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Once you've executed your campaign, it's important to calculate the return on investment (ROI). This blog helps you to do just that.
Before launching your SMS campaign, it is crucial to establish clear goals that will serve as the basis for measuring success and calculating return on investment (ROI). These goals can be divided into four distinct areas:
Remember to revisit these objectives at a later stage to assess the campaign's progress and make any necessary adjustments.
The success of your SMS campaign hinges on accomplishing your business goals. To determine your ROI, you can use these goals to understand what worked well, what could have been improved, and what adjustments are necessary to make your next campaign even more successful.
Having a clear understanding of your campaign's performance is crucial for setting objectives, managing expectations and making improvements to future campaigns.
The following pointers will help you to unlock some of the key metrics you need:
The delivery rate breaks down the percentage of texts that were successfully delivered compared to the total number sent. It gives you a good indication of how accurate and up to date your data actually is. A low delivery rate may suggest that some housekeeping is needed to update or remove some of your mobile numbers.
After sending your messages, the first step is to determine the success of your delivery. You can calculate the delivery rate using the following formula:
[Delivered ÷ Total Sent ] × 100 = ROI%
By measuring the conversion rate, you can begin to build up a picture about which offers and promotions worked best for your audience and motivated them to take action. Depending on the goal of your SMS campaign, the conversion rate can be determined by analysing the number of downloads, appointments booked, or offers redeemed in-store.
You can calculate the conversion rate using the following formula:
[Number of people who took action ÷ Number of Recipients] × 100 = ROI%
You can track the financial return on your campaign by looking at areas such as active redemption numbers, conversions or call and response rates. This also allows you to compare the performance of SMS marketing against other channels such as email, direct mail, and social media.
To calculate the cost per conversion, divide the number of achieved goals (e.g., appointments booked, items sold, coupons used) by the cost of each delivered text message. The formula looks like this:
[Return ÷ Investment] x 100 = ROI%
An ROI figure is only ever as reliable - or as accurate - as your data and how well you interpret it.
Remember to:
Tip: A/B tests involve splitting your database into two segments and sending each group slightly different messages to determine which one performs best. For instance, one message may contain imagery while the other does not, or the wording may vary slightly. A/B testing is an excellent way to gain insights into customer behaviour and the campaign strategies that work and don't work.
Calculating the true ROI of marketing campaigns remains a significant challenge for many businesses. Whether your campaigns are spontaneous or part of planned monthly initiatives, understanding the value generated from SMS marketing can help you make improvements, increase brand awareness, boost profits, and secure greater investment from stakeholders in future campaigns.
If you have any questions regarding the calculation of your campaign's ROI or if you wish to learn more about maximising your SMS results, don't hesitate to reach out to us today on 01484 599 311.