Last updated on November 14, 2023

Mariya Arabadzhieva-Todorova
Content Marketing Specialist @ Yotpo
July 20th, 2022

Follow these steps to set a winning budget for your text marketing program and choose the right SMS provider.

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eCommerce is changing. Sky-high inflation on a global scale combined with a looming recession and rising customer acquisition costs have challenged brands of all sizes to change how they approach and handle their finances. As the holiday season is almost upon us, it is essential for businesses to craft a rock-solid budget plan to try and smooth the bumps in their road to success.

Why it’s important to budget for your SMS program

A clear SMS budget plan will keep your finances on track and ensure you don’t overspend. Foreseeing future expenses and setting clear success benchmarks will help you better plan, allocate and justify your budgets, gain razor-sharp insights into your business performance, improve decision making, and maximize growth.

How to budget for your SMS marketing program

Predicting your expenses might seem overwhelming at first, but it’s actually not as complicated as you’d think. Here are four simple steps to build an SMS marketing budget plan that works for your brand.

Step 1: Define your goals

The first step to any successful budget plan is defining your goals — where you want your business to be and how you predict it will grow.

All brands are different, but ultimately, they all want the same things: raise brand awareness, boost engagement, grow a loyal customer base, and drive more sales. And the good news is that SMS can help with all four and then some.

So before you start budgeting for your SMS marketing program, take a moment to reflect on your business goals for the next three to six months and where your focus should be.

Step 2: Shape your strategy

Now that you have a clear vision of your budget goals, it’s time to come up with a thorough plan on how to achieve them. Start drafting your budgeting strategy by answering the following questions:

How often do you plan on sending a text marketing campaign to your audience?

Are there any upcoming events or campaigns on your schedule for the following month? Maybe a new product drop or a flash sale for Mother’s Day? To estimate expenses, multiply the number of campaigns you plan to send and the number of your SMS subscribers. Remember that if the text message is above 160 characters, you will be charged for two text messages, above 320 — for three, etc., and that the prices of SMS and MMS differ.

Which SMS automations do you use?

Are you sending a welcome text message to every new subscriber? And what about abandoned cart reminders or shipping updates? Using multiple automations on your store means that when your traffic grows, so will the number of triggered messages sent on a monthly basis and thus — your expenses. While you can’t really predict how many people will, for example, sign up for your SMS program in the following weeks, what you can do is check the average cost of your welcome SMS automation in the past few months and use this number when drafting your budget. And if you are planning for ad campaigns that will boost traffic or some other promotional activities, remember that those will also increase your SMS automations spending.

Which countries do you target?

Sending a text message to a U.S. customer does not cost the same as sending an SMS to Australia because of the different carriers providing the service. Check the country pricing of your text marketing solution and use the price per message in target countries when calculating your expenses.

Step 3: Analyze your past spending

Go to the analytics section of your SMS platform and collect as much data as possible: your total spent in the past few months, what was used for one-off campaigns, and what was used for SMS flows.

Getting complete visibility of your past spending and attributing it to the different aspects of your text marketing program will help you gain a better perspective on how your SMS budget is distributed and, eventually, come up with ideas on how to optimize it in the future.

Step 4: Measure the effectiveness of your spending

Costs and spending are just one aspect of budgeting. There are a few more important metrics you need to monitor to fully measure the effectiveness of your SMS program, such as click-through rate, conversion rate, average order value, and ROI.

Click-through rate (CTR)

A CTR of 30% is a good benchmark for you to aim for, as it would mean that a solid chunk of your audience finds your offers engaging enough to click on the links and wants to learn more about them. Think of low CTR as a leak in your budget that needs to be fixed. How? Make your messages more personal and appealing through segmentation and adding captivating visuals. Adding a pinch of FOMO is always a good idea, too!

Conversion rate (CVR)

Your SMS conversion rate will vary depending on a variety of factors, including the type of message you are sending and whether it is a one-off campaign or an automation. Low CVR may indicate there is something preventing your subscribers from making a purchase — it could be anything from unappealing website design to a bad user experience, or even a complicated checkout process.

