Promotional vs Transactional SMS
What they are and how to use them
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Don’t you love how easy it is to redeem a coupon from your favorite brand when it’s sent directly to your phone?
Just like your friends who want to text you major life updates, your favorite brands love to communicate with you in this way too.
If you’ve ever received a text message from a brand sharing a thank you message, news or an update, a discount, a unique code, booking details, or alert, then you’ve engaged with SMS marketing with a business.
SMS marketing is one of the easiest, fastest, and most cost-effective ways to communicate with your audience.
It’s also one of the best ways to boost customer engagement rates. With SMS, businesses can send valuable instantaneous messages to a large list of people in their target audience.
Considering SMS marketing messages have a 98% open rate, it’s no surprise businesses choose this marketing method to generate interest from their consumers.
There are a lot of ways businesses can use SMS marketing: from telling shoppers about their available loyalty points to sharing shipping updates, SMS allows businesses to engage with their audience in a way that creates a positive and informative relationship.
The type of SMS messages businesses send are placed into two categories: promotional SMS and transactional SMS. Each type contains a different purpose and key message, compliance rules, and sender information.
Before you start using SMS for marketing, it’s important to understand the differences between the two (and how each can be a valuable strategy for your business).
Let’s dive into what each type of SMS category means:
What is promotional SMS?
Promotional SMS is when a business sends their customers unique SMS messages for marketing or advertising purposes. Businesses use promotional SMS mainly to promote their products or services and generate customer interest, and to get their target consumers to engage with them in a more direct and efficient way.
An example of promotional SMS is when a company sends a special coupon code for dollars off an item at their store, like this example from NaturAll Club.
What is transactional SMS?
Transactional SMS is used by businesses to relay transactional information.
Through this type of SMS, businesses can reach subscribed customers directly to share important details that aren’t related to promotional activity, like order status, delivery notifications, and more.
Check out this example from Imperfect Foods.
One of the most common examples of a transactional SMS message is when a customer receives a text message sharing their order status or shipping updates from somewhere they’ve shopped online.
What are the key differences between promotional versus transactional SMS?
Now that you know what promotional SMS and transactional SMS are, it’s time to start building a strategy.
Each type of message serves a different purpose, and there are key compliance laws according to the Telephone Consumer Protection Act (TCPA) that businesses have to follow whether they’re sending promotional or transactional messages. Understanding what these key differences are and how promotional SMS and transactional SMS function will help you make better informed decisions about the type you should be using for the best results.
To outline the major differences, we’ll start with the purpose of each.
What’s the purpose of transactional SMS vs. promotional SMS?
Each type of SMS has a different purpose or goal for every business.
To break it down simply: consider what kind of reaction you’re hoping to get from your customers. Define what your business goals are through an SMS campaign, the actions you want to drive your customers to make, and if there is a specific metric you’re hoping the campaign will improve. Answering these questions will help you decide which type of message you should send.
For example, if you’re hoping to increase website traffic, customer engagement, customer retention, or purchase rate, you’ll want to consider promotional SMS. This is a great opportunity for your brand because promotional SMS messages containing coupons are redeemed 10 times more than coupons being promoted in other ways.
However, if you’re hoping to build brand credibility, foster a positive relationship, or educate your customers about important details so they depend on your brand for information, then transactional SMS may be a good solution. In fact, more than 50% of customers prefer transactional SMS over other forms of communication for support-related topics.
Some businesses often use both types of SMS strategies, especially ecommerce brands. It’s common for ecommerce stores to send targeted customers details about a new product launch, a coupon code, or news about a sale. If you’ve given a brand your phone number, it’s likely you’ll get these types of promotional messages. However, many ecommerce brands also use transactional SMS to provide shipping updates to customers, too. Your business isn’t restricted to one type of strategy, and both can help drive success in different ways as long as you provide value.
Timing and promotional vs. transactional SMS
Businesses can’t just send SMS messages on-the-fly. Every country will have different laws around SMS timing, and Canada and the U.S. abide by the Telephone Consumer Protection Act (TCPA).
According to this act, in order for a business to send a promotional SMS message, the customer has to provide written consent to opt-in. Also, businesses cannot send a promotional SMS message before 8 a.m. or after 9 p.m. local time.
However, since transactional SMS messages are not for promotional or marketing purposes, there are no time restrictions for when businesses can send them. Transactional SMS messages can also be sent to all recipients whether they have a DND (do-not-disturb) status or not.
It’s important for your business to have a sender ID. This is the unique name or number that pops up for your customers every time you send them an SMS message. Setting up your sender ID will help you stay on-brand with your SMS marketing efforts. Whether you choose a long number or a short code, the sender ID must be from a pre-approved U.S. address and it must be included in any SMS communication. This is part of SMS marketing compliance.
Compliance and promotional vs. transactional SMS
Just like we shared above, the compliance laws with SMS marketing come from the TCPA, but the laws are different between promotional SMS and transactional SMS. As per U.S. compliance laws, promotional SMS messages cannot be sent to anyone in your customer base that has their status set to do-not-disturb (DND).
So, any messages containing information about a new product, a code, a sale, or any type of marketing message being used for promotion cannot legally be sent to these people. In fact, your business can get a fine starting at $500 per message sent if it goes against these rules outlined by the TCPA.
That can add up to a lot of money! It’s likely not worth the few messages to one customer.
As for transactional SMS, the compliance rules are slightly more lenient due to the fact that transactional messages are informational and may be necessary for the customer to receive, no matter what their DND status is.
