SMS marketing promises impressive returns, but how do you actually measure and prove ROI to justify the investment?
The average SMS marketing ROI is 15-25x, meaning for every $1 spent, you generate $15-25 in revenue. But results vary wildly based on industry, strategy, and execution.
This comprehensive guide covers everything you need to calculate, benchmark, and maximize your SMS marketing ROI.
What Is SMS Marketing ROI?
ROI (Return on Investment) measures how much revenue you generate for every dollar spent on SMS marketing.
Basic formula:
ROI = (Revenue - Cost) / Cost × 100
Example:
- SMS campaign cost: $500
- Revenue generated: $7,500
- ROI = ($7,500 - $500) / $500 × 100 = 1,400% (or 14x)
A 1,400% ROI means you earned $14 for every $1 spent.
Average SMS Marketing ROI by Industry
| Industry | Average ROI | Revenue Per Message |
|---|---|---|
| E-commerce | 15-25x | $0.30-0.75 |
| Restaurants | 10-20x | $0.25-0.50 |
| Real Estate | 20-40x | $1.00-5.00 |
| Healthcare | 8-15x | $0.50-1.50 |
| Automotive | 25-50x | $2.00-10.00 |
| Salons/Spas | 12-20x | $0.40-0.90 |
| Retail | 10-18x | $0.25-0.60 |
| Financial Services | 15-30x | $0.75-2.00 |
Why the wide range?
- Customer lifetime value varies
- Purchase frequency differs
- Average order value impacts revenue per message
- Industry maturity affects benchmark data
How to Calculate SMS Marketing ROI
Step 1: Calculate Total SMS Costs
Include ALL costs, not just message fees:
Direct costs:
- Message fees ($0.01-0.04 per text)
- Platform subscription ($50-500/month)
- 10DLC registration ($15-80 one-time + $2-25/month)
- Phone numbers ($2-10/month per number)
Indirect costs:
- Campaign creation time (hours × hourly rate)
- List management/segmentation
- A/B testing resources
- Compliance audit costs
- Design/creative if using MMS
Example total monthly cost:
- 50,000 messages × $0.02 = $1,000
- Platform subscription = $200
- 10DLC fees = $25
- 5 phone numbers × $5 = $25
- Campaign creation (4 hours × $50/hour) = $200
- Total monthly cost: $1,450
Step 2: Track Revenue Attribution
Direct attribution methods:
Unique tracking links:
- Use unique URLs per campaign
- Track with UTM parameters
- Attribute all conversions from that URL
Unique promo codes:
- Create SMS-specific discount codes
- Track redemptions
- Attribute revenue directly
CRM/Platform integration:
- Connect SMS platform to CRM
- Track customer journey
- Multi-touch attribution
Example revenue tracking:
- Campaign sent 50,000 messages
- 2,000 clicks (4% CTR)
- 150 conversions (7.5% conversion rate)
- Average order value: $75
- Total revenue: 150 × $75 = $11,250
Step 3: Calculate ROI
Using example above:
- Cost: $1,450
- Revenue: $11,250
- ROI = ($11,250 - $1,450) / $1,450 × 100
- ROI: 676% (or 6.76x)
Interpretation: For every $1 spent on SMS, you earned $6.76.
SMS Marketing KPIs Beyond ROI
ROI is the ultimate metric, but track these leading indicators:
1. Delivery Rate
Formula: (Messages delivered / Messages sent) × 100
Benchmark: >95%
What it means: Your messages are reaching recipients
2. Open Rate
Formula: (Messages opened / Messages delivered) × 100
Benchmark: 95-98%
What it means: SMS naturally has high open rates
3. Click-Through Rate (CTR)
Formula: (Clicks / Messages delivered) × 100
Benchmark: 20-45%
What it means: How many recipients took action
4. Conversion Rate
Formula: (Conversions / Clicks) × 100
Benchmark: 5-15%
What it means: How many clicks turned into sales
5. Opt-Out Rate
Formula: (Opt-outs / Messages delivered) × 100
Benchmark: <1% per campaign
What it means: List health indicator
6. Revenue Per Message
Formula: Total revenue / Messages sent
Benchmark: $0.25-5.00 (varies by industry)
What it means: Average value per text
7. Customer Acquisition Cost (CAC)
Formula: Total SMS cost / New customers acquired
Benchmark: Should be <30% of customer LTV
What it means: How much to acquire each customer
8. Customer Lifetime Value (CLV)
Formula: Average purchase value × Purchase frequency × Average customer lifespan
Benchmark: Varies widely by industry
What it means: Long-term value of acquired customers
How to Maximize SMS Marketing ROI
Strategy 1: Segmentation (30-50% ROI Increase)
Sending the same message to everyone is lazy and ineffective. Segmentation increases relevance and conversions.