Average order value (AOV)

The average order value is in direct correlation to the profits of your company. If you manage to achieve even a slight increase in the average shopping basket, you’ll raise your customers’ individual value over time and will make every dollar of your SMS budget well spent. To boost AOV, consider setting a minimum order value, try volume discounts, or simply group products in bundles.

Return on investment (ROI)

Return on investment is the most important marketing KPI, as it helps you see “the big picture” and evaluate if a particular aspect of your strategy is worth the effort. Monitor the ROI of each SMS you send to gain valuable insights on what performs well, what doesn’t, and what you need to focus on. Brands that use Yotpo SMS & Email enjoy a 25x ROI on average. For a higher ROI, analyze your top-converting campaigns, focus on your highest-spending customers, and leverage automations.

What to look for in a text marketing solution to build your winning SMS budget

Having a reliable text marketing partner by your side can be crucial to the overall success of your SMS program. When it comes to budgeting, here are the five essential things you need to look for before making your choice.

1. Predictable message cost

Creating a solid budget plan would be impossible without having a clear understanding of your SMS marketing solution’s pricing model. To predict spending and estimate costs when choosing a platform, check the price per message for SMS and MMS for the countries you plan on sending campaigns to and watch out for hidden fees.

Yotpo SMS & Email’s price per message includes all carrier fees, so you can be sure there won’t be any unpleasant end-of-month surprises.

SMS Marketing


2. Visibility on SMS spending and ROI

If you want to build a winning SMS strategy, find a partner with an advanced analytics solution that offers complete visibility into your text marketing performance. You should be able to monitor all the primary SMS KPIs in real time so you can accurately track your success and return on investment.

SMS Marketing

3. Reliable revenue attribution

Attribution is the process of matching user interactions to a specific marketing campaign, or, in other words — where and how your customers came across your product or service. In terms of SMS, attribution will show how many people made a purchase on your store after receiving a text marketing message from your brand.

With Yotpo SMS & Email’s advanced attribution model and its two adjustable conversion windows, “last clicked” and “last delivered,” you’ll be able to measure the effectiveness of each SMS you send and compare the results of your marketing efforts across multiple channels. Our built-in UTM-tracking feature will further help you keep an overview of the performance of specific campaigns and match data with third-party tools like Google Analytics.

SMS Marketing Budget

4. Pay only for messages that you send

Every SMS marketing platform has its own pricing model. Some come with a standard monthly rate and in exchange you get to send a certain number of text messages within this month. But even if you don’t use all of them, they are not transferable for the next month, so when going through various options, make sure you don’t end up paying for messages you did not send.

With Yotpo SMS & Email’s pricing plans you get exactly what you pay for — with a set price per message for each country and no hidden fees. Combine this with unmatched deliverability and downloadable real-time performance reports, and you’ll get a complete overview of the total number of sent messages and a precise breakdown of costs at the tip of your fingers.

5. “Pay as you grow” model

It doesn’t matter if you are new to SMS or a seasoned text marketer — you still need an SMS solution with a flexible business model to ensure your revenue will exceed costs at all times. So when choosing a text marketing platform, look for a “pay as you grow” model — one offering various payment plans.

With Yotpo SMS & Email, as your business grows, you can seamlessly switch between pricing plans to enjoy our powerful platform’s benefits. In addition, as you move up the ladder of pricing plans, the price per message lowers so that you can send bigger message volumes.

Your budget needs attention

Budgeting for your SMS program is an ongoing process, and text message marketing costs and spending are just one aspect of it. As your brand’s needs shift along with the ever-changing eCommerce landscape, make sure to revisit your existing budget and make adjustments as necessary.

Having a solid budget plan, together with a reliable text marketing partner that offers powerful analytics tools and a transparent, “pay-as-you-grow” pricing model, will help you keep track of your performance at all times and stay on the path to success.

Schedule a demo with our SMS team and start planning for an exciting holiday season with Yotpo SMS & Email.