SMS Marketing ROI: How to Maximize Return & Reduce Costs

January 24, 2023

One of the most compelling reasons to use SMS as part of your marketing strategy is that SMS, when used right, has a crazy high ROI. 

That’s really important to know, because one of the biggest criticisms of SMS is that it can be seen as higher cost than some other marketing channels (like email).

Everyone that has ever run successful paid traffic before understands that if you want to scale, there is a BIG shift in mentality.

Small business owners = “How can I get free marketing? How can I reduce the costs?”

Scaling businesses = “How can I scale up and spend MORE? Where can I put money in that I get a return on?”

The entire mindset shifts from just trying to “reduce costs” to being able to spend profitably.

With all that said, there are a few considerations to getting your best bang for your buck with SMS, so let’s get into it.

What is The ROI of SMS?

Studies show that the ROI on SMS marketing can be as high as 13X+. 

In our own experience, depending on the campaign, we usually get between 5-10X ROI.

That means for ever $1 we spend, we get $5-10 back within a short period of time, which is EXCELLENT! 

(We find it’s much higher if you measure over the course of a few months vs just campaign specific ~7 day windows).

There are very few places where you can get such a high return, in such a short time, especially considering how EASY SMS can be to set up and execute.

But these ROI figures aren’t really that important. We could use stats and figures all day to try and prove it’s great…

But what really matters is how good YOUR ROI is. What does SMS do for YOUR business? 

Let me cut to the chase and give you a frame to look at this:

If you can literally make just 1 extra high ticket sale per month, it will EASILY cover all your SMS costs and then some.

(Even for some of the biggest plans we have at Roezan.)

And if you keep reading, I'll show you how you can get WAY more ROI than that.

But let's start with why SMS is going to likely perform much better than some other channels:

Why Is The ROI Of SMS So High?

There are lots of reasons why SMS is an excellent channel, here's why:

1. SMS Gets Attention In ADHD Economy

In marketing, before a transaction ever happens, you must get ATTENTION. 

That’s why were NOT living in the “information economy” anymore - we’re living in the “attention economy”... 

…Or even better said, the “ADHD Economy” (as Devin likes to put it!)

If you want to get attention, you must go to where the attention is currently, and right now everyone’s attention is on their phone.

SMS is default with every cell phone, and 98% of the adults in the US have a mobile phone.

Everyone is on their phone all day… and with SMS you’re right in the middle of a channel they are using constantly.

SMS grabs ATTENTION…. And will continue to do so for years to come. 

That gives you the opportunity to get your messages SEEN, which is vital considering the following:

2. The Average SMS Open Rate Is Bananas

For a lot of the campaign’s we’ve run that have failed, we find that it’s often not that the messaging was poor, or the promotion sucked…

It was that literally most of the people just didn’t see the message.

Think about it:

Let’s say you have an email list of 10,000 people. 

If you get 15% open rates with email, that means 1500 people saw the message (maybe).... 

It also means that 85% of people on your list literally did not even open it!

Even if you wrote the most banger, pulitzer prize-winning, David Olgivy, Gary Halbert promo of the century… 

The VAST majority of people are literally just not seeing it. 

However in contrast, SMS has a 98% open rate.

That means the VAST majority of people are seeing your messages. 

That also means:

  • People are actually gonna see your message
  • You can get WAY higher engagement, even if your SMS list is much smaller
  • The likely effectiveness is much higher
  • Therefore ROI is higher

And futrhermore:

3. The SMS CTR Is Pretty Great Too (Drives Real Action)

The CTR of SMS is between 6-19% based on the study, where email’s CTR is between 2-5% based on the study. 

So we're talking a 3-4X increase in CTR using SMS vs Email.

So not only are more people opening, more people are clicking! 

With these things combined, this makes the ROI of SMS much more compelling, and also sets it apart from comparing with other channels on a “cost per send” basis.

You're gonna get WAY more action from SMS when you run the numbers.

How To Measure the ROI of SMS

OK so SMS is pretty effective in terms of getting attention, opens, and clicks.

This is nice and all, but how do you actually measure the ROI of SMS? 

