SMS marketing typically involves promotional SMS — text messages that businesses send for marketing or advertising purposes to promote the company’s products or services. Promotional SMS can raise brand awareness, foster engagement, and promote ecommerce.
But in business, SMS is good for more than marketing. The flip side of promotional SMS is transactional SMS, and it’s the right communication channel for many use cases.
What is transactional SMS?
Transactional SMS involves sending automated messages to customers in response to an event or when triggered by a customer request or action. Transactional messaging examples include sending order confirmations, account balance notifications, real-time alerts, and one-time passwords (OTP) for two-factor authentication (2FA).
Customers prefer to receive such notifications via text message. SMS has the highest reach among communications channels: 91% of the global population has a mobile device. SMS boasts a 98% open rate, and 95% of people read their text messages within three minutes of receiving them. The low cost to send messages makes SMS a cost-effective communications channel.
Benefits of transactional SMS
But transactional SMS service isn’t good just for customers. It offers a host of benefits for businesses too.
- Improved customer engagement: Send important and timely information to customers keeps people informed and engaged with the brand. It fosters increased customer satisfaction and loyalty and can improve customer retention.
- Increased security: When used for OTPs and to send security alerts, transactional SMS helps protect accounts from unauthorized access and avoid fraudulent transactions.
- Real-time communication: Transactional SMS enables real-time communication, allowing businesses to send urgent or time-sensitive messages, such as booking confirmations, delivery updates, or appointment reminders.
A transactional SMS use case
One example of transactional messaging comes from Plivo customer LAZ Parking, which manages parking properties on behalf of lot and garage owners in the US. At the height of the COVID-19 epidemic, LAZ rolled out a touchless pay-to-park solution. But rather than forcing drivers to download an app, LAZ relied on SMS.
Each LAZ Parking lot posts a sign with a unique alphanumeric code. The sign tells drivers to text the code to a short code phone number. When the company receives a new text, it replies by sending a link that drivers can use to pay for parking using their mobile devices.
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LAZ Vice President of Innovation Patrick Ryan found Plivo’s transactional SMS API to be an excellent fit for his company. He says, “This is a simple way to give customers access to mission-critical systems and get them to interact with them via their phone. Giving customers a link via text is far less technically complex than having to build your own app — an Android version, an Apple version — and distribute them in the app store. We can build our system how we want it, put a sign in a location, and get it up and running. It’s much more direct and simple.”
LAZ’s use case is an innovative example of how to take advantage of transactional SMS. Other common use cases include
- Booking confirmations — travel and hospitality business can send text to confirm a hotel room or a restaurant table.
- Order receipts — retails can offer SMS as a way for customers to get their purchase confirmations.
- Delivery status messages — stores and food service businesses can text customers to tell them to come and get it.
- Billing reminders — sometimes it pays to tell people that it’s time for them to pay.
- Appointment reminders — healthcare providers and service businesses can let people know they have plans to visit, to help avoid missed sessions.
- Service alerts, such as utility outages and flight delays — in unusual circumstances, an informative text can be reassuring.
Making it personal
When you use an SMS API like the one provided by Plivo’s cloud communications platform, you can tailor transactional messages to individual customers or segmented groups based on the data you have about them, enabling businesses to deliver more relevant and personalized content.
Whenever you need to provide valuable, timely information, consider text messaging. When you’re ready to get started, read our SMS Best Practices Guide for detailed texting considerations.
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