Every marketing dollar needs to justify itself. Whether you are pitching budget to your CEO, evaluating a new platform, or optimizing your channel mix, you need a clear framework for measuring the return on your SMS and email marketing investment.
This guide provides practical formulas and benchmarks to calculate, track, and improve your marketing ROI.
The Basic ROI Formula
At its simplest, marketing ROI is: (Revenue Generated - Cost of Campaign) / Cost of Campaign x 100
If you spent $500 on a campaign and generated $5,000 in revenue, your ROI is ($5,000 - $500) / $500 x 100 = 900%. For every dollar spent, you earned $9 back.
Calculating Email Marketing ROI
Costs to include: Platform subscription fees, dedicated IP costs, email design/content creation time (hourly rate x hours), list management and verification costs, and any agency or freelance fees.
Revenue to track: Direct sales attributed to email clicks (last-click attribution), assisted conversions (email was part of the path), revenue from automated flows, and customer lifetime value influenced by email nurturing.
Industry benchmark: Email marketing averages a 42:1 ROI — $42 returned for every $1 spent. Top performers see 50:1 or higher. If your email ROI is below 20:1, there is significant room for improvement in your strategy, deliverability, or targeting.
Calculating SMS Marketing ROI
Costs to include: Per-message costs (typically $0.01-0.05 per SMS in the US), platform subscription, number provisioning (short codes, toll-free, 10DLC), content creation time, and compliance management.
Revenue to track: Direct sales from SMS link clicks, coupon code redemptions from SMS campaigns, revenue from SMS automation flows, and incremental revenue from SMS-assisted conversions.
SMS ROI varies more widely than email because per-message costs are higher, but engagement is also dramatically higher. A well-optimized SMS program typically returns 25-50x on investment.
Key Metrics to Track
Revenue per recipient (RPR): Total revenue divided by number of recipients. This is the most important metric for comparing campaign performance over time.
Revenue per email/SMS sent: Total revenue divided by total messages sent. Useful for understanding the value of each message in your database.
Customer acquisition cost (CAC) via marketing: Total marketing spend divided by new customers acquired through marketing channels.
Customer lifetime value (CLV) by acquisition channel: Do customers acquired through SMS have a higher or lower CLV than those acquired through email? This informs where to invest.
Flow revenue vs. campaign revenue: What percentage of your revenue comes from automations vs. one-off campaigns? Healthy programs see 30-50% from automations.
Attribution Models
How you attribute revenue matters enormously for ROI calculations:
Last-click attribution: Credit goes to the last channel the customer interacted with before purchasing. Simple but incomplete — it ignores all the touchpoints that influenced the decision.
First-touch attribution: Credit goes to the first interaction. Good for understanding acquisition channels but ignores nurturing.
Multi-touch attribution: Distributes credit across all touchpoints in the customer journey. More accurate but more complex to implement. Linear, time-decay, and position-based models each have their strengths.
Our recommendation: Use multi-touch attribution if your platform supports it (Upturn does). If you must choose a simpler model, last-click is better for evaluating specific campaigns, while first-touch is better for evaluating acquisition channels.
Improving Your ROI
The fastest levers for improving marketing ROI:
- Improve deliverability: If 20% of your emails land in spam, fixing that is a 20% revenue improvement with zero additional spend.
- Segment and personalize: Relevant messages convert better. Moving from blasts to segmented campaigns typically doubles revenue per message.
- Build automations: Automated flows cost nothing per send beyond the platform fee. Every automation you add generates incremental revenue at near-zero marginal cost.
- Clean your list: Removing unengaged subscribers reduces costs and improves deliverability. A smaller, engaged list outperforms a large, unengaged one every time.
- Test everything: Subject lines, send times, content, offers. Small improvements compound over time into significant revenue gains.
ROI measurement is not a one-time exercise — it is an ongoing practice. Set up your tracking, establish baselines, and review performance monthly. The brands that obsess over their marketing economics consistently outperform those that do not.