The best way in our opinion, is to use a multi-touch attribution tracking software like Hyros or WickedReports.

These are tools that allow you to specifically track how people interact, where they click, and what leads to sales.

Example Webinar Campaign Attribution Tracking

For example, here’s a book-a-call campaign SMS campaign we ran a while back. The ROI on this send was crazy.

We sent this message to about ~8000 people.

The message was extremely simple and sent them to a registration page for the funnel.

Here's a screenshot from WickedReports for that exact messages. We made $21k from it.

Summary:

  • Costs: ~$160
  • Revenue: $21,384
  • ROI: 13,265% (or ~133X)

This was an EXCELLENT campaign.

Now, this campaign involved a lot more than 1 SMS, but Wicked is showing that the people that clicked on this message drove > $21k in revenue.

Without WickedReports, we may have never known how powerful SMS is.

So I'd highly recommend signing up for a multi-touch attribution tracking tool in order to really see the efficacy of your SMS campaigns.

You'll be able to see which campaigns perform the best, and optimize your spend and strategy over time.

(This is not just for SMS... but you will benefit from tracking ALL your marketing, especially where your spending real $$)

Inside of Roezan, you can use our built in UTM tools (and automatic link shortener!) to add campaign specifics to your links:

But Isn't SMS Expensive?

If you look at SMS in comparison to email marketing, you can see that often the cost per send is quite different and SMS is much more expensive per send.

However, while the strategy for email and sms might have similarities… there are some very notable differences in efficacy:

With that said, we don't look at it as a COST as much as an investment that brings in revenue.

And we hold ALL our marketing to that standard.

It may be helpful to think of your SMS more akin to adverting vs. trying to solely compare it to email costs.

How Much Does SMS Marketing Cost?

Basically, this depends on how big your list is and how often you want to text them. 

You can see our current pricing here.

The more you send, the cheaper it gets per message, and our pricing gets down to less than 2 cents per message.

One of our larger tiers for example gives you 50,000 messages for $1,200. 

Just doing some napkin math here, let me show you how easy it is to get ROI on this:

High ROI Webinar Example Napkin Math:

Let’s say you’re running a webinar (this is one of the most common use cases for SMS).

Let’s say you’re selling a high-ticket product, usually between $1k-$6k. For average, we’ll just use $2k.

Let’s say you have a list of 20,000 people on your SMS list (this is pretty big, but hey, you selected the "whale" package so lets just roll with it!).

  • 20k broadcast to your whole list asking them to sign up for a webinar
  • 20,000 x 98% open = 19,600 opens
  • 19600 opens x 10% CTR = 1960 signup page visits
  • 40% sign up, leaving you at 784 signups.
  • You send 3 messages to that list of 784 signups reminding them about the webinar, and one of those being the “we’re live now!” that drives most of the traffic. (2352 messages)
  • Let’s say you get 30% of the people that signed up to show up (because of text), so 235 people live.
  • You do your webinar, and you close 2%. (Could be WAY more.. But let’s just rock this low conversion rate for now).
  • That means you close 4 people at 2k each = $8k webinar

So far we’ve used 22,352 messages, or less than half of our monthly allotment, so about $600.

We just used less than $600 in messages to generate $8k, which is 12X ROI. 

These are not crazy numbers. These are very normal numbers. Many webinars do much much better than this.

This also does not include:

  • If you sold a higher ticket product like a group coaching program, this could 2-4X the revenue collected.
  • If you offered more financing options / payment plans and increased the close rate, could 2-4X revenue again
  • If you upsold the buyers into another program (very common)
  • If you downsold non-buyers into another program
  • People that didn’t buy on the webinar but do purchase in the cart close sequence. (Sometimes up to 50%+ of sales come through this)

All these additions can increase your ROI without changing any of your SMS costs.

Also consider that what I illustrated is a pure SMS example, whereas in the real world you would most likely compliment this with email as a tag-team duo and crush much harder. Typically you can lean on email to generate registrants, SMS to get them live, and both to close down the deal.

This type of result is excellent, and would still be amazing if we did HALF of that at 6X ROI.

If your numbers are way worse than this, then check out our AdEngage course where we break down how we run webbys in our coaching business.

