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Subscriber LTV: The most important metric to measure your SMS program performance

At Postscript, we believe SMS is the most important marketing channel of the decade. And we are all in—our focus is exclusively on SMS for ecommerce store owners and merchants.

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 LTV.

ROI alone doesn't answer the big questions

Most marketers focus on the ROI of a channel like SMS. While this is a simple measurement, it doesn’t answer big questions like:

  • Am I sending the right number of messages?

  • Are my messages resonating with my customers?

  • Will my list be as profitable in the future as it is today?

  • Are my messages driving as much conversion as they should?

Simply put, if you want to create an SMS strategy built for the long term, then ROI cannot be the only metric you’re focused on. You need a measurement built for the future—one that helps ensure SMS remains an ongoing source of revenue and sales for your brand.

Subscriber LTV measures the total revenue potential of each individual who subscribes to your SMS marketing—customers as well as non-customers.

A Look at the Formulas

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Subscriber LTV

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.

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Total Value

Subscriber LTV and Subscriber List Size are the lead metrics used to calculate the Total Value of your SMS program. optimize for these metrics, you will naturally stay focused on delivering continuous value to your customers. This, in turn, will naturally drive more revenue and increase the long-term value of SMS to your brand. When Total Value is increasing, you know that your SMS program—and the revenue it is generating—is growing in the right direction.

For a deeper look at Subscriber LTV, check out this resource or take our quiz to see how your SMS program ranks.

How Three Ships Achieved Textpert-Level Status in Subscriber LTV

Three Ships Beauty uses SMS to grow their customer base, connect with subscribers consistently, and engage with their brand loyalists in personal ways. Watch below to learn exactly how they do it.

ARMU Metrics

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The driving forces of subscriber LTV

Our data science team analyzed over 7,000 stores in our customer base to see what factors feed into a successful SMS strategy—and a high Subscriber LTV.

These factors roll up into what we call the ARMU Metrics.

Here they are:

  • Acquisition Rate: Growing your list at a regular cadence—using a variety of different acquisition methods—is crucial to the total value of your SMS program.

  • Revenue per Message: Investing in a contextual SMS strategy drives a higher revenue per message. That means great creative and meaningful segmentation versus sending the same templatized promotions and burning out your list.

  • Messages per Subscriber: Sending the right number of messages means finding the right sending cadence for your brand. There is no one-size-fits-all strategy for this. Some brands send regularly and frequently, especially if it’s what subscribers knowingly opted into. Others may send five or six times a month through automations, detailed segments, and drip campaigns.

  • Unsubscribe Rate. Reducing list churn is essential to keeping an engaged customer base and increasing repeat sales.

Each of these actions and success metrics comes with a set of recommended approaches to boost the effectiveness of your messaging strategy, increase your Subscriber LTV, and drive lasting ROI for your SMS program.

Ready to grow the lifetime value of your SMS program with Postscript?

A Deeper Dive into ARMU

Now let’s take a look at each of these metrics—including how to calculate and optimize them.

A is for Acquisition Rate

If your subscriber list isn’t growing, you can’t continue to grow your revenue in a meaningful way. And without new list growth, your list will ultimately shrink over time, as some subscribers are bound to opt out.

Acquisition Rate = New Subscribers ÷ Orders in the Last 30 Days

If you don’t have a healthy Acquisition Rate, here are some improvements you can make.

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How Honeylove Became an Acquisition Textpert

Turns out there’s no one-size-fits-all acquisition tactic, which shapewear brand Honeylove knows all about. Watch below for their best list growth ideas that any brand can employ.

See more ways Postscript can
help you grow your list

R is for Revenue per Message

All marketers want to see an increase in revenue over time in order to justify their investment in SMS—and then invest even more for greater returns.

Revenue per Message = Total Attributed Revenue Over Past 30 Days ÷ Total Messages Over Past 30 Days

Optimizing revenue is not about simply increasing the number of messages you blast to your full list. Here are some more strategic actions you can take.

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How Brightland Became a Revenue Textpert

Foodies everywhere agree—Brightland makes the best olive oils, vinegars, and SMS campaigns. Learn how they serve up creative strategies, compelling content and revenue-driving messages.

See how Postscript helps you send better-performing, higher-earning messages

M is for Messages per Subscriber

If subscribers aren’t being touched on a consistent, ongoing basis, it’s impossible for a brand to stay relevant and top-of-mind.

Every subscriber should be getting no fewer than five messages a month to reinforce brand loyalty and recognition. Remember: A subscriber who has opted-in wants to hear from you. This does not mean blasting them with low-quality content just because you haven’t reached out lately. It’s all about serving up a mix of automations, compelling campaigns, promotions, conversational messages, and more. There’s a lot to say over text.

Messages per Subscriber = Total Messages Sent Over Past 30 Days ÷ Total Number of Subscribers

There are a lot of steps you can take to improve your messaging strategy.

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Use Multistep Campaign Flows

How Homesick Became a Messaging Textpert

Smell that? It’s the scent of success. Learn how fragrance brand Homesick touches base with their subscribers on a regular basis in thoughtful and strategic ways.

See how Postscript helps you improve your messaging strategy

U is for Unsubscribe Rate

Guess what a healthy list looks like for SMS? It is the opposite of what you’ve come to learn in email.

We found that the longer a subscriber is on your list, the healthier your list is. With SMS, people are much more likely to opt-out early in the process rather than later on.

Unsubscribe Rate = Total Unsubscribes (First 30 Days) ÷ Total Number of Subscribers (During Same 30 Days)

There’s a variety of steps you can take to reduce list churn.

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How Death Wish Coffee Became a Textpert in Unsubscribe Rate

Pour yourself a cup of joe, sit back, and learn how Death Wish Coffee keeps their list engaged from the moment someone signs up and throughout the entire subscriber experience.

See how Postscript helps you hook and retain customers for the long haul

Ready to make SMS your #1 revenue channel?

Start your free 30-day trial of Postscript now, or get in touch with our SMS experts to explore all the ways Postscript can help your specific brand get the most out of SMS.