Hi, this is the next article in a series of articles on how to measure the return on investment in software development projects.

Businesses that are not effectively measuring the return and profitability of their companies, don’t have an effective manner to tweak or improve on their business model. To take this further, businesses should actually be measuring the return of all the different business functions.

In this article we get very specific about how to effectively measure the exact return on bulk SMS campaigns. Please remember that this is the writers opinion only, please feel free to comment and offer your own suggestions in this regard, its all about learning and sharing to make business function better.

A bit of history first. Most people will agree that SMS has become huge, the technology is simple and most important very short forcing you to get to the point quickly in what ever you are communicating.

Having said this however, businesses consider SMSing a major benefit when it is done correctly, the cost benefit ratio is outstanding. The dilemma is this, most companies sending out SMSes know that it is worth it because every now and then a customer walks in the store and says they got an SMS, how many companies out there however can tell you exactly how much money they make from SMSing clients? Very few right? So how do you do it?

How to measure

We will use the example of retail businesses that offers its clients a combination of services and products.

Step 1: Your existing clients are like gold, make sure you know as much about them as they will let you know, at the very least ask every client for there cell number and first name, with that you can send a completely customized SMS to that person and make it seem like you typed it yourself. You can build a sales profile on that client, buying pattern etc.

Step 2: Decide what sort of campaign you want to send clients. Make sure every SMS that goes to a client has an offer/discount or something in it that will ensure your clients are always excited about receiving SMSes from your business. Information or announcement type SMSes are never a good idea, they may irritate your client thereby possibly losing a client or the client asking you to stop SMSing them. In other words, my suggestion is that if you are going to send a campaign, give something away, for example 10% off a specific service for a week to clients you know are interested in that service, come fetch a gift cause its your birthday soon. The point here however is that an SMS campaign that is giving something back to a client is always going to have a much higher return than a campaign offering information only. Experience has also shown that the cost involved in offering something is cheaper than not offering anything at all when comparing average sales value and quantity of purchases made. Sometimes you need to give something back to the client in order to make more from the client. Think along the lines of that client talking to another person who speaks to another etc. Thats just one of the many benefits of giving something back to the client.

Step 3: Add a unique code to each SMS and state that the person must give the code to redeem the 10%, gift etc. Now you know where I am going with this, but you are already saying that people wont come to the store and present the number. I agree and disagree with this statement, the reality of adding a, say 5 digit code to the end of an SMS means that the client now needs to do an action and this can be seen as negative, remember though that the objective is to measure exactly how many people come back as a result of the SMS, interested clients that receive the SMS will come to your store and show the code if they are really interested in what you are giving back. You will also get those clients that come to the store and say they received an SMS, a good system will allow you to take that clients cell number and check if they got the sms and hence get the code sent to them.

Step 4: Your software program to do point of sale must have a portion built in that allows you to enter SMS codes into the system, this then verifies against the cell number for that client and very importantly, get your program to automatically either give that gift (product code, service code), the discount on the product or service etc automatically. The client will then see that this SMS code actually assists in getting what is being given to them very quickly, thereby making the client more receptive to the same campaigns in the future. Most importantly however your program will have recorded that a discount or item was given as a result of an SMS code, oh and did I mention that anything else bought on that invoice can also be directly attributed safely to that SMS! Why? Well its all about the impulse buying syndrome that many people exhibit, now not only have you got the client to come back to your store, but they have also purchased additional items and services as a result of your campaign to give them something. Yes there will be clients that aren’t like this, but experience has clearly shown that clients will more often buy more than just what you offered. Better still if you have a good sales team, they will promote products or services that compliment the discounted product or service purchased by the client because of the SMS sent. This means you are actually using SMS to promote a line of products to the client by offering the client discount on one of those products, you could also have negotiated a cheaper cost price from your suppliers for the product hence not actually effecting your profitability on the product.

Step 5: Finally your software program needs to have a specific report that is date range and or SMS campaign based that shows ROI in SMS campaigns, this is not such a complex report, the cost price is made up of:

– the cost of the SMS campaign as a whole – the cost price of all the items on the invoices attributed to the campaign

The sales portion consists simply of the selling price (ie actual selling price less discount if that is what was given) of all the items on all the invoices for that SMS campaign

The report then subtracts sales from cost of sales to give the profit on the campaign and then display a simple ROI percentage.

That’s it, you now have a manner to provide an exact way to track the exact return on an SMS campaigns, importantly however you need to have software that is able to offer these capabilities. Most clients (businesses) discover that the hit rate of clients responding to the quantity of SMSes sent is probably lower than 10% but that the return and profitability of the campaign far outweighs what looks like few people coming back on your campaign. Remember it doesn’t take huge quantities of people responding to turn a good profit, in most instances it only takes 2-3 clients returning to accept your offer. 10% of 10 000 clients coming back is serious profit for any business, considering it took a well thought out SMS and 5 minutes to send 10 000 SMS’s to clients, that’s probably the best money you could have spent on marketing ever.

Also remember that a report displaying ROI on an SMS campaign will greatly assist you in becoming even more effective with SMS campaigns, ie what time of the month has a better return, what season, time of day, what sorts of discounts client like best etc, all of these business decisions can be taken very easily with a report such as this in front of your eyes.

A final note: If you find that your hit rate is to low for your liking, the chances are your campaign is a bit to general, rather send more specific campaigns to even more targeted clients, that will definitely see your percentages increase, if that doesn’t work then perhaps the issue lies in the service you offering clients, great service always brings clients back again. I have had clients that had almost no return on SMS campaigns and they sent the same SMS campaign as other clients had sent with great success, without telling them however, it was clear that they just didn’t offer there clients a good service in any case so no amount of SMSing and discounts was going to help them.

I hope this article has helped some people and companies. Comments are always welcome