Transactional Email Services
September 01, 2021 / Katarina Rudela
Reading Time: 10 minutes
A transactional email is a type of email that’s automatically sent when a triggering condition is met within an application or service. The trigger is some type of event such as an interaction with a customer or a customer preference. Transactional emails are primarily functional, such as providing updates or responding to a customer’s request. However, they can also fulfill marketing purposes by assisting in the recovery of an abandoned online shopping cart or reactivating an inactive user. In other words, a transactional email is one of the recipient expects to receive, which often isn’t the case with marketing email.
The most common types transactional emails include the following:
- Receipts and confirmations
- Behavioral emails
- Support and feedback
- Explicit requests
- Account alerts
- Summaries and digests
- Event-driven notifications
- Referrals and invitations
Receipts and Confirmations
Receipts and confirmations are the most common type of transactional emails. They’re generated by transactions, which is why they’re known as transactional emails. Customers usually receive a receipt or confirmation email after making an online purchase. In the case of a downloadable product such as a document or software, the file is often attached to the email. However, confirmation emails don’t need to be related to a purchase, as they also include event RSVPs and account sign-ups. These types of emails verify to users that their registration or sign-up was successful.
Behavioral emails are used to increase customer loyalty, making them more focused on marketing than other types of transactional emails. Users typically receive these emails after meeting certain conditions such as milestones in a loyalty program. An onboarding email is a common example of this type, which is sent to new users shortly after they create a new account. This type of behavioral email provides basic