High-impact segments:
- New vs. returning customers (different offers)
- High-value vs. low-value (VIP treatment)
- Active vs. dormant (re-engagement vs. nurture)
- Geographic location (local events/offers)
- Product interests (category-specific promotions)
- Purchase recency (timing matters)
ROI impact example:
- Unsegmented campaign: 3% conversion rate
- Segmented campaign: 6% conversion rate
- 2x increase in conversions = 2x ROI
Strategy 2: Personalization (20-35% ROI Increase)
Generic messages get ignored. Personalized messages drive action.
Personalization tactics:
- Use first name ("Hey Sarah, ...")
- Reference past purchases ("Your favorite [Product]...")
- Location-based offers ("Visit our [City] store...")
- Behavioral triggers ("You viewed [Product]...")
- Purchase anniversary ("It's been 6 months since...")
ROI impact example:
- Generic: "Shop our sale"
- Personalized: "Sarah, your favorite sneakers are 30% off today!"
- 35% higher CTR = 35% higher ROI
Strategy 3: Optimal Timing (15-25% ROI Increase)
Send time dramatically affects engagement and conversions.
Best days:
- Tuesday-Thursday (highest engagement)
- Monday (acceptable for announcements)
- Friday (good for weekend planning)
- Saturday-Sunday (avoid promotions)
Best times:
- 10 AM - 1 PM (lunch planning)
- 6 PM - 8 PM (evening browsing)
- Avoid: Before 9 AM, after 9 PM
Industry-specific:
- Restaurants: 10-11 AM, 3-4 PM
- E-commerce: Tuesday-Thursday afternoons
- B2B: Tuesday-Wednesday 10 AM - 2 PM
ROI impact:
- 11 AM send: 8% conversion
- 3 AM send: 1% conversion
- 8x difference in ROI just from timing
Strategy 4: A/B Testing (10-30% ROI Increase)
Small changes can double results. Test systematically.
What to test:
- Send time (morning vs. evening)
- Offer type (% off vs. $ off)
- Message length (short vs. detailed)
- CTA wording ("Shop now" vs. "Claim offer")
- Urgency ("Limited time" vs. no urgency)
- Personalization (name vs. no name)
Testing methodology:
- Split list 50/50
- Test one variable at a time
- Minimum 1,000 recipients per variant
- Run for 24 hours minimum
- Track conversions, not just clicks
ROI impact example:
- Control: "Shop our sale" → 3% conversion
- Variant: "48-hour flash sale ends tonight!" → 5% conversion
- 67% ROI increase from one word change
Strategy 5: Automation (25-40% ROI Increase)
Automated campaigns run 24/7 without manual work, scaling your ROI.
High-ROI automated campaigns:
Welcome series (60-80% open rate)
- Trigger: New subscriber
- Timing: Immediate
- ROI: 15-25x
Cart abandonment (25-35% recovery rate)
- Trigger: Items in cart >1 hour
- Timing: 1 hour, 24 hours, 72 hours
- ROI: 20-40x
Post-purchase (30-50% repeat purchase)
- Trigger: Order delivered
- Timing: 7 days after delivery
- ROI: 10-20x
Re-engagement (15-25% win-back rate)
- Trigger: No purchase in 60-90 days
- Timing: 60, 75, 90 days
- ROI: 12-18x
Birthday/Anniversary (40-60% redemption)
- Trigger: Customer birthday/anniversary
- Timing: Day of + 7-day window
- ROI: 25-45x
Strategy 6: Multi-Channel Integration (30-50% ROI Increase)
SMS + email + push + ads = compound effect.
Omnichannel cart abandonment example:
- Hour 1: SMS → "You left $X in your cart. Checkout: [link]"
- Hour 24: Email → Detailed cart contents + reviews + 10% off
- Hour 72: SMS → "Last chance! Your 10% discount expires tonight"
- Day 4: Facebook retargeting ad
Result: 3x higher recovery rate than SMS alone.
