Transactional SMS vs. Promotional SMS — Definition and Guide

As consumers, we have at some point received a text message from a brand sharing a thank you message, a unique code, an update, a discount, an alert, or booking details. then you’ve engaged with SMS marketing with a business.

Considering SMS marketing messages have a 98% open rate, it’s no surprise businesses choose this marketing method to generate interest from their consumers. It is one of the easiest, fastest, and most cost-effective ways to communicate with your audience and boost customer engagement rates.

There are a lot of ways businesses can use SMS marketing throughout the customer life cycle journey: from sending customers unique codes in the sign-up process, verifying purchases and delivery, sending available loyalty points to sharing other important 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: transactional SMS and promotional SMS. Each type contains a different purpose and key message, compliance rules, and sender information.

To get the most results in your SMS marketing, it is important to understand the differences between the two and how each can be a valuable strategy for your business.

This article will explore the differences and provide a thorough guide on how you can effectively support your audience along the lifecycle journey.

What is Transactional SMS?

Transactional SMS refers to any SMS message from a business to relay transactional information about its product, services, or processes like order status, delivery notifications, and more to subscribed customers.

A common way transactional SMS message is used by businesses is verifying user transactions — when a client receives a text message with information on their order status or shipping updates from an e-commerce store.

An example is this order status update from Jumia

What is promotional SMS?

Promotional SMS on the other hand is used for sales and marketing purposes, mainly for businesses to directly promote their products/services to prospects and subscribers and generate customer interest.

An example is when a business sends a message that contains an offer or a sales coupon like this example from MTN

The Key Differences Between Promotional and Transactional SMS

One major difference would be consent. Generally, you always need to have permission to send any text SMS to your customers. What differs here is the level of permission, based on key subservience laws by the regulatory bodies businesses have to follow based on whether you’re sending a transactional or promotional message.

Understanding these key differences in the functionality of the two messages will help make better-informed decisions about the type you should be using for the best results.

Let’s start by highlighting the purpose of each.

Let’s start by highlighting the purpose of each.

1. Conformability and transactional vs. promotional SMS

The compliance/conformability laws with SMS marketing vary between promotional SMS and transactional SMS. As per Nigeria compliance laws, promotional SMS messages cannot be sent to anyone in your customer base that has their status set to Do-not-Disturb (DND).

In other words, promotional messages about a new product, a sale, a code, or any type of marketing message cannot legally be sent to these people except if they opted-in to receive such messages. Otherwise, you could be reported for sending unsolicited messages, fined, and blocked.

Transactional SMS, on the other hand, facilitates timely updates and confirmations, making the rules guiding transactional SMS a little more permissive due to the fact that transactional messages are informational and may be important that the user receives them regardless of what their DND status is.

It is however important to outline the purpose of your SMS and ensure that your transactional SMS is void of any trace of a promotional aspect. Otherwise, your business would be breaking compliance laws.

Transactional SMS examples include:

  1. Order status confirmations used to communicate a flow.

E.g, an item is being processed, on hold, preparing for shipment, shipped, and/or complete.

2. One-Time Passwords (OTPs) used to protect your business and customers’ data from fraudulent activities, automated OTPs can be used to authenticate new account sign-ins, and verify users’ transactions.

E.g., Hi, kindly use 305115 as your One Time Passcode to complete your signup on [Company Name]. Expires on 2-Jul-2021

3. Appointment confirmations

E.g Hi [First Name]. This is a friendly reminder of your upcoming appointment with [DOCTOR’S NAME] on [DATE AND TIME]. If you need to reschedule or cancel, please call this number or reply to this text within [TIME] of your appointment time to avoid a no-show fee.

4. Shipping updates

5. Booking reminders

Promotional SMS examples

  1. Discount codes
  2. New product alerts

E.g, “Flash Sale!!! Get 50% off our spring collection with code TEXT50. Shop now: http://txt.xt/VB1x”

Getting Started…

By understanding the difference between transactional and promotional SMS, you’re able to see the opportunities for your brand and make good decisions as you plan the marketing strategy to engage directly with your customers.

There are many ways you can use SMS marketing; whether it’s for promotional or transactional purposes, we recommend you integrate with a leading SMS tool to optimize your eCommerce marketing stack.

With Termii as your partner, you’re guaranteed to easily automate your text marketing, verify customers’ transactions, send unique campaigns, have two-way conversations to engage with your audience in a way that’s personalized and efficient.

Termii runs a developer-first approach (access our full API documentation here) while also providing dashboard tools for sales and marketing teams within businesses who decide to run non-API-based engagement or promotional campaigns (read this article for more details).

If you’ll need further help in deciding how to leverage Termii to engage your audience, track revenue, and ROI, send us a chat at sales@termii.com, run or schedule a live demo with an expert.

Cecilia Abegunde

Termii helps businesses verify their customers across SMS, voice, and instant messaging channels.