Or check out these free posts to dramatically improve your offers and webinars:

How To Improve Your ROI On SMS

So if you’d like to improve your ROI on SMS, here are our suggestions for maxing it out.

1. Use SMS For Money-Making Promotions

You certainly CAN use SMS for nurturing, pushing people towards content, interacting with them.

However, if you want to maximize ROI, make sure your using SMS for money-making promotions, like webinars, events, getting calls booked, and special deals.

Specifically, SMS excels at time-sensitive promotions because it can get people to act fast. 

2. Maximize Deliverability By Following Our Unorthodox Best Practices

If you haven’t sent a lot of SMS before you might not realize that deliverability is actually a pretty big issue. 

Carriers have all kinds of automatic filtering to prevent spam, and if you trigger a spam filter, your messages can often get blocked or undelivered.

This ultimately means that your campaigns won’t generate as much $$ as they could.

So how do you fix this?

Roezan’s got your back baby.

Since our inception, we’ve been watching for patterns based on MILLIONS of messages sent. 

There are 2 things you want to do to make sure you get maximum delivery.

  1. Verify your toll-free number

This is required as of 2022 and we have helped all our clients get verified. We check over their application before passing it along to the carriers to give it the best chance of getting verified. 

We’ve had great success with this. If you sign up for Roezan, we’ll ask for some business details and we’ll help with your application. If anything looks funky, we’ll let you know before we submit it.

Once your verified, we’ve seen a lot less filtering. 

  1. For every message you send, use our best practices

We put together a list of things you’ll want to do for each message that you send that give you the best chance of getting delivered. We keep this up to date with the messages we see going across the network and troubleshooting we’ve done 1 on 1 with clients.

Maximize SMS Deliverability Best Practices

If you’re having deliverability issues - let us know and we can help diagnose based on our professional experience (even if you’re not a Roezan customer!)

We love this stuff.

3. Use SMS For Webinars & Reminders

This is probably the most common use case. Use your SMS list to get signs ups for webinars and remind people when it’s starting.

Note: We specifically built a Zoom integration to do this automatically for you. Just connect your Zoom account, configure your reminders and we’ll AUTOMATICALLY send SMS notifications to your list.

Plus we’ll use their unique join links. Plus we’ll automatically shorten them!

Here's a quick video on how it works:

Our clients often see large increases in show-ups when using this.

In fact, one of our clients commented that 52% of the people that attend their webinars are because of SMS!

4. Use SMS To Book Calls + Reminders

Another high ROI strategy we use is using Roezan / SMS to book calls. 

One of our clients used our book-a-call strategy and booked $25k in a short time period. 

Check out this video:

You can do this with an extremely simple strategy laid out in this video:

This can be an amazing high ROI strategy if you use sales calls to close clients.

5. Use SMS For Promotions / Closing Down Deals

Use SMS for promotions and time-sensitive events.

SMS is great for getting attention, and reminding someone that you have a sale that’s closing is a GREAT way to drive extra revenue and get a high ROI.

6. Use Segmentation To Send To Highly-Engaged Groups 

You can improve your ROI by being more aggressive with sending messages to engaged segments.

A common misconception is that you should just blast your whole list all the time, with the same broadcast message.

Instead, a much smarter way to do this is to hit your whole list for the beginning of a promotion and then get more aggressive with smaller segments based on engagement.

For example, in a webinar campaign, you might hit your whole list inviting them to a webinar. 

Then, you can send follow-up messages about the webinar to ONLY the segment of people who signed up.

Then, you can send follow-up messages post-webinar about the deal ONLY to people who attended the webinar.

In this case, you’re not spamming your whole list when they aren’t interested, and you’re improving your ROI by being more aggressive with people that actually want to hear from you about this topic.

The most successful marketers that I know are very aggressive in their sending… BUT they also are only being aggressive with people that are interested. 

7. Strike The Balance Between The Number Of Sends Per Promo

To make sure you get the best ROI, try to strike a reasonable balance of messages per promotion.

Also, while you can “borrow” strategies from email marketing - Remember that SMS does cost more. 