Transactional SMS can be sent to any customers at any time of day, but it must be clear that these messages are not meant for marketing purposes. As soon as a transactional SMS includes a promotional aspect, it can lose its transactional status and your business would be breaking compliance laws. This is why it’s beneficial to outline the purpose of your SMS so you can fit it under the proper promotional vs. transactional category and follow the correct TCPA compliance.
Examples of promotional and transactional SMS from leading ecommerce brands
The best way for you to understand everything we’ve been sharing about promotional and transactional SMS is for you to just see it in action for yourself. Ecommerce and direct-to-consumer brands use both promotional and transactional SMS messages all the time to connect with their consumers. Let’s dive into a few examples of leading brands doing this well and how it’s working for them!
Transactional SMS examples
Since there are a lot of uses for transactional SMS messages, it’s best to see live examples to understand how brands use them. We’ll show you how a few up-and-coming and popular brands write their transactional SMS messages to inspire you to create your own. These examples are also TCPA compliant; check them out below.
1. Order status.
Order status is one of the most common types of transactional SMS messages ecommerce consumers receive. When shoppers choose to opt-in for shipping updates, they’ll get the kind of message shown in the example below from Rent the Runway. These types of messages can include the following order status updates: your item is on hold, being processed, preparing for shipment, shipped, and complete.
2. Delivery notification.
Just as the name suggests, a delivery notification is received when a shopper’s package is out for delivery or has been delivered. This type of transactional message is sent after the shoppers have received all the information about shipping updates, so although order status and delivery notifications are similar, delivery notifications are always the second step after order status updates.
Common samples include a text message from a business telling you that your package will be delivered in an hour, or a thank you text message from a business that is also telling you when your package has been delivered.
Delivery notification SMS messages are great because your ecommerce brand can use this opportunity to ask customers for any feedback (whether it’s about your shipping, the products themselves, or your communication), send them appreciative messages to build a better relationship, or ask customers to review your brand online to build credibility.
Sending receipts through email or SMS is common for all ecommerce brands, especially since you aren’t shopping in a brick-and-mortar store where they can print a receipt for you at the moment you complete a transaction.
Just like you opt-in for SMS shipping updates, an ecommerce brand can text you your receipt as well, making it super convenient and simple for shoppers to see and organize their shopping receipts on their phones. Some brands use SMS to make returns as well, allowing customers to text a picture of their receipts back to return a previous order.
4. Recurring billing.
Similar to sending receipts through SMS, businesses can also update their customers about recurring bills this way, too. For example, Affirm financing services sends their lenders a text message around the same time every month to let them know about an upcoming payment. This is the perfect way to help your customers stay organized with their monthly bills since you know they’re guaranteed to see your message within the same day. This is the type of transactional informative message that customers definitely appreciate.
Promotional SMS examples
Just like before, the best way to start creating your own promotional SMS messages is to be inspired by others. We’ve set aside the main types of promotional SMS messages brands can be using to increase engagement and profit with examples from brands you may love.
1. New merchandise alert.
Since 98% of text messages are read by the end of the day, it’s a great tool to alert customers about new merchandise released on your ecommerce store.
This will help you get quick sales, especially from your most-engaged customers who’ll be excited to see what merch you just dropped for them.
310 Nutrition does this well with their promotional message about new available flavors.
By sharing the news about the merch, sharing the specific flavors available, and adding a simple way for shoppers to purchase immediately makes for a great customer experience that customers will happily engage with.
2. Discount code.
Sharing discount codes and special coupons are another great strategy for optimizing your promotional SMS messages. It’s true that nearly 35% of consumers prefer to receive coupons and promotional codes from retailers via text message.
Since every customer in your SMS segment will receive the message, you’ll ensure a higher engagement rate and redemption rate on your coupon codes because it’ll be easy for customers to copy the code, click the link to your store, and paste it when they’re checking out items.
Here's a fun example from Super Coffee.
Did you know that 48% of U.S. consumers prefer SMS loyalty communication over direct mail, email or application loyalty communications?
Combining two of your customer engagement and retention efforts is a great way to maximize results. This is why using SMS marketing to engage customers in your brand’s rewards program is important. Not only does it keep customers coming back to earn more points with your brand, but SMS offers you the ability to reach people right away to update them about their points earnings and VIP status. This keeps your brand front-and-center in each customer’s mind. Check out how AMC theatres does this well!
4. Conversational SMS.
Conversational SMS is a great opportunity for your brand to build a solid relationship between you and your customers. This is because it’s not something every brand does, and it’s a great way to send something personal to your customers that makes them feel special as one of your brand advocates. Rather than using this type of SMS to increase sales or have customers redeem coupons, this is for building solid relationships so that customers stay loyal to your brand and make future purchases. We saw two brands doing this well: Maev and JUDY.
Integrate with a leading SMS tool to optimize your ecommerce marketing stack
Now that you’ve learned the difference between promotional and transactional SMS, hopefully you see opportunities for your brand to use this type of tool to ramp up your marketing strategy and reach your customers directly. There are so many ways you can use SMS marketing; whether it’s for promotional or transactional purposes, you’re guaranteed to engage with your audience in a way that’s personalized and efficient.
Also, when you can trust a business to ensure your Shopify store is sending effective,
TCPA-compliant SMS messages, it makes your marketing efforts way easier. This is why apps like Postscript are a great feature for any ecommerce brand hoping to start using SMS marketing.
With Postscript as your SMS marketing partner, your ecommerce brand can build a subscriber list, easily automate your text marketing based on user actions, segment your audience for personalization, send unique campaigns, have two-way conversations, track revenue and ROI, and so much more.
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Written by Christina Donati
This guide was written by Tina Donati, a content marketing specialist with a passion for writing and all-things digital. Tina has a master’s degree in communication and journalism, and she works full-time in marketing while running her own freelance writing business part-time.