What Is a Transactional SMS: A Complete Guide for 2024

Transactional SMS messages can enhance your brand presence, improve customer satisfaction, and boost revenue and profits. They differ from promotional SMS messages in their tone (and in relation to text messaging compliance laws), yet they're incredibly important in helping you strengthen customer relations.

In this article, we will not only talk about how you can make the most from your transactional messaging campaigns but also discuss your options for partnering with a transactional SMS service to get started on your journey to delivering an excellent customer experience.

Transactional SMS messages are classed as business-critical communications that are central to the customer experience. Appointment reminder texts, order confirmations, delivery updates, and review requests sent by text are all types of transactional text messages. The same goes for verification codes sent by SMS as part of a two-factor authentication message.

Sending transactional messages to mobile phones as part of your SMS strategy will enable customers to quickly receive crucial information about your products and services. If you have timely information that customers must know, transactional text messaging will ensure you are able to swiftly provide customers with information.

By sending transactional messages, you are opening up another channel of communication with your customers. It's easy for email communication to get lost in the noise that often plagues email inboxes. Plus, a lot of people use their non-primary email addresses for online shopping and other "less important" purposes to avoid spam and unnecessary disturbance.

They might even have notifications disabled for these inboxes, which could cause a further delay between the time of delivery and the time they open the email. When customers receive a message via text, this typically sends a push notification to their mobile phones, which instantly alerts the recipient.

Before we get into further details on exactly what type of content is contained in transactional notifications, we need to talk about promotional SMS messages, too.

While a transactional SMS message is different from a promotional SMS message, you will likely need to utilize both types of messages during the customer journey.

So let's discuss the two most important differences between sending promotional messages and transactional text messages, so you can get a better picture of their respective invaluable roles in SMS marketing.

Nature of content

Transactional SMS is different from promotional texts in that the latter focuses on advertising and marketing in the most traditional sense. Any SMS that promotes a product or service, for example, with a flash sale notification, discount code, VIP or loyalty offer, or even a generic brand awareness campaign, falls into this category.

You can think of promotional text messages as a way for your brand to directly promote your products or services. Much like a transactional text message, a promotional message is often an effective way to quickly reach your target market. As a widely underutilized channel for customer communication, SMS is exceptionally good for marketing messages.

Transactional messaging, on the other hand, focuses more on delivering important must-know info to customers. However, due to the role these messages could play in boosting the customer experience, transactional marketing also helps promote your business, albeit in a less direct way.

Some marketing-savvy businesses are using a hybrid of the two message types – adapting transactional messages to add value for the customer, to drive further engagement and action, or to cross-sell other products and opportunities.

When your hybrid SMS marketing efforts are executed effectively, they can help inspire customer retention and improve customer engagement. Those who currently send transactional SMS messages may wish to explore ways to thoughtfully blend these with promotional messaging. As we said, transactional messages with subtle promotions can inspire customer engagement.

Both promotional and transactional SMS can be carried out as part of your SMS marketing strategy. However, it's essential to know the difference between the two text message types so you can be sure you're adhering to the relevant SMS compliance laws that govern the country where your customers and subscribers reside.

SMS compliance laws and regulations exist to ensure that businesses follow legal and ethical practices when sending out text communications. Legislation varies according to country and the message content. Marketing texts, for instance, require express consent from SMS subscribers, whereas informational and transactional SMS rules may be slightly different.

Notable laws and regulations you should look into include the TCPA, CAN-SPAM Act, and CTIA Messaging Principles, which are relevant to the United States, along with the GDPR, which governs data protection in the European Union. It's essential to be aware of and comply with the relevant text messaging laws, as any breaches can lead to hefty penalties for your business.

Typically, both transactional and promotional SMS messages require express consent from the recipient. However, if a customer consents to transactional messaging, it doesn't mean that you can start sending them promotional materials as well. You need consent for the latter separately. There is one good way to tackle this issue. When asking a customer for their number, explicitly state what type of messages (and preferably also how often) you will be sending to the subscriber.

