E-commerce marketers have measured the success of SMS marketing by looking at ROI. There is no doubt that SMS marketing increases ROI substantially; however, there are other metrics that markets need to consider. ROI tells you what has happened in the past, but it doesn't predict what can happen. Companies adopting SMS marketing to meet customer demand need to measure future value. Subscriber LTV (Lifetime Value) provides this measurement for you. 

What Is SMS Subscriber LTV?

SMS subscriber LTV refers to those who actively subscribed to your SMS marketing. This includes customers and people who have never made a purchase. Using this formula, you can calculate your Subscriber LTV: the revenue per message multiplied by the number of messages per subscriber divided by the unsubscribe rate.  

(revenue per message x messages per subscriber) / unsubscribe rate

Your subscriber LTV is higher when subscribers remain active and make purchases. You can achieve this by engaging with them, ensuring that you provide relevant messages, and understanding the timing of your messages. 

If you notice that your subscriber LTV is slipping, this could indicate that you aren't providing relevant messages or offers, subscribers are churning early on, or you may not be sending the right volume or reaching them at the wrong time.

The key is to make sure you leverage your tools, such as conversational commerce, to have higher retention levels and more purchases. 

Why Should E-commerce Marketers Care About Subscriber LTV?

Your subscriber LTV is a good indicator of your relationship with your customers. Customers today don't want irrelevant messages or generic email blasts; they want brands to engage with them based on their wants and needs. If you are hitting the mark, your subscriber LTV will be higher. 

Engaged customers who receive relevant messages are more likely to purchase and return to your brand. They want to know that they can rely on a simplified process and consistent, personalized experiences.

How Does SMS Subscriber LTV Help Brands?

The traditional key performance indicators of ROI attributed revenue and acquisition cost are beneficial but have limitations. It is important to understand how they are limited so that you can understand the significance of SMS subscriber LTV. Take a look at the following. 

1. ROI Is a Measure of the Past

ROI is an excellent tool for evaluating the success of past strategies or campaigns, but it doesn't guarantee the same results in the future. In other words, you can't use your measure of ROI for one month to predict the ROI for the following month. While it helps you determine what strategies are working, it doesn't tell you why customers responded the way they did. You need other tools to make predictions. 

2. Customer Acquisition and Attributed Revenue Are Limited

Customer acquisition and attributed revenue are important metrics that help you analyze your strategies, but they are based in the past. Both can help define your strategy and make decisions, but they aren't good predictors of your strategy's effectiveness in the coming months. You need to know how to target the right customers effectively, what offers they respond to, and your potential for the highest conversion rates. 

3. Subscriber Retention is Future-Oriented

When you look at retention measures, they are good predictors of the future. How you interact with your subscribers will impact your ability to interact with them next month and the following year. Subscriber LTV considers revenue, but it also factors in subscriber retention, which helps you maximize the value of every subscriber on your list. 

Brands invest in every subscriber on some level, and retention is the best way to maximize that investment. Brands that use subscriber LTV to build, retain, and engage with their subscribers can grow and allocate resources more effectively. 

Relevance is the Key to Boosting Subscriber LTV

Your subscriber LTV is primarily influenced by customer engagement, retention, and conversion. 

1. Customer Engagement

First, you need to get your subscribers to engage. This requires sending relevant messages to them at the right time. You need to send messages often enough that they remember you without overwhelming them. This helps to build a positive image of your brand. 

One way to accomplish this is through conversational checkout. For example, you can send customers your latest product that is relevant to their interests. Include a message that allows them to reply with "Buy" to complete the purchase, and they can use their already stored payment methods to purchase the product with frictionless checkout. 

2. Customer Retention

If you cannot retain your subscribers, you need to rethink how you interact with them. Most of the time, this happens when brands send irrelevant information or text too frequently. Subscriber retention is an important measurement because it is so easy for customers to unsubscribe. You know you are using SMS marketing effectively when they stay with you. 

3. Customer Conversion

Measuring your conversions is critical because it lets you know that you are sending the right messages at the right time. You are using the customer data available to target the right customers in a personalized way. 

This metric factors into your revenue per message, the average attributed revenue per text message. You can increase this number by having a contextual SMS strategy that is creative and targeted. Rather than sending out a one-size-fits-all 10% off coupon, choose relevant messaging and products for customers by leveraging data based on their past shopping behaviors. 

Final Words

Your subscriber LTV is a measurement that can help you predict your future conversions, which is critical for brands today. SMS provides a unique opportunity to reach customers where they are with relevant notifications about your brand. You can send them customized offers based on their past behaviors or offer conversational checkout that is frictionless and simple.