Yotpo’s 2024 SMS Benchmark Report

At this point, you know that personalization is key to better engagement, but how much can it improve your SMS ROAS? To find out, we compared flows and campaigns side-by-side.

At this point, you know that personalization is key to better engagement, but how much can it improve your SMS ROAS? To find out, we compared flows and campaigns side-by-side.

The results were clear: flows are the way to go.

Specifically, flows drive the majority of revenue with a much smaller budget.

• Revenue impact: Flows accounted for 51% of revenue
• Budget efficiency: They required only 12% of the budget
• Revenue per message: Flows generated a high $4.09
• Cost per order: Flows had a low cost of just $1.00

In contrast, campaigns, despite making up 93% of sends and 88% of the budget, drove only 49% of revenue. Their revenue per message was much lower at only $0.31, with a higher cost per order at $7.79.

This doesn’t mean you should stop investing in campaigns. Remember, not all campaigns are created equal. Broad messages sent to your entire list usually have lower engagement and conversion rates than targeted messages sent to VIP customers. It’s about learning where to optimize your campaigns so that you can maximize revenue in tandem with your flows.

Reports

Campaigns and Flows

Key Takeaways

Brands are spending significantly more on campaigns than flows but are seeing nearly equal revenue in return. This doesn’t mean you should stop sending campaigns. In fact, both flows and campaigns can be highly profitable if you refine your strategies by…

1. Leveraging seasonality trends: Obviously, brands invest more in November due to Black Friday, but our data shows that the spring season can yield powerful results as well (more on this later).

2. Segmenting buyers effectively: You wouldn’t send a regular email campaign to a large unengaged group, right? The same goes for SMS. When sending mass campaigns, suppress unengaged subscribers and tailor your content to specific buyer segments for better engagement and conversion. For example, subscribers who are also your highest-tier VIP customers will appreciate hearing about sales first.

No surprise here, but the real payoff lies with personalized, targeted strategies. Do this well, and you’ll see a massive return on your SMS investment.

Text-Sized Tips to Improve Performance

It’s no surprise that the top-performing SMS flows are similar to top email flows. Specifically, 82% of the total SMS Attributed Flow Revenue comes from just four flows: Welcome, Abandoned Checkout, Order Confirmation, and Browse Abandonment.

This revenue concentration highlights the importance of focusing on these key areas to maximize your return on investment. Let’s break each one down:

The Core Four: Migrate Your Email Winners

Additional Flows Worth Investing In

We recommend investing in three additional flow types. While they’re not part of the core four flows, these additional flows are essential for capturing customer interest at key touchpoints, re-engaging potential buyers, and maintaining long-term customer relationships. 

Order Management Flows

Loyalty Flows

Subscription Flows

Reports

1. Sales by Flow = SMS attributable sales within the month
2. ROAS by Flow = SMS attributable sales/costs within the month
3. Revenue per Flow = Revenue/message sent
4. Cost per Order Flow = Cost/message sent

Flow Revenue vs. ROAS

Key Takeaways

Considering 82% of total flow revenue comes from four flows, the 80/20 rule clearly applies. Focusing on the four dominant flows while incorporating high-efficiency niche flows allows for a balanced and impactful SMS marketing approach without overinvesting in too many flows.

Despite contributing a small percentage of total revenue, the “Loyalty Reward Received” and “Back in Stock” flows boast exceptionally high ROAS, showcasing the value of automating specific customer actions.

This strategy ensures you capture significant revenue from major touchpoints while maximizing efficiency and engagement through targeted, high-ROI interactions.

Proof These Solutions Work

She’s Waisted was one of the first Yotpo brands to adopt Back in Stock automated messages as part of their overall SMS marketing strategy. Together with other triggered flows, the brand achieved an impressive 123x ROI.

Can We Send More Efficient Campaigns?

Yotpo recently released an engaged-based segmentation feature, which allows brands to exclude subscribers who are unlikely to engage (click or convert) from the message.

Instead of rules-based segmentation (e.g., a customer clicked on SMS in L90 and purchased in L180), engagement-based segmentation dynamically creates inclusion and exclusion audiences to create a segment of customers more likely to engage with the text.

Analyzing the brands who sent at least 1 engagement-segmented campaign: brands see a +17% lift in ROAS and a -19% reduction in CPO compared to unengaged campaigns.

Brands drove a higher ROAS from Engagement-based Segmentation campaigns (11.4x) than campaigns with No Segmentation (9.8x). Driving a reduction in cost to purchase and increasing their overall return on campaigns.

Where brands saw the biggest benefit is the reduction in CPO. Engagement-based Segmentation campaigns saw an average CPO of $8.05 vs. No Segmentation’s $9.88 CPO. By removing the customers who are less likely to engage with each campaign brands have found an effective way to drive performance while reducing costs.