Transactional messages can be delivered by email, post, phone call, and some messaging platforms (like Messenger) as well as SMS. Not all these channels are convenient for this purpose. Imagine an eCommerce business sending an order confirmation by post. The customer would probably receive their purchase at the same time or even before the confirmation arrives! This would render the order confirmation entirely useless and probably cause the customer some frustration too.

That said, appointment confirmations are sometimes sent by post. A good number of NHS hospitals still use the traditional method of posting letters out to patients. In this case, the transactional message works fine by ‘snail mail', as routine NHS appointments typically involve a lengthy waiting time.

So, the urgency of the transactional message plays a part in which communicational channel to use. For most cases, SMS is best. Here's why.

SMS messages generally have a better chance of being seen compared to other channels. With email, as many as 55% of all emails globally are considered spam – it can take time and effort to build a reputable ‘sending reputation' with email service providers, so deliverability is a concern. Of the emails that do land in the inbox, on average, only 21.33% are opened.

Though SMS messages are also subject to spam filters by carriers, there's a lower chance of texts going astray, especially considering the transactional nature of the content. Furthermore, text messages lead the way with an astonishing 98% open rate because of their ‘always-on' nature.

“SMS is a quick and simple channel for when you need to make sure the message gets delivered.” These are the words of Kristjan Bek from Bigbank, who is currently using Messente's transactional SMS API for text messages such as updates on contract status and payment reminders alongside text-based customer authentication, customer service, and marketing.

SMS is the channel of choice for many

Studies have shown that SMS is the preferred method of communication between customers and businesses. In one survey, nearly two-thirds of respondents said they'd switch to a business that offers text messaging for communication. The same study further reports that 75% of those surveyed said that appointment reminders were helpful. Some examples of transactional communication they found helpful were banking alerts (according to 45% of respondents) and food delivery updates (39%).

Millennials, in particular, seem to prefer transactional SMS messages. According to Openmarket, more than half of survey respondents said they'd like to receive delivery notifications and appointment reminders by text as opposed to other options.

As mentioned earlier, businesses send different types of transactional SMS covering a range of informational and service-related messages. See some super effective examples of transactional SMS in action below.

1. Status update

In this example, Powergrid uses SMS to inform and update customers about progress made in fixing an electrical fault. This is a business-critical text that highlights how customers can ask for help if needed, and it reinforces the company's goal of achieving top-level customer service.

2. Delivery message

One of the most common and useful transactional SMS messages is designed to keep customers updated about order status and delivery. Typically, the process starts the moment the order is placed. You can send an order confirmation text message stating details such as basic customer info, what they've bought, and the total bill. This can be followed up with regular shipping updates with details about where the order has reached, the number of days it could take to reach the destination, or any unforeseen delays.

Note how Iceland uses an omnichannel approach with theirs, directing customers to a transactional email which gives more detail about order changes.

3. Information request

Some businesses require customers to engage from time to time to keep their service running smoothly. Take this energy company which uses transactional SMS to request meter readings to keep their customers' accounts up-to-date. This example even uses emojis, which provide a friendly, informal tone – a nice touch when customer action is needed.

4. Appointment reminder

Sending an appointment reminder can help to reduce no-shows. A brief confirmation SMS can prevent messy mixups. Here, BT Group (formerly British Telecom) reminds a customer that an engineer is due to visit, stating the specific date and time and providing an opportunity to cancel or make changes. There's also a cut-off time for changes to better manage customer expectations.

5. User verification

Another familiar transactional SMS is one that involves two-step authentication and a one-time passcode (OTP). Many businesses use this type of message to increase security for customers attempting to log into an account online. SMS works brilliantly for user verification because messages can be sent and received more or less instantly.

One of the best ways to start growing revenue through transactional text messages is to partner with a transactional SMS provider and use their API – a software service that connects your CRM system or other business application with telecommunication networks. Messente offers an API for transactional SMS as well as marketing texts and SMS user verification.

Integration with Messente's SMS API can usually be done in just a few hours with the help of a developer. Once that's done, you can use the API to start sending your SMS transactional communications right away. You and your developer might want to check out our quickstart guide, which explains more.

Ready to go? Sign up to Messente and receive your API key.