What is Transactional SMS  - a Complete Guide 2023

Transactional SMS messages can enhance your brand presence, improve customer service 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.

What is a transactional SMS?

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

Text messaging laws

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 message types so you can be sure you’re adhering to the relevant SMS compliance laws that govern the country where your customers/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 subscribers, whereas informational texts are treated slightly differently.

Notable laws and regulations to check out include the TCPA, CAN-SPAM Act and CITA Messaging Principles, which are relevant to the United States, along with the GDPR which governs data protection in Europe and the United Kingdom. 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.

Benefits of transactional SMS as a communication channel

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:

Excellent delivery and open rates

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 less 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 messaging API for transactional SMS messages like updates on contract status and payment reminders, as well as 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. Other helpful transactional SMS messages included 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.

Transactional SMS examples

As mentioned earlier, transactional SMS covers a range of informational and service-related messages. See some of these in action below.

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 which highlights how customers can ask for help if needed and it reinforces the company’s goal for achieving top-level customer service.

Delivery update

One of the most common and useful transactional SMS messages is designed to keep customers updated about order progress and delivery. Note how Iceland use an omnichannel approach with theirs, directing customers to a transactional email which gives more detail about order changes.

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’ account up-to-date. This example uses emojis, which provides a friendly, informal tone – a nice touch when customer action is needed.

Appointment reminder

Sending an appointment reminder can help to reduce no-shows and mixups. Here, British Telcom 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 manage customer expectations.

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.

How to start sending transactional SMS messages

One of the best ways to start growing revenue through transactional SMS messages is to use a messaging 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 API can be usually be done in just a few hours with the help of a developer. Once this is done, you can use the API to start sending transactional SMS. 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.