Engagement Based vs. Non-Segmented Performance

This segment is analyzing $12.2m in SMS spend across 19.6k Campaigns.

 

Not every subscriber needs to or is ready to receive every Text campaign. This isn’t email. Customers treat their Texting inbox as a precious resource. Optimizing campaigns sends to when is the right time for the customer not only makes them happier, but also reduces send costs as well.

This is a great area to save on SMS costs, but it’s not the only way.

Q4 Has the Strongest Performance, but There’s Efficiency in Spring Campaigns

SMS campaigns exhibit significant seasonality, with Q4 showing the strongest performance due to a major spike in November and a bump in December.

November (to no one’s surprise) accounts for 16% of annual campaign revenue with $163m, making it the best revenue-performing month. December follows with $84m (8%), and May also performs strongly with $83m (8%).

The lowest revenue-driving months are January, February, and July, with January generating $60m (6%), February $66m (7%), and July $69m (7%).

Total Campaign Revenue + ROAS vs CPO (Monthly)

1. The best revenue-performing months of the year are Nov, Dec, and May. While the lowest revenue-driving months are Jan, Feb, and Jul.
2. The highest ROAS months of the year are Nov, Feb, and Mar while the lowest are Jul, Oct, and Jan.
   – Be picky with your July texts. It’s the lowest revenue-generating and ROAS-performing month throughout the year across verticals.

Key Takeaways

Given this data, focus on releasing the demand your team has built up throughout the year and quarter during Q4 to maximize revenue, but don’t overlook the February to May period. Despite lower revenue, these months have a high ROAS, indicating an opportunity to send more high-value SMS campaigns.

Leverage major shopping events like Valentine’s Day, President’s Day, Mother’s Day, and Memorial Day to boost revenue. And be strategic with your July campaigns, as it’s the lowest revenue-generating and ROAS-performing month across verticals. A tip? Focus on lead capture this month to prepare for Q4 instead.

We analyzed performance across different months and examined the impact of using images and emojis to see what really works.

The findings were clear: focus on high-performing months and optimize your content for the best results.

In other words, don’t be too worried about all the frills.

A Text-sized Tip to Improve Performance

Peak Revenue Hours and Regional Trends Drive 1.5 Billion Messages Sent

The hours from 15 to 24 UTC represent the most revenue-generating period, particularly between 15 and 17 UTC, with the absolute peak at 16 UTC. To maximize revenue, schedule your campaigns strategically within this window.

While the US accounts for 80% of the 1.5 billion text messages sent globally, other regions like Australia (11%), the UK (3%), Canada (2%), and New Zealand (1%) remain underused. These regions, receiving less noise than the US, offer opportunities for higher engagement and conversion rates.

Key Takeaways

Develop tailored strategies that consider cultural nuances and regional preferences, to optimize performance in these regions. Are there additional holidays in other regions where shoppers expect sales? Are there large festivals you can tap into?

Adjust your approach based on the specific costs and behaviors of each region, to enhance engagement and drive conversions. By strategically targeting peak hours and optimizing regional strategies, you can significantly boost the effectiveness of your SMS campaigns.

Checkout Engagement Drives Optimal Subscriber Growth

There’s a significant opportunity to capture more SMS subscribers at higher up the funnel. Checkout is still the leading source of subscriber growth. 51% of all subscribers we analyzed were collected at Checkout.

With 37% of subscribers collected from pop-ups/spin to wins, there’s still plenty of room to collect more SMS subscribers up the funnel. Remember, 60% of Flow Revenue is generated from the Welcome Flow.

Most Effective Subscriber Capture Methods:

Key Takeaways

To capture customers’ attention, deploy pop-ups at strategic moments, such as when they’re about to leave the site or after they’ve spent a certain amount of time browsing.

Additionally, keep sign-up forms short and straightforward, asking only for essential information to reduce friction. And make sure these forms are optimized for mobile users, as a significant portion of traffic comes from mobile devices.

Proof These Solutions Work

Bubble’s SMS subscriber list has grown by over 71% in just six months, fueled in particular by Yotpo’s Dynamic Pop-up, which collects subscribers up to 4x faster than competitors.

Text Your Way To Success

With $977.9 million in SMS-attributed revenue, making up 16% of total storewide sales, SMS is a crucial component of successful marketing strategies in 2024 and beyond.

Remember, campaigns contributed 49% of attributable revenue, while flows accounted for 51%—with an impressive average ROAS of 25x, showcasing the importance of a balanced approach to SMS marketing. Don’t overdo it.

Trash those one-size-fits-all blasts! To maximize impact, strategically invest in a powerful combo of campaigns and flows. Target those high-impact subscriber areas. Ready to crush your SMS goals? The Yotpo SMS experts can help. Let’s chat and boost your ROI!