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Introduction
There are two essential questions for any company: How much do you make? How much does it cost? ROI (Return On Investment) is the indicator that provides a precise answer to these two questions. Among KPIs SMSROI is the benchmark, as it is in all sectors. And when it comes to R.O.I., SMS comes out on top. Follow the guide.
Discover the benefits, options, parameters, creation and follow-up of surveys via SMS to optimize participation rates and the reliability of the data collected, while improving the customer experience.
What is the ROI of SMS ?
On average, €1 spent on SMS generates €50 in sales. The return on investment for SMS is therefore 4900%.
It has to be said, however, that this figure is an average. The profitability of this mobile marketing strategy depends on many variable factors:
High response rate
This is the major advantage of SMS surveys: the opening rate of SMS (98%), ensuring almost guaranteed visibility. This high open rate translates into a very significant customer response rate (often around 45%), far superior to that of e-mail or other more traditional survey methods. This efficiency favors the acquisition of a large number of quality responses. And the uniqueness of the telephone number improves the reliability of the data collected and the results obtained.
- The place of SMS in your strategy
- The quality of your mailing list and the type of recipient
- The quality of the message and the relevance of the proposed offer
- Quality of user experience
- Your personalized transmitter
- Your direct URL to your products
- Etc.
Generally speaking, SMS is the most cost-effective communication medium.
Why is the ROI of SMS so high?
There are several reasons why SMS is a particularly ROI-producing channel. Firstly, the costs associated with mailings are relatively low compared with most marketing channels (the unit cost of SMS is between 3 and 7 cents). Secondly, a number of KPIs work in SMS 's favor:
- Openness: This is the metric for which SMS is recognized as a marketing must-have. 95% of business SMS are opened within 4 minutes Next receipt.
- Clicks: Another KPI where SMS dominates other marketing channels, generally ranging from 6% to 16%.
- Conversions: Another metric that works in SMS's favor, with an average of 29%.
With SMS 's low cost and high engagement, it's only logical that its performance is second to none.
How can I accurately calculate the R.O.I. of my shipments?
Calculating the return on investment of SMS is similar to all ROI calculations. You need to determine how much you have spent (on marketing actions, advertising, etc.), so that you can prioritize the most profitable investments in the future.
To do this, subtract the money invested from the profits, then divide the resulting amount by the cost of the investment. The result is then multiplied by 100 to express the ratio as a percentage.
ROI formula: R.O.I = (revenues - costs) / costs x 100.
For your marketing strategy SMS, you need at least the following data to calculate your R.O.I:
- Number of messages sent
- Price per SMS
- Sales generated.
(The price per SMS multiplied by the number of messages sent gives you the cost of the investment, the sales figure gives you the associated revenue)
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Calculation examples
(10 000 € - 1 000 €) / 1 000 € x 100 = 900 %
This means that every euro invested in campaign generated 9 euros in revenue.
It's important to note that ROI should not be considered an absolute measure of the success of a marketing initiative. Other factors such as the reach of your communication, information gathered on the quality of the mailing list, impact on user experience and customer satisfaction must also be taken into account when assessing the overall success of an action.
Customer case study: the R.O.I of a "Panda Tea" SMS campaign
Our customer Panda Tea decided to launch a marketing campaign at SMS. The campaign targeted 20,000 recipients, at a total cost of around €1,000. At the end of this operation, 2926 customers made one or more purchases, bringing the profit from this marketing campaign to €64,372.
(64372 - 1000) / 1000 x 100 = 6337,2%
Every euro spent by Panda Tea on the SMS campaign generated €63.37.
Calculating ROI for a physical store
For a store, the ROI calculation doesn't change. The biggest difference with the web lies in the way you discover the revenue generated by your mailings.
You'll need to be clever, for example, by adding a promo code specific to your action in your text, or by indicating that you need to show the SMS received at the checkout to benefit from your offer.
How can I optimize the ROI of my campaigns?
To improve the profitability of your SMS campaigns, you will need to review the various performance indicators at your disposal in detail, in order to determine what can be optimized:
- Delivery rate: The percentage of your shipments delivered successfully. It informs you about the quality of the telephone number database used. If it's not satisfactory, clean up your your mailing list.
- Open rate: The percentage of delivered messages that have been opened. It gives you an idea of the effectiveness of your Sender ID and first line of text. If your openings aren't up to standard, you can choose a more impactful tagline for your next action.
- Click-through rate: The percentage of SMS opened messages that have generated a click on a link included in the message. It indicates the effectiveness of your content. To optimize it, aim to write content that engages your customers and an optimal URL or button to generate actions.
- Conversion rate: The percentage of recipients who have carried out the desired action (purchase, registration, contact request, etc.). This is the ultimate indicator of the effectiveness of your communication in generating commercial results.
- Cost per conversion: The average cost of each conversion, calculated by dividing the total cost of the campaign by the number of conversions generated. It is useful for observing the profitability of your actions in relation to your margin.
By using these key performance indicators, you can make decisions based on accurate data and really improve results in the future.
smsmode© the ideal partner to boost your ROI
Calculating ROI isn't difficult. Getting all the information you need to make an accurate calculation, however, can be time-consuming. With smsmode©, your enriched campaigns (SMS + URL link with or without landing page) can be precisely monitored!
In your customer area, you have access to all essential data in real time. The number of SMS received, their status, but above all: the number of clicks on each link(s). This information is vital for calculating, for example, your average basket, conversions, clicks... In order to know precisely all the elements that have an impact on ROI.
This integrated solution allows you to calculate your ROI in a simple way, without having to dig through a multitude of different tools to find the data you need to calculate your profitability.
Try out our SMS platform and benefit from 20 free test credits, with no obligation.