Strategy 7: List Quality > List Size (40-60% ROI Increase)
10,000 engaged subscribers > 50,000 disengaged subscribers.
List quality tactics:
- Require double opt-in (confirms real interest)
- Regular list cleaning (remove dormant contacts)
- Engagement-based segmentation (focus on active users)
- Sunset policy (remove never-engaged after 90 days)
- Source tracking (some sources = higher quality)
ROI impact:
- Large, unengaged list: 1% conversion
- Small, engaged list: 8% conversion
- 8x higher ROI with smaller, better list
SMS Marketing ROI by Campaign Type
Promotional Campaigns
Average ROI: 10-18x
Best for: Driving sales
Frequency: 2-4 times per month
Optimization tips:
- Clear, compelling offer
- Urgency and scarcity
- Simple redemption process
- Limited-time only
Transactional Messages
Average ROI: 5-10x (but critical for retention)
Best for: Customer experience
Frequency: As needed
Types:
- Order confirmations
- Shipping updates
- Delivery notifications
- Appointment reminders
ROI note: Lower direct revenue but prevents cancellations and improves satisfaction = long-term ROI.
Win-Back Campaigns
Average ROI: 12-20x
Best for: Re-engaging dormant customers
Frequency: Quarterly
Optimization tips:
- Generous discount (20-30% off)
- "We miss you" messaging
- Remove barriers to purchase
- Limited-time offer
VIP/Loyalty Campaigns
Average ROI: 20-35x
Best for: High-value customers
Frequency: Weekly to monthly
Optimization tips:
- Exclusive offers
- Early access to sales
- Points/rewards updates
- Birthday bonuses
Common SMS Marketing ROI Mistakes
1. Not Tracking ROI at All
Fix: Set up tracking links and promo codes
2. Only Measuring Short-Term Revenue
Fix: Track customer lifetime value from SMS subscribers
3. Ignoring Indirect Benefits
Fix: Account for retention, referrals, brand awareness
4. Sending Too Frequently
Fix: Respect subscribers' time—quality over quantity
5. Using Vanity Metrics
Fix: Open rates don't matter if conversions are zero
6. Not Testing
Fix: A/B test everything—small changes = big ROI gains
7. Buying Phone Lists
Fix: Organic opt-ins = 20x higher ROI than purchased lists
Tools for Tracking SMS Marketing ROI
SMS Platform Analytics
- DMText built-in analytics
- Delivery, open, click rates
- Revenue attribution
- Campaign comparisons
Google Analytics
- UTM tracking for SMS links
- Goal completion tracking
- Multi-channel funnel analysis
- Assisted conversions
CRM Integration
- Salesforce
- HubSpot
- Klaviyo
- Customer journey tracking
Attribution Platforms
- Segment
- Amplitude
- Mixpanel
- Multi-touch attribution
Justifying SMS Marketing Budget to Leadership
Present these data points:
- Average ROI: 15-25x (vs. 4-5x for email, 2-3x for paid ads)
- 98% open rate (vs. 20% for email)
- 90-second response time (vs. 90 minutes for email)
- Lower cost than paid ads: $0.02/message vs. $1-5/click
- Owned channel: No algorithm changes, no ad account bans
ROI projection template:
"With 10,000 SMS subscribers × 4 campaigns/month × $0.02/message = $800/month cost.
At industry-average 3% conversion rate and $50 AOV:
- 10,000 × 3% × $50 = $15,000 revenue per campaign
- $15,000 × 4 campaigns = $60,000/month
- ROI: ($60,000 - $800) / $800 = 7,400% (74x)
Conservative estimate (half of industry average): 37x ROI"
Conclusion: SMS Marketing ROI Is Exceptional
SMS marketing consistently delivers 15-25x ROI when done correctly. No other channel matches this performance at scale.
Keys to maximizing ROI:
- Track everything with attribution links
- Segment your audience
- Personalize messages
- Test constantly
- Automate high-value workflows
- Focus on list quality over size
- Respect your subscribers
The businesses seeing 30-50x ROI share these traits:
- Strategic campaign planning
- Rigorous testing and optimization
- Multi-channel integration
- Long-term customer value focus
Ready to start generating measurable ROI from SMS marketing? DMText provides built-in analytics, revenue attribution, A/B testing, and automation tools to maximize your returns. Sign up today and send your first campaign in minutes.