What Is Transactional SMS? A Complete Guide to Transactional Communication and Messages

14 November 2024

Nicole Esters

Do you want to deliver crucial information to your customers on time, such as their Bank account, order, purchase, or other service details? Here is where transactional SMS helps you keep your customers up-to-date.

Let’s be honest: when we purchase something from any brand or manage our finances with a/bank, we like to be kept in the loop as a customer. We expect timely updates. When we check our account, we appreciate knowing our current balance after the transaction, receiving direct deposit confirmation, or getting loan payment reminders as the due date approaches. Besides, when we place an order online, we want to know whether or not our order is confirmed when our order will be delivered, and if we can expect any delays.

We want to know all these without wasting time refreshing our email inboxes, logging into an eCommerce website, or logging into any banking apps. All we desire is all this information to be delivered straight to us so we can see it immediately, right?

This is exactly what our customers want from us, and transactional messages offer it. Transactional SMS helps you improve your brand presence, customer satisfaction, and ROI. They help you strengthen your customer relationships. In this blog, we will discuss transactional communication, the key difference between transactional SMS and promotional SMS, types of transactional messages, best practices, and much more. Let’s first start with the definition of transactional SMS.

What is Transactional SMS?

A transactional SMS is an automated text message that brands send to their customers by informing them about their appointments, reservations, recent purchases, accounts, two-factor authentication, or any other interaction with the company. There are also transactional bulk SMSs, which mean sending bulk SMS to a group of recipients. For example, if a bank server is down unexpectedly, it affects online banking services. In this situation, the bank can send bulk transactional SMS to all customers, aiming to inform them about the temporary unavailability of services.

The transactional messages are A2P messages, meaning a customer receives a text from the business and does not expect to revert. So, if you are wondering what transactional communication is, it is the one-way communication between the business and its customers.

If you are thinking about why you should care about transactional messages, the simple answer to this is: BECAUSE YOUR CUSTOMERS CARE ABOUT IT!

As per the studies, SMS is the preferred communication method between customers and businesses.

One survey said that 2/3 of respondents choose businesses that use SMS for communication.

Millennials prefer transactional SMS, and as per the study, 48% of them prefer to receive appointment reminders and delivery notifications through text.

Now, one question will pop into your mind: how does it differ from promotional text messages?

Let’s find out in the next section,

Understanding Difference: Transactional SMS Vs. Promotional SMS

Both transactional and promotional messages are different from each other, but during your customer journey, you need to use both.

Features	Transactional SMS	Promotional SMS
Nature of Content	Focuses more on delivering imperative must-know information to customers. In short, it is strictly informational.	Highly promotional. Focuses on directly promoting products/services to customers
Role	Improves customer experience. (Also promotes business but in a less direct way)	Perfect for quickly reaching the target audience.
User consent	Require prior express consent.	Require express written consent. If customers consent to send transactional messages, you can’t start sending promotional SMS, too. For that, you need separate consent. In the case of opt-out, it’s a complete opt-out of receiving SMS from a business.
Regulations	The main focus is sending customers information regarding your product/service usage so it see less TCPA regulations. For example, for SMSs like order confirmation, you don’t need to comply with marketing quiet hours.	The main purpose is to increase sales, promote your product/service, and increase awareness about your business; TCPA regulations are the primary focus.
Example	Text messages for shipping confirmation details, OTP, two-factor authentication, account details, order confirmation, purchase details, reservations, banking and billing, etc.	Text messages for product launches, flash sales, exclusive discounts, loyalty offers, promo codes for upcoming sales, etc.
Template	“[Bank Name]: Due to a temporary server issue, our online banking services are currently unavailable. We are working to resolve it, and we will inform you once the service will be restored. We apologize for the inconvenience caused.”	ABC Pvt Ltd: Get 20% off on your next order with code ABC25. Shop now: [Link]

To increase customer retention, engagement, and satisfaction, implement a hybrid of the two message types – transactional + promotional messages.

Wondering how to get consent?

Here is a great example from Costco –

Source: Twitter

Here are a few compliance best practices for transactional SMS:

When users sign up, send them an SMS to confirm what they have signed up for. In short, utilize double opt-in
Send only transactional messages because the person has not signed up to receive promotional SMS.

Differentiating both types of SMSs will help you fulfil your customers’ expectations and avoid any future compliance issues.

