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Retention marketing is the cornerstone of building lasting customer relationships, and both email and SMS play pivotal roles. But when it comes to boosting ROI, do you favor the instant engagement of SMS or the reliable scalability of email?
SMS boasts an impressive 98% open rate, with most messages read in 3 minutes or less—while email marketing rakes in an average ROI of $36 for every $1 spent.
Both have their strengths, but which one delivers? Let’s dive into the details.
The Basics of Email and SMS Marketing
What is email marketing?
Email marketing is the OG of retention marketing. It’s versatile, cost-effective, and highly scalable. Brands rely on tools like Klaviyo and Mailchimp to create newsletters, promotions, and post-purchase follow-ups that land directly in a customer’s inbox.
For businesses looking for professional email marketing services, partnering with a retention marketing agency ensures a more effective and strategic approach. With 81% of SMBs still using email as their primary acquisition and retention channel (Source: DMA), it remains a key driver of customer engagement and growth.
What is SMS marketing?
SMS marketing is the newer, scrappier contender. It’s all about short, impactful messages delivered straight to your phone. From time-sensitive offers to personalized appointment reminders, SMS is growing in popularity because of its immediacy.
For businesses exploring SMS services, this channel provides a chance to directly engage with a highly attentive audience. In fact, 75% of consumers are comfortable receiving SMS messages from brands they’ve opted into. (Source: Salesforce).
Comparing ROI: The 4 C's of SMS vs. Email Marketing
Email and SMS marketing excel in different areas when it comes to ROI. Let’s break it down using the 4 Cs: Contact Acquisition, Costs, Conversion Rates, and Cadence.
1. Ease of Acquiring Contacts
- Email: It’s 2–3x easier to collect email addresses than phone numbers. Tactics like lead magnets (discounts, free guides) are effective and scalable.
- SMS: Acquiring phone numbers is harder but often results in a higher-value, more engaged audience.
Email lists are easier to grow, but SMS lists can drive greater engagement per subscriber.
2. Cost Per Campaign
- Email Marketing: Email is a budget-friendly powerhouse. Sending to 10,000 subscribers might cost $10–$20 and scales well with audience size. With tools like Klaviyo or Mailchimp, businesses can automate complex email flows without significant additional expense.
- SMS Marketing: SMS campaigns have higher costs, ranging from $500 to $1,500 to send 10,000 messages. The price depends on the length of the message and whether multimedia is included. However, SMS shines in immediacy, making the cost worth it for flash sales and time-sensitive promotions.
While email allows you to reach larger audiences cost-effectively, SMS campaigns deliver faster responses and higher impact per contact.
3. Conversion Rates
- SMS: SMS typically achieves conversion rates between 10–15%, thanks to its personal touch and sense of urgency. Take abandoned cart reminders, for instance—these messages often drive quick sales recovery, especially when they include exclusive discounts.
- Email: Email conversion rates generally fall between 1–5%. While they may be lower than SMS, email shines in building lasting customer relationships. With tools like segmentation and automation, brands can steadily boost engagement and drive more conversions over time.
SMS is ideal for quick, decisive actions, while email supports sustained growth through continuous customer touchpoints.
4. Cadence
- Email: Brands can send multiple emails weekly without overwhelming their audience, especially when content is segmented and value-driven. From newsletters to promotional campaigns, email offers flexibility in cadence.
- SMS: Less is more when it comes to SMS. Messaging your audience 2+ times a week risks high unsubscribe rates. Timing and targeted messages are vital to maintaining engagement.
Unlike email, which allows for consistent outreach, SMS demands careful planning to avoid overwhelming your audience.
Answering the Question: SMS vs. Email Marketing ROI
SMS drives more revenue per contact.
Thanks to high open and conversion rates, SMS delivers impressive revenue per subscriber. Its immediacy makes it perfect for flash sales and time-sensitive promotions.
For businesses utilizing SMS services, this channel provides significant short-term revenue opportunities.
Email achieves higher ROI as a channel.
Email’s cost efficiency and scalability give it an edge for long-term ROI. The ease of growing email lists and the ability to nurture leads make email the go-to for sustained revenue growth.
Partnering with email marketing services from a retention marketing agency can amplify these benefits, ensuring a cohesive strategy.
The Nuance
- SMS maximizes revenue from smaller, high-value lists.
- Email generates scalable revenue and builds long-term relationships.
How to Combine SMS and Email for Maximum ROI
Integrated Campaigns: Combining SMS and email can deliver the best of both worlds. For example, launch a new product via email to share in-depth details, build excitement, and showcase imagery. Then follow up with an SMS reminder to nudge highly engaged subscribers who clicked on the email but didn’t complete their purchase. The immediacy of SMS acts as a perfect complement to the informative nature of email.
Pairing email campaigns with SMS alerts is a great way to share time-sensitive promos, like flash sales or early access. This keeps your audience in the loop and ensures they don’t miss out on key updates.
Segmentation and Personalization: To maximize ROI, tailor your approach across both channels. Use email to nurture leads through educational content, upselling opportunities, and ongoing relationship-building. Leverage SMS for quick, high-impact actions such as abandoned cart reminders, shipping updates, or limited-time offers.
Advanced segmentation ensures your audience receives content that aligns with their preferences and behaviors. For instance, identify users who open emails regularly but rarely click through. These individuals might respond better to a personalized SMS with a more direct CTA.
Retention marketing agencies can help implement these advanced segmentation tactics, ensuring both channels work together seamlessly.
Play to Their Strengths
- Email: Use email to grow your reach, nurture relationships, and keep communication flowing with thoughtful, consistent messages.
- SMS: SMS is great for grabbing attention quickly with timely, personalized messages that encourage immediate action.
Conclusion
By combining email and SMS, you can cover all your bases—building trust over time while driving quick results when it matters most.
The bottom line? Email and SMS work better together. Pair them strategically, and you’ll see the kind of ROI that keeps your business moving forward.
