To create long-term growth with your SMS channel, you need a measurement built to ensure SMS remains an ongoing source of revenue and sales for your brand. As part of our commitment to SMS, we’ve developed a proprietary channel-specific measurement focused on long-term customer value—what we are calling Subscriber Lifetime Value (Subscriber LTV). Subscriber LTV measures the total revenue potential of each individual, customers and non-customers, who subscribes to your SMS marketing. As your Subscriber LTV goes up, you should expect your revenue from SMS to go up as well!
About Subscriber Lifetime Value
Subscriber LTV is the average dollar amount each subscriber spends over the life of their subscription (assuming that the life of their subscription begins the moment they opt-in to your SMS list and ends the moment they unsubscribe from that list). This average is the foundation for determining the Total Value of your brand’s SMS program.
Total SMS Program Value
To calculate the Total Value of your SMS program, we'll take a look at both Subscriber LTV and your subscriber list size. When you optimize these metrics, you will naturally stay focused on delivering consistent value to your subscribers. As a result, this will organically drive your shop more revenue and increase the long-term value of SMS to your brand.
ARMU Metrics: The Driving Forces of Subscriber LTV
After analyzing almost 8,000 shops, our data science team identified what factors promote both a successful SMS strategy and a high Subscriber LTV.
These factors roll up into what we call the ARMU Metrics:
Acquisition Rate (A): The rate at which you gain new subscribers by using a variety of different acquisition methods is paramount to the total value of your SMS program. Check out ways to improve your Acquisition Rate and grow your subscriber list here.
- Your acquisition rate is calculated by dividing the number of net new subscribers over the last 30 days by the total number of orders your shop has received within the last 30 days (e.g. New Subscribers L30 ÷ Total Orders L30). See Acquisition Rate benchmarks below:
Revenue per Message (R): By investing in a contextual SMS strategy, you can be sure to drive a higher revenue per message and avoid burning out your subscriber list. Get creative with your sending. Out of ideas? Take a look at Fantastic Texts for some inspiration. Create meaningful segmentation - here’s how! You may also consider engaging your subscribers with conversational commerce. Find ways to build conversational commerce into your SMS strategy here.
- Your revenue per message rate is calculated by dividing the total amount attributed to your SMS program in the last 30 days by the number of messages your shop has sent in the last 30 days (e.g. Total Attributed Revenue L30 ÷ Total Messages L30). Learn more about attribution windows here. See Revenue per Message benchmarks below:
Messages per Subscriber (M): Sending the right number of messages means finding the right sending cadence specific to your brand. Find what's right for you!
- Your messages per subscriber rate is calculated by dividing the number of total messages your shop has sent in the last 30 days by your store’s total number of active subscribers (e.g. Total Messages L30 ÷ Total Subscriber List). See Messages per Subscriber benchmarks below:
Unsubscribe Rate (U): Reducing list churn is essential to keeping an engaged customer base and increasing repeat sales. If you expand your Unsubscribe Rate card on your dashboard, you may notice two percentages. Each rate is broken down below:
- The top percentage is your shop’s Unsubscribe Rate calculated by dividing the amount of individuals who have unsubscribed from your SMS list in the last 30 days by the number of messages your shop sent in the last 30 days (e.g. Unsubscribes L30 ÷ Messages L30).
- The bottom percentage is your shop’s Subscriber LTV Unsubscribe Rate. This is calculated by dividing the total number of individuals who unsubscribe from your SMS program within their first 30 days of opting in by the total number of subscribers you have during that same 30 day period (e.g. Total Unsubscribes (First 30 Days) ÷ Total Number of Subscribers (During Same 30 Days)). This is the figure that plugs into your store’s Subscriber Lifetime Value equation pictured earlier in this article. See Unsubscribe Rate (First 30 Days) benchmarks below:
- Note: Generally, an Unsubscribe Rate is calculated with the same equation as the top percentage. However, subscribers are more likely to opt out during their first 30 days than they are at any other point in the subscriber lifecycle. By examining unsubscribe behavior during the first 30 days (captured and shown as the bottom percentage in your Unsubscribe Rate card), we can more accurately predict Subscriber LTV and better help merchants improve their SMS strategy. The benchmarks above are for Postscript's proprietary Subscriber LTV Unsubscribe Rate.
Applying ARMU Metrics and SLTV
- Take a look at your ARMU Metrics on your dashboard. Is anything in the red? If so, this metric is one of the first places you should start in order to improve your Subscriber LTV. Check out this blog post to see what levers you can pull to start improving your metrics.
- To keep increasing the potential value of your SMS strategy and maximizing long-term revenue, you foundationally must keep growing your list and adding subscribers at a consistent rate. Luckily, Acquisition is one of the easiest metrics to influence. From Facebook Lead Ads to popups to landing pages, the options to grow your list and increase your Acquisition rate are vast. Find more ways you can influence your Acquisition rate here.
- Another easy metric to influence? Messages per subscriber. The idea here is to find the right sending cadence for your brand - not necessarily to blast out as many messages as possible nor is it being overly cautious with your send frequency, either. Take advantage of our hyper-segmentation options and our features like Safe Send to beat message fatigue.
Where can I find my ARMU and Subscriber LTV metrics?
- Check your Dashboard! At the top of your Dashboard, you can check existing ARMU metrics, benchmarks for performance, Subscriber LTV, and other contributing metrics like Total Subscribers.
- Leverage your CSM for help. If you have a Customer Success Manager, you can work with them directly to get a view into your metrics and strategize with them on how to improve.
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