Types of Transactional SMS: Examples & Use Cases

There are various types of transactional SMS. Here are a few different types that businesses across the globe use.

1) Confirmation Text

Usually, businesses send confirmation texts to customers when they purchase their product/service or appointment confirmation.

For example,

Tom placed an online order to purchase his favourite t-shirt from an e-commerce store. Now, the e-commerce store sends Tom a confirmation text notifying him that his order was successful and when he can expect to be ready for pickup.

Order Alert: Hey Tom, Thanks for your purchase! Your order will be ready on [date] at [Time]. For more details, visit our website’s order page [Link] or reply STOP to unsubscribe.

Or Hotels can even send booking confirmation SMS like this:

“[Hotel name]: Your reservation is confirmed. Get all the details here: [Link].”

Healthcare service providers can send appointment confirmation text like this:

“Hey [name], your appointment has been scheduled for [Date] at [Time]. – [Clinic name].”

2) Service Notification

It is the most common type of transactional SMS that businesses use to inform customers regarding service reminders, account updates, etc.

For example,

The car dealership business owner sends customer service notifications regarding service completion or renewal of monthly subscription services to improve customer satisfaction.

“XYZ Car Dealers: Your car service is complete and ready for pickup. Visit today or call us at [number] if you need further assistance. Thank You!.”

“Your monthly subscription has been renewed successfully. Thanks for choosing us! For any queries or assistance, call at [number]. Drive Safe!”

3) Order and Delivery Updates

This type of transactional SMS lets customers know that their order was processed, out-for-delivery, and delivered successfully. In short, it keeps customers informed about their orders.

For example,

Dick ordered sunglasses online, and here is how the eCommerce store owner sends him updates about his order.

“Hey Dick, your order [number] has been shipped! Click here [Link] to track your order. Expected delivery [Date]. Questions? Reply ‘HELP’ for assistance. Reply STOP to unsubscribe.”

4) Reminders

It includes informational text reminders such as appointment reminders, payment reminders, meeting details, etc.

For example, ABC Salon sends a transaction confirmation message to Elena

“Hey Elena, thanks for visiting ABC Salon. Your payment of [bill no.], [$amount] for [service] on [date] was successful. For any queries, call us at [number]. We hope to see you soon! ”

An insurance company can send payment reminder SMS to customers so the customer does not have to deal with service interruptions.

“Reminder: Your insurance payment of [Payment Amount] is due on [Date]. Please make the payment on or before the due date to avoid any service interruption. Pay now: [Payment Link].”

5) Account Verification

Many times, customers face challenges while logging into their accounts. At that time, they need to verify their identity. Companies can send OTP or 2FA texts to customers to verify their account information.

For example,

Banks can send their customer the following type of service disruption of maintenance alert.

“[Bank name]: We are currently undergoing maintenance, and some services may be temporarily unavailable. We are working to restore full service as quickly as possible. Thanks for your patience.”

6) Receipts

Many brands send purchase receipts through an automated transactional SMS. Once the customer completes the purchase, they receive the receipts, which will help them keep a record of their purchase.

For example,

A solar company can send the following type of digital receipt message to customers once they complete the purchase from their brand.

“Thanks for buying our solar products! The receipt is attached here [Link]. Please review and contact us if you have any questions.”

7) Security Alerts

Businesses send automated security alerts to customers who opt-in to receive SMS notifications without any CTA or promotion.

For example,

Travel agency owners can send the following type of security alerts to customers to who are travelling and notify them about important safety information or updates related to their destination.

“[Travel Agency Name]: Security Alert! We want to inform you about recent developments at your travel destination. Please exercise caution and stay updated with local news. Safe travels”

8) Unsubscribe Messages

An automatic unsubscribe message is also a type of transactional SMS. It should trigger when the customers send a reply like STOP or UNSUBSCRIBE. When customers are no longer interested in receiving SMS from the company, they can unsubscribe. Sending an automated message confirms the receipt of the unsubscribe request. It also notifies customers that they will not receive any texts.

In the following example, a Real Estate company sends an SMS informing Joe that she will no longer get messages from them.

