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4 Basic Metrics for Your SMS Marketing Campaigns

sms marketing metrics

One key to successful marketing is to know when you’re doing it right. And when you’re doing it wrong. The great thing about SMS marketing is you can get that information pretty quickly. The messages get sent out fast, and generally the actions taken on those messages are quick as well. But to understand how your messages are performing, you need to do a little maths. Thankfully, it’s all rather simple once you see it.

List growth

One of the first questions marketers usually ask is “How many subscribers do I have?” While that’s a useful question, it isn’t the end of that train of thought. It’s most useful to know whether the number of subscribers is increasing or decreasing overall. You’ll need to know three things to calculate list growth: the number of subscribers you had before, the number you have currently, and the time between then and now.

For example say you had 100 subscribers at the end of last month. At the end of this month you have 250. Calculate your growth rate by using the following formula: Subtract last month’s number from this month’s number. Then divide that result by last month’s number. In the example above the maths look like this: (250-100)/100 = 1.5. Since there was one month between those two numbers your growth rate is 1.5 per month, or if you prefer percentages, just multiply by 100 to get 150% per month. The time period doesn’t have to be a month. You can check it on a daily, weekly, hourly rate depending on what your own goals are.

If the growth rate is positive then your list is growing. If your growth rate turns out to be negative, it isn’t an error (probably, double check your maths!). It means you’re losing more subscribers than you are gaining. Which leads to the next metric…

Opt out/churn rate

People will always opt out from your list. There’s a variety of reasons for this. Many might have nothing to do with your offers, but some of them will. If you diligently keep track of your opt outs and churn rates you’ll know when you’ve done something wrong.  But first, let’s get to the difference between opt out and churn rates (some will say there is none and they aren’t wrong. I make a small distinction between the two). The difference is time and method. Both measure the number of people who leave your list. Opt out only counts those that officially opt out using the defined protocol in your message. But there are other ways people can leave your list. They may switch mobiles and have a new number which means their old number may become invalid. This doesn’t happen as much as it does with email addresses, but it could happen. The other difference is churn rates are usually calculated over some period of time, often weeks or months. Opt outs usually happen within the first 24 hours of a message, and that is being generous.

Here’s how to calculate them both. Divide the number of opt outs by the total number of subscribers (the number of subscribers before the opt outs!) You can usually do this shortly after a message is sent out to see how it affected your subscribers. A higher opt out rate means your message didn’t do as well as usual. You might want to change something. This gives you the opt out rate for a particular message.

data protection for sms messaging

To calculate churn rate, you can add the number of subscribers lost by non-opt out methods (probably a very low number, if any at all for SMS) to the opt out number before dividing by the total number of subscribers. As I mentioned, this is usually counted over weeks or months of a campaign. Or calculated on a per month basis to give a picture of how many subscribers you are losing over time. The time period doesn’t matter so much, as long as it is meaningful to you.

Redemption and click rates

How many subscribers took advantage of your offer? It’s easy to find out how effective your marketing message was by dividing the number of redemptions (or clicks if you sent a link) by the total number of subscribers. Usually that number is multiplied by 100 to get a final percentage. It looks like this: 120 subscribers redeemed the offer. You have 1000 subscribers in total. The redemption rate is 120/1000 = .12 or 12%

Cost per customer

All the above metrics are great, but ultimately you need to know if your marketing funds are being spent wisely. Here’s how you figure it out. Find the cost per SMS message you sent (as low as 2.1p with fastsms) and divide by the redemption rate you calculated above (important! Divide by the rate, not the percentage). Sticking with the example above, here’s how to find the cost per customer: 2.1p/.12 = 17.5p per redemption (or customer). If you made more than 17.5p per redemption, then you made a profit. Obviously the lower the cost per redemption the better, since your profits will be higher.

Examining these metrics for each message and over time can help you identify the best and worst of your marketing. You can use these simple metrics for A/B testing as well if you choose to do that with your large lists. And together they help answer the ultimate question: “Is SMS marketing working for me?”

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