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
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.
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.
The driving forces of subscriber LTV
Our data science team analyzed over 9,000 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 ARMR 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.
Retention Rate. Engaging your customers so they stick around for the long term is essential to 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.
A Deeper Dive into ARMR
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.
Optimize for list growth with a creative, incentivized popup that greets first-time visitors. If your standalone popup isn’t moving the needle enough, consider adding popups at checkout or triggering them before visitors abandon the site.
Collection at checkout
Over 60% of subscribers are collected at checkout, so make sure this is turned on.
Social media outreach
Use keywords on your social media channels to encourage followers to opt-in, or use link stickers to drive followers to your SMS sign-up page.
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.
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.
Make sure automations are firing
The highest-EPM (Earnings Per Message) sends come from automations. So, be sure to turn on Welcome Series, Abandoned Cart, Add to Cart, Browse Abandonment, Customer Winback, and Loyalty Offer automations, among others.
Create better segments
Send more targeted messages to subscribers who haven’t purchased yet, are lapsed buyers, and are among your VIPs. Your segments should all be receiving tailored messages based on their individual behavior.
Great creative often leads to greater results, but testing different offers is also key to optimization. A/B test Abandoned Cart, Winback, and new sign-up incentives to see what subscribers like best.
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.
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.
Automations are the most contextual types of messages, because they’re triggered by subscriber behavior. When these run in the background, you’ll naturally send more relevant (and typically more profitable) texts. Make a unique Welcome Series that educates subscribers about your brand and gives them a promo code for their first purchase. Touch base with them after they’ve placed their first order, ask them for reviews, create winbacks if they haven’t purchased in a while, set up abandonment automations, and more.
Send More Campaigns
This is why Subscriber LTV is important. If you begin to send more campaigns and your unsubscribe rates increase, it means you will need to either send less frequently or be more thoughtful about your segmentation and messaging. A consistent SMS campaign strategy will be crucial to ensuring subscribers stay connected with your brand.
Use Multistep Campaign Flows
Remember when you were afraid to send too many emails in a month? We all know that when done well, an increase in sends can mean an increase in revenue. Set up a multistep campaign flow so your message can be sent over a series of relevant texts, with those who purchase being automatically removed from the rest of the flow.
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.
R is for Retention 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.
Retention Rate = 100% - D30 Unsubscribe Rate
There’s a variety of steps you can take to reduce list churn.
Discover Where Opt-Outs Are Happening
If subscribers are opting in via keyword and then opting out after receiving an offer, consider a deeper discount upfront. Look at how quickly messages are being sent out in an automation. For example, allow enough time in between Welcome Series messages so that new subscribers aren’t bombarded early in their journey with you.
Warm Up Subscribers Early On
Offer incentives right away. Once you’ve got a customer hooked, that’s when you can start to have fun with conversational texts and interactive campaigns to engage them and create brand loyalists.
Make It Exclusive
If you’re going to maintain your spot in a subscriber’s inbox next to texts from Mom and Dad, you’ve got to keep it VIP. Tease new product drops, give early access to sales, and offer SMS-only perks.
How Death Wish Coffee Became a Textpert in Retention 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.