SMS Marketing versus Transactional SMS

SMS marketing and transactional text messaging are very versatile ways to communicate with your customers. The ways businesses can use texts are diverse and it is becoming the primary channel through which brands and businesses communicate with their customer base.

Why? SMS is an effective, affordable, and efficient way to connect.

Why is SMS so popular? Not only does bulk SMS offer an affordable way to reach many recipients at once, but open rates for SMS also exceed those of any other communications channel. At a near 100% delivery rate and 98% open rates within just minutes of text message receipt, SMS far exceeds all other communication platforms. This includes email, voice, direct mail, and social media. Furthermore, as it is so unintrusive, most consumers prefer SMS over other channels when they receive messages from businesses.

Did You Know?

  • Almost 50% of consumers view promotional coupons as the most effective SMS messages they receive.
  • SMS coupons are redeemed 10x more than coupons delivered over other channels.
  • More than 50% of customers prefer transactional SMS to other customer support channels.
  • 50% of SMS marketing messages that include a call to action are deemed useful by consumers.
  • 78% of mobile users read SMS messages from businesses they have subscribed with.

However, when sending text messages to your database of contacts, the distinction between marketing/promotional SMS and transactional is very important. There are a couple of extra rules that need to be followed to ensure the success of your marketing text campaigns.

Subscribe button for SMS marketing
Subscribe button for SMS marketing

Whether you are sending messages locally or internationally, there are various laws and regulations worldwide with which businesses must be compliant when it comes to marketing. These include (but are not limited to):

🇪🇺 GDPR: General Data Protection Regulation
GDPR is the European Union regulation and legislation that addresses the transfer of personal data outside the EU and European Economic Area.

🇺🇸 TCPA: Telephone Consumer Protection Act
TCPA is a 1991 US law that restricts telephone solicitation/telephone marketing and limits the use of automatic dialling, pre-recorded voice messages, and using SMS and Fax for solicitation purposes without express consumer consent.

🇦🇺 Spam Act 2003
Australian Law prohibits businesses from sending unsolicited commercial electronic messages, including email, SMS, MMS, instant messaging, etc.

🇨🇦 CASL: Canada’s Anti-Spam Legislation
Canada passed federal law governing electronic threats including spam, enabling Canadian businesses to compete globally while protecting Canadian consumers.

When you send business-related SMS, compliance with these laws is largely dictated by whether your messages are for marketing or transactional purposes.

SMS marketing examples on a mobile handset
SMS marketing examples on a mobile handset

Also known as promotional SMS, marketing SMS is sent to consumers often in a bulk SMS or text message blast format. Its purpose is to:

  • promote a product or service
  • increase sales
  • build brand awareness
  • generate consumer interest
  • trigger customer engagement

These messages include (but are not limited to):

  • new product announcements
  • event invitations
  • discounts, coupons, and special offers
  • fundraising requests
  • polls and surveys
  • sweepstakes

The key factor in SMS marketing is that these messages must only be sent out with the express consent of each recipient. Consent must never be assumed, nor can it be implied. It must be written or recorded verbally, electronically, or on paper. For example, actively signing up to a mailing list constitutes express consent. For this reason, when you buy a product online or sign up for a service, there is often a tickbox at the bottom of forms to opt in to receiving marketing material.

Transactional SMS is sent from a business to a single recipient where it is deemed essential for the recipient to use a specific product or service. In most cases, transactional SMS contains information that the consumer has requested, and they consent to receive these messages when they provide their mobile number, often during the checkout process.

Transactional SMS includes:

  • password resets
  • two-factor authentication
  • order confirmation
  • order status
  • delivery status and tracking number
  • payment reminders
  • receipts
  • reservation or appointment confirmations
  • recurring billing advice

Often transactional messages will be automated, but not all automated text messages are transactional. As marketers get better at sending behaviour-based messages through the customer lifecycle, marketing text automations become increasingly more popular.

The biggest, most important difference between these two types of SMS is intent; whether the message is informational or promotional in nature.

  • The purpose of marketing SMS is to increase engagement, purchase rates, and customer retention.
  • Transactional SMS aims to foster relationships, build brand credibility, deliver top customer service, and educate customers individually.

From your business’ point of view, this difference affects how you collect data, user consent and compliance:

  • You must never send a marketing message to your customers or any other consumer without express consent to do so.
  • You also need to understand and appreciate that consenting to transactional messages does not, by default, mean consent to receive marketing messages.
  • Ensure that you clearly identify yourself whenever sending both marketing and transactional text messages. Whether this is enforced or not, failure to identify your brand will damage your brand credibility and risk customers reporting your number as spam.

By complying with the regulations for the area within which your business operates, you protect yourself from being accused of spamming your SMS contact database. This, in turn, eliminates the risk of being fined or otherwise penalised (and under the GDPR some very hefty fines have been dished out!).

ClickSend is a premium global online SMS gateway. We have the technical expertise and insight to facilitate business messaging for all your communications. This includes opt-in SMS marketing and transactional text messaging.

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Business Communications. Solved. Otherwise a massive lover of all things tech and marketing.