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Is SMS Marketing Worth It? Breaking Down the Costs & ROI

Before getting started with SMS marketing, it’s important to evaluate the costs and determine your budget. This lesson gives an overview on pricing and ROI.

Before getting started with SMS marketing, it’s important to evaluate the costs and determine your budget. This lesson gives an overview on pricing and ROI.

SMS marketing pricing

When setting your SMS marketing budget and evaluating platforms, there are three main costs to consider:

Cost per message

You can expect to pay between $.01-$.05 per text message. MMS message costs may be slightly higher, depending on which service you use.

Cost per keyword

What many brands don’t realize until they get into the costs of SMS marketing is that you need to pay for your keywords. If you are asking subscribers to text FEDORA to 55623, you need to pay for the use of FEDORA. Those keywords are generally $10-$25 per month. Keywords associated with subscribing, such as STOP to opt-out, are generally included at no cost.

Monthly fee

Most platforms have tiered pricing, where for a monthly fee, you get a certain number or messages and a certain number of keywords. Anything beyond what’s included in the monthly price will require additional payment or scaling up to a higher tier. Many providers, including Yotpo SMS, offer a free tier or trial for those getting started, with the option to scale up as your list grows and campaigns take shape.

How to measure ROI of SMS marketing

There is no one-size-fits-all approach to measuring ROI, because every brand — and every campaign — has specific goals for their SMS marketing strategy. Here are a few different ways to measure:

Clickthrough rate

Looking at how many clicks a link receives in a given campaign is a relatively straightforward way of assessing how interested your subscribers are in your products, offers, or content.

Conversion rate

For most eCommerce brands, conversion rate translates to sales, but conversions can be any action you want a subscriber to take, whether it’s referring a friend, signing up for an email newsletter, or trying out a new interactive feature on your website.

Cost per subscriber

Like any other marketing channel, it’s important to know how much you’re paying to acquire a text subscriber. Then, look at the complete customer journey — how many of those subscribers are purchasing? How much are they spending? How often are they buying? Once you calculate those factors, you’ll know the true cost of your subscribers.

It’s also essential to consider your opt-out rate. If you’re losing a lot of subscribers each month, it may be time to rethink your overall strategy, and try different tactics to see if you can reduce your subscriber loss.

Princess Polly’s ROI from SMS marketing

For an example of the ROI brands see when they implement an SMS marketing strategy, let’s take a look at Australian clothing brand Princess Polly. They began using Yotpo’s SMS marketing solution to better engage their Gen Z audience, and have seen the following results:

  • The end-of-month SMS blasts have exceeded revenue goals every time.
  • A recent flash sale campaign saw a 41% conversion rate and 73x ROI from their non-engaged segment alone.
  • The SMS Welcome Flow has driven a 84% CVR.

Princess Polly has seen tremendous growth and ROI from their SMS marketing. Implementing the channel has allowed the brand to better connect with their target audience in a unique and effective way.

Given the relatively low costs of SMS marketing and the high rates of success, it’s easy to see why brands are getting on board. Plus, most platforms make it easy to get started, so you can start measuring and optimizing for success right away.

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