Understanding the differences between transactional SMS and promotional SMS

Want to implement an SMS messaging strategy into your business, but aren’t sure where to start or how it works?

You might also question why you’d start with another marketing channel when you’re already running email campaigns, ads, and posting on social media. But, an SMS strategy, when done correctly, offers great results and boosts your customer engagement. 

To understand how SMS messaging for business works, we need to dig deeper into the two types of SMS: promotional and transactional. Together these SMS strategies build relationships with customers and promote your business.

In this article, you’ll learn how to use transactional SMS vs promotional SMS in your business and what the main differences are between the two.

Not all business messaging serves the purpose of selling or promoting. To lay the foundation for further contact, you can use SMS to communicate with your customers and send them important information and updates.

Transactional SMS refers to non-promotional automated text messages. Use transactional SMS to notify and inform users about topics unrelated to marketing, such as sending order confirmations or authentication information. 

Using short transactional texts to reach customers can be more effective than calling them or sending emails, as people are more responsive to SMS.

Transactional messages have many uses and purposes. Each industry and business can find ways to use them in their communication strategies. Below, we collected a few examples of how our clients use transactional messages to reach customers.

E-commerce businesses use transactional messages to:

Transactional SMS use cases in banking and governmental institutions:

Transactional SMS use cases in hospitality:

People tend to trust SMS more than emails or other communication channels. After all, you don’t give out your phone number as easily as your email address, which is required for most registration or subscription processes. 

Using transactional SMS in your business is a great way to reach your customers on time and handle sensitive information.

For example, one of our clients, dahmakan, a food delivery service operating in Southeast Asia, uses transactional SMS to communicate with their customers. Just to experiment with SMS, the company at the same time ran three communication channels: email, push notifications, and SMS. Out of the three, SMS campaigns had the best results, allowing dahmakan to double its conversion rates and improve communication with customers.

Promotional SMS advertises products and services through short texts sent directly to your customers’ phone numbers. Unlike transactional texts, promotional messages aim to sell and create awareness. This form of communication is short, direct, but effective. 

Statistics show that people trust SMS messages a lot, and most open a new text within 3 minutes of receiving it. It results in an over 98% open rate for this communication channel.

Other benefits of promotional SMS are that they don’t require your customers to download apps, subscribe to your email list, or even have an internet connection. You can send text messages quickly and be confident they’ll reach the target.

Although short text messages limit the use of visuals and don’t exceed 160 characters, don’t get discouraged. 

Use promotional SMS to:

These are just a few of examples how marketers strategically use promotional SMS. But you can always adapt your strategy to your audience and business needs.

Both transactional and promotional texts play a part in the overall buyer’s journey. Your best bet to win over your customers is by combining the two. Use transactional SMS to make contact and build trust. And occasionally send promotional texts to let your customers know about your products and services.

If you only send transactional messages, your communication with customers might fall flat, as they don’t go from one part of the buyer’s journey to the next.

On the other hand, if you only use promotional texts, you might show off as a bit too salesy, and skip important steps in bonding with your customers.

But before you try both methods, you should know how to use transactional SMS vs promotional SMS based on their purposes and consent procedures.

Promotional and transactional SMS are both important because they have different purposes. 

Transactional SMS’ main purpose is to inform. Welcoming texts, confirmations, and reminders inform people and show them you care. 

With promotional SMSs, the goal is to advertise your products. It’s important that people learn about your products, services, discounts, and latest deals. Knowing how high the open rate for SMS is, you can anticipate that important notifications are better sent directly to a customer’s phone number than ending up in a spam folder in their email inbox.

But one wouldn’t work without the other. For example, when a customer registers to your SMS list, send them a welcome message to start the entire communication chain. Without it, a person might be a bit surprised to receive a promotional message without any introduction.

Transactional and promotional SMS require different types of consent from users. In most countries, the terms and conditions of a company already indicate that by providing contact details, a company might contact a customer for informational purposes. However, you are still obligated to provide a clear opt-out form to let your customers protect and manage their data.

Things get trickier when it comes to promotional communication. To send promotional SMS, you need documented proof of opt-in consent from a customer to send marketing material to them. 

When a customer registers on your website or orders something, they should find consent boxes that ask for permission to contact them for marketing purposes. You might have seen them yourself, such as “I agree to receive offers and promotions to my email, phone number, or other means of contact.” 

These fields aren’t mandatory. And just like with transactional SMSs, you must provide an easy way for users to opt out of your list.
Be aware of different data protection laws across countries. These requirements can vary a lot, and even the tiniest mistake can get you fined. For example, in the European Union, companies have to comply with the General Data Protection Regulation (GDPR) that governs how you manage personal data. For severe GDPR violations, fines can reach millions. The best way to be on top of data protection laws across regions is to find a trusted SMS service provider.

Both transactional and promotional messages are important if you want your SMS marketing to work. Once you know the benefits and purposes of transactional SMS vs promotional SMS, you can maximize your marketing efforts.

However, building an SMS strategy on your own is challenging. You need to create automation, make sure to comply with different data protection laws, and personalize your content to see results. 

The best way to handle SMS marketing like a pro is to work with a trusted SMS service provider.

And we’re here to help you get started. Launch your first SMS campaign with Infobip. We invite you to try our transactional SMS service for free.