SMS marketing is one of the most powerful channels to connect businesses with customers and boost engagement rates. While SMS open rates and engagement stats are impressive on their own, the real value of SMS marketing lies in its return on investment (ROI).
In this guide, we’ll break down exactly how to calculate SMS marketing ROI, what success looks like, and the actionable strategies you can implement to improve returns.
Jump right to:
- Understanding SMS Marketing ROI
- How to Calculate ROI for SMS Marketing Campaigns
- What’s a “Good” ROI in SMS Marketing?
- Proven Strategies to Boost SMS Marketing ROI
<h2 id="Understand">Understanding SMS Marketing ROI</h2>
SMS marketing ROI is a metric that gauges how much revenue your SMS campaigns generate compared to what you spend on them. It’s a helpful way to assess how effective your text marketing efforts are from a financial standpoint.
Typically written as a percentage, ROI is a clear, quantifiable way to evaluate how much meaningful business value your text message marketing is delivering. The higher the percentage, the greater your return on investment.
Factors That Make SMS a High-ROI Channel
There are several unique characteristics of SMS that make it especially profitable. These factors include:
- High open rates. SMS averages a 98% open rate, compared to only 20% for email. That means more eyes on your messages — and more opportunities for conversion.
- Low cost, high impact. Texts cost just pennies to send, making them one of the most affordable ways to reach customers.
- Personalization at scale. SMS messages can be personalized using names, order history, and customer behavior to increase conversions.
- Automation and scalability. From drip campaigns to transactional alerts, effective SMS platforms let you automate your outreach, saving your team time and boosting messaging consistency.
<h2 id="How">How to Calculate ROI for SMS Marketing Campaigns</h2>
Knowing whether or not your SMS campaign is profitable starts with doing the right math. Before we jump into the SMS ROI formula, you’ll want to tally up the costs associated with your campaign.
These costs might include:
- SMS provider fees
- Cost per message (and number of messages sent)
- Types of message (MMS or SMS)
- Length of messages (160 characters counts as one message)
- Cost of phone number type (10DLC, short code, or toll-free)
- Creative costs
Once you have an idea of how much a given SMS campaign costs your business, you can apply it to a simple ROI formula.
The SMS ROI Marketing Formula
The standard formula to calculate SMS ROI is simply the amount of sales revenue your campaign generated, minus the total cost of your SMS campaign, divided by the total cost. Then, you’ll multiply your number by 100 to get your SMS ROI percentage.
Your ROI formula should look like:
Let’s put this into practice. Say your company generated $5,000 in revenue from your latest SMS marketing campaign. Your total cost to execute the campaign (including platform and messaging fees) was $500.
The ROI formula for this particular campaign would look like this:
<h2 id="Whats">What’s a “Good” ROI in SMS Marketing?</h2>
ROI goals differ depending on the industry and type of campaign, but there are general benchmarks to keep in mind. For most businesses, a marketing campaign that generates $5 in revenue for every $1 spent — a 5:1 return ratio — is considered successful. A higher ratio is even better; for example, a 10:1 return ratio would be seen as exceptional.
More than half of small to medium-sized businesses report an average SMS marketing ROI of $21 to $40, an exceptionally positive return.
<h2 id="Proven">Proven Strategies to Boost SMS Marketing ROI</h2>
Maximizing ROI is all about doing more with less. Here are five ways to drive better performance from every message you send.
Personalize and Tailor Campaigns
Generic blasts don’t cut it anymore. Personalized campaigns drive 40% more revenue than their generic counterparts. Leverage customer data to tailor your text messages to individual contacts.
Consider information such as the customer’s name, location, purchase history, and behaviors to send personalized, relevant product suggestions and tailored discounts.
Include Clickable Links and Clear CTAs
Every message should prompt the customer to take a specific action and make it easy for them to do so. Make sure to include:
- Clear trackable links
- Time-sensitive offers
- Strong CTAs like “Book Now,” “Claim Offer,” or “Get Yours Now.”
Manage and Segment Your Lists
A disorganized or outdated list can lead to wasted messages, poor engagement rates, and unnecessary costs.
Regularly audit your contact lists and remove duplicate entries, inactive subscribers, or phone numbers that frequently bounce. Keeping lists clean ensures your messages reach the right people and helps reduce spend on contacts who are unlikely to convert.
Your lists should also be segmented based on their stage in the customer journey and factors such as:
- Demographics
- Purchase history
- Engagement level
- Age
- Behavior
This enables you to send relevant, timely messages that resonate with each group.
Track Key Campaign Metrics and Optimize
You can’t improve what you don’t measure. Tracking the performance of your campaign lets you know what’s working, what isn’t, and how to optimize for a better SMS marketing strategy. Key metrics to track include:
- Delivery rates
- Reply and unsubscribe rates
- Click-through rates (CTR)
- Conversion rates
Once you’ve begun tracking different metrics, you can A/B test different message types, CTAs, send times, and offers or promotions. Making small adjustments can lead to big ROI improvements and regularly tracking campaign metrics enables your team to make data-driven decisions.
Choose a Cost-Efficient SMS Provider
The SMS platform you choose can impact both the cost and performance of your campaigns. Choosing the right provider can mean the difference between strong ROI and unnecessary spend.
As you evaluate SMS marketing platforms, look beyond the price and consider features that contribute to performance and scalability.
Prioritize SMS platforms that offer:
- Excellent customer support. Reliable support minimizes downtime and helps resolve campaign issues quickly.
- Competitive pricing. Lower, transparent pricing reduces your campaign costs and ensures you spend an expected amount on messaging.
- Phone number registration support. Proper registration improves message deliverability and compliance. Better deliverability means more messages seen by customers.
- CRM integrations. Integrations allow you to personalize messages using customer data and ensure better campaign performance, leading to improved ROI.
- Automation and metrics. Automation saves time and boosts consistency, while analytics help you optimize. Together, they improve campaign performance and enable you to fine-tune your SMS marketing playbook.
- Scalability. A scalable platform should grow with your business without added costs or downtime, keeping your ROI strong as message volume increases.
Turn Texts Into Revenue With Textedly
Maximizing ROI isn’t always about sending more, it’s about sending smarter. Textedly gives businesses the tools to do just that. With automation, segmentation, campaign analytics, and seamless integrations, you’ll drive more value from every message.
Whether your team is small or large, running promotions, nurturing leads, or re-engaging customers, Textedly’s flexible pricing plans empower everyone to create high-impact campaigns that actually convert.
Ready to boost your returns? Get the free trial.