“Hey! Joe, You have successfully unsubscribed from [company name] SMS alerts. If you need further assistance, reply ‘HELP’ or visit our website [Link]. Thank You! ”

9) Account-related SMS

Whenever the banking system wants to notify users regarding successful account registration or account status updates or any social media platform wants to send verification codes for the brand-new account or password resets, they can do it through the following transactional messages.

Account Registration Confirmation

“[Banking Name]: Hey [Name], Your account has been successfully created with us. Click here to log in any time :[Link].”

Password Reset Request

“Hi [Name], Your password reset request has been received. To rest your password, use this code: [code]. Thank you!”

Account Status Update

“Your account has been updated successfully. If you have not made this change, please contact support.”

Why is Transactional SMS Effective? Reasons to Prefer it Over Other Communication Channels

Transactional messages can be sent by email, post, messenger, and SMS. All these communication channels are not convenient for all purposes.

Imagine this: An eCommerce business sends order confirmation via post. A customer would probably receive their product at the same time or even before the confirmation post arrives! Such order confirmations will be of no use and make customers frustrated!

You must choose a method that ensures reliability, engagement, and speed. If you decide to use Emails or push notifications for transactional communication, there might be a chance that your email gets lost in spam, and customers might ignore push notifications.

As per the study, 55% of emails are considered spam, so email delivery is a major concern. On the flip side, SMS offers almost 98% open rate, assuring customers will see your message instantly. You can use the right automated SMS marketing platform like Textdrip and integrate SMS API into your existing CRM to send automated notifications such as shipping updates, order confirmation, appointment reminders, etc.

SMS ensures that essential information will reach customers promptly, improving the customer experience and building trust. Transactional SMSs are usually automated and can be received at any time. For example, customers who purchase a product after business hours will get an automated SMS confirmation.

In short, if you use the right SMS provider, you can easily implement it and scale your business. Such platforms help businesses automate texts that will be sent after the trigger of the specific action.

SMS is the standard feature available on all mobile phones globally. Therefore, it is the perfect method to communicate important information to customers who even don’t have internet access.

Best Practice Tips for Transaction SMS

While implementing transactional SMS, here are a few best practice tips you need to keep in mind. Transactional SMS strategies are pretty different from promotional or conversational texts.

Select the right SMS platform that you can easily integrate with your existing technology stacks and key business tools. Choose the platform that aligns with your business’s requirements and fits in your budget.
Get explicit consent from customers before sending them transactional SMS.
Send the right message at the right time. Timely updates will help you build customer trust.
Send personalized messages and keep messages short, as there is only a 160-character limit. So send relevant information only. Send only transactional content and use clear CTA like “click here to track your order.”
Start slow. Send only one type of transactional SMS and track its results. Analyze how users are engaging with your messages. Gather engagement, opt-out, click rates, etc.
If you experience increased opt-out rates, then diagnose the issues and fix them.
Once it is done, you can try sending more transactional texts.
Repeat steps 1 to 7 until you receive the expected results.

Keep Customers Happy & Informed By Sending Transactional SMS With Textdrip

Text messaging is an excellent way to constantly connect with customers and strengthen their relationships with your brand. All you need is the right automated SMS marketing platform, technology, and right strategy. Textdrip efficiently simplifies transactional SMS paths with its convenient, automated, user-friendly platform.

Using Textdrip, you can easily craft transactional SMS campaigns, automate and persoanlize them, and integrate them with your CRM tools. Transactional SMS helps you strengthen your relationship with your customers. Therefore, don’t miss this opportunity to improve the customer journey and earn your customers’ loyalty. Sign up for the free trial or book a demo and experience how beneficial the non-marketing texts are!

FAQ's

How secure is Transactional SMS?

Transactional SMS is generally secure, especially when used for OTPs and other time-sensitive data. However, businesses should ensure the use of secure APIs and follow data protection regulations to safeguard customer information.

Do customers need to subscribe to receive Transactional SMS?

Not necessarily. Transactional SMS are typically sent to customers who have already interacted with your business, such as placing an order, signing up, or booking a service. However, it's essential to have a valid phone number and explicit consent if required by local laws.

Can Transactional SMS notify users of urgent system updates or patches?

Yes, Transactional SMS can instantly alert users about important system updates, patches, or security fixes that must be applied immediately to ensure functionality or security.

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Nicole Esters

As Textdrip’s CFO, Nicole oversees the company’s financial operations and resource allocation and reviews the company's financial performance. Read More