Communication Technologies and Messaging Solutions: What is Transactional SMS?

The text messaging revolution is here, but businesses can communicate with customers in a variety of ways. Here’s how Transactional SMS works.

Transactional SMS refers to any text message sent from a business to its customer that provides information about their product or service. Marketing messages and promotional SMS campaigns are not considered Transactional SMS – we’d call this Broadcast Marketing (and it also plays a key role in a business’s sales strategy).

Transactional SMS messaging is usually automated, occurring after a customer completes an action, or as a mass broadcast to relay a critical product update. Automation reduces the required human resources while delivering a high level of customer service.

In cases where transactional SMS occurs after a user completes a specified action, their action triggers a pre-determined message, and any customer-specific fields are automatically filled.



Let them know their parcel has arrived with a quick and welcome SMS!

So how can businesses use Transactional SMS messaging?

Businesses and service providers can utilize transactional SMS messaging to alleviate time-intensive customer interactions, or simply to provide another channel to their communications. For instance, a booking confirmation could be sent to a customer via email as well as SMS, to ensure that it is received, seen, and within easy access to the customer.

Below are some examples of Transactional SMS uses:

  • One-time passwords (OTPs): Transactional SMS can be used to send OTPs to customers in making sure that data is secured such as sign-ins, payments, and more can be verified by sending automated OTPs
  • Purchase Updates: After paying for a product, customers are eager to receive it ASAP. Retailers frequently handle inquiries for order updates, but these too can be handled by transactional SMS. Purchase Confirmations, Order Status, Shipping Updates, Tracking Codes, and Delivery can all be sent via SMS
  • Booking confirmations and appointment changes: Upon initial booking and a few days out – help your customers remember their bookings with a friendly reminder text! This simple notification will also increase your ROI by reducing no-show rates. Include click-through links to allow customers to quickly update a booking if need be
  • Security alerts: Common with financial institutions and email providers – a quick text lets both your customer and your business know if their recent interaction was legitimate. “We noticed an unusual transaction from Hawaii – was it you?” is a classic example. If all is fine, a customer doesn’t need to reply, but they’ll appreciate the security you’ve provided them

Why SMS specifically? There are other channels too.

SMS can be used to increase the number of customers on customer databases, improve customer service, enhance customer loyalty and increase revenue.

But crucially, SMS is native to all mobile phone devices. It is the most universal of all messaging channels and requires no download to utilize.

It’s also far less invasive than a phone call, which can require back-and-forth calls if a call is missed. SMS gives customers the freedom to respond at a time that is convenient for them.

While email is necessary for sending large amounts of text – such as a travel itinerary – to a customer, emails overall tend to get bogged down in customers’ inboxes. They also have notoriously low open rates – a good open rate being between 12 – 25%. By stark contrast, SMS has a 95% open rate within the first 3 minutes of being received.

Time to implement Transactional SMS?

Now that you’re thinking about whether SMS is right for your business communications, you probably have plenty of questions!

Our team at Babeltext can show you the inner workings of messaging for customer service, plus take you through the many channels available to you beyond transactional SMS alone (including Facebook Messenger, WhatsApp, Webchat, and more!)

To schedule a time to chat with our team, click the button below. Want to read some more? Download our informative PDF guide on migrating from phone calls to messaging, and how best to market your new channels!


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