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 allows you to:
- Measure the total revenue potential of each individual, customers and non-customers, who subscribes to your SMS marketing.
- Create long-term growth for your SMS channel with a measurement built to ensure SMS remains an ongoing source of revenue and sales for your brand.
- Understand the trajectory of your SMS program. As your Subscriber LTV goes up, you should expect your revenue from SMS to go up as well.
In this article, we describe Subscriber LTV in detail, discuss ARMR-- the driving forces behind Subscriber LTV, and list some additional resources to influence these metrics.
Subscriber Lifetime Value Overview
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.
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. You can check Subscriber LTV metrics right on your dashboard.
Benchmark: We analyzed data across 9,000 shops to come up with the following benchmarks for low, medium, and high Subscriber LTV (denoted by “Room for Improvement,” “Intermediate,” and “Textpert,” respectively). If you’re in the low range, we encourage you to take action based on the recommendations provided here.
ARMR Metrics: The Driving Forces of Subscriber LTV
After analyzing over 9,000 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 ARMR Metrics and can be found on your Postscript dashboard:
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.
- 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:
Retention Rate (R): Because subscribers are 5x more likely to opt out of your SMS program in their first 30 days than at any other point in the subscriber journey, it's important to understand how many subscribers you are retaining during that period. D30 Retention Rate captures the percentage of subscribers who stay subscribed through their first 30 days on your list. Keeping new subscribers engaged is key, so consider sending meaningful and timely messages early on in their journey—like an interactive welcome series or a personal product recommendation flow.
- Your retention rate is calculated by subtracting 100% by the percentage of subscribers that have unsubscribed from your list in their first 30 days. (i.e., 100% - D30 Unsubscribes).
- Want to see how your brand's ARMR and SLTV compare to other brands in your industry? Check out our 2023 Benchmark Report.
- Take a look at your ARMR 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.
- Did you know Acquisition is one of the easiest metrics to influence? 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. 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.
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