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

Text Message Marketing Cost

When setting your text message 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 & Email, 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 text message 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. Yotpo SMS & Email will not only ensure that you get your SMS program up and running with ease, but also provide you with reliable and real-time information about how much you’ve earned, and exactly how much you’ve spent to get there, so that you always know your return on investment.

Yotpo SMS & Email’s Commitment to Pricing Transparency

Some SMS marketing providers require you to choose a plan in advance based on how many messages you think you will send in any given month. This could result in your brand needing to upgrade or downgrade plans regularly, or worse: paying for more than what you ultimately send. Yotpo SMS & Email’s flexible payment model was designed with eCommerce brands in mind to help prevent this.

With our platform, you only ever pay for the messages you send — our usage is inclusive of carrier fees, so there are never any hidden costs waiting to surprise you. We are also completely transparent in our pricing, allowing you to review the predicted cost of every campaign and flow before you even launch them. With this marketer-friendly approach to pricing, along with our easily exportable reports for budgeting and analysis, you can keep your budget stable and your revenue climbing (even as your SMS usage fluctuates) for the best SMS marketing results over time.