Whereas you can send as many emails as you want, 10 emails in a day to 100k people without thinking… costs for SMS will rack up pretty quickly.

That means you will want to consider the appropriate amount of follow-up with SMS per campaign.

How many webinar reminders should you have? 

It’s really up to you, but by default, the most important are 1 day before, 1 hour, and we’re starting now.

You can add a lot more and even warm up the audience with pre-webinar content if you’d like, it just depends on your situation.

Also, just like I mentioned above, you’ll want to use Roezan’s built-in segmenting tools (also, lists, tags, etc) to make sure you’re not sending to uninterested prospects.

If you can find this balance, you’ll be able to maximize your ROI.

8. Use 2-Way Convos

Have a support rep, an SDR, or a salesperson reply to inbound messages. This can dramatically improve the customer’s experience and make sure that you're not letting any deals slip through the cracks.

How To Reduce Your SMS Costs

OK so I’ve talked about how to improve your ROI by maximizing revenue, but how do you reduce your costs (the other side of the coin)?

Here are the biggest considerations we see:

1. Don't Import A Massive List

The first thing many people think about doing when starting SMS is importing a massive list. While this CAN be ok if done correctly, there may be some reasons that you might not want to do this.

First, it’s an important note that you must get explicit permission before texting prospects.

Just because they gave you their phone number at some point in time, does NOT necessarily mean they gave you explicit permission to market to them.

There are some SMS guidelines for landing page opt-ins that have to be in place to be considered explicit permission:

SMS Optin Page Compliance

If you’ve collected these numbers over time, you may have built up a significant list… and hitting that big list can be very costly (and illegal) if these people are not expecting it, or are not engaged.

You’ll likely see poor results, have large expenses, and run the risk of getting complaints, high errors (by sending to landlines and old numbers), or even high opt-out rates which can hurt your sending or even get your phone number banned. 

Sounds kinda nasty right?

So the alternative is to just start fresh and make sure you get opt-ins. 

Here’s how to do it:

Come up with a promotion or webinar that includes a compliant phone number opt-in. Then email your main list about it (or do normal promotion), and build a list of ENGAGED phone numbers from there. 

That means you can sign up on a lower plan and just upgrade as you go along. 

This will save you the trouble of all the risk, keep your costs low, and make sure you can get the best bang for your buck!

(As much as I would love for you to sign up on our highest plans and give us lots of money… I’d rather you have long-term success and great ROI!)

2. Clean Your Lists By Opting-Out Bounces / Landlines

With Roezan, we help reduce your costs by AUTOMATICALLY validating and opting out any bounced phone numbers (non-working, incorrectly formatted) and landlines. 

Also, every time you send a message, we do this process.

We also have automatic opt-out functionality: If someone writes “stop” or “unsubscribe” or any other variation of those types of words, we automatically opt them out.

This keeps your lists clean so you’re not spending money on bad numbers, or people that don’t want to hear from you. 

(And again, at Roezan, this is all automatic. We can’t say the same for some other providers in the space…)

3. Send To Segments (Instead Of The Whole List)

I mentioned this above but to repeat, using segmentation is an excellent way to make sure you’re only sending messages to engaged targets!

With segmentation, you can send to specific groups of people based on actions or attributes.

This is built right into Roezan and you can segment by lists, tags, custom fields, and more!

4. Send More Messages (What?)

This might be counterintuitive, but the more messages you send, the cheaper your costs per message will be.

Our higher-tiered plans can save you quite a bit of money, so if you go over your message limits, it’s often a good idea to upgrade your plan!

Conclusion

The ROI of SMS marketing can be EXCELLENT because of the unique efficacy of sms. 

By implementing this strategy you can grab attention and get great open rates and click rates to drive action, ultimately driving revenue.

You can improve your ROI by making sure you use SMS with money-making strategies like webinars, book-a-call campaigns, and promotions.

You can also save a lot of money by making sure you’re only sending to people who want to hear from you and using cool Roezan features like segmenting and auto-opt out technology.

We hope this article is helpful so that you can maximize your ROI with SMS marketing.

If you’d like some help with SMS marketing or your strategy - you can book a call with us here or sign up for a Roezan account here.


 
 

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