackable and easy to analyze, as long as you start with thoroughly drafted goals and gather all important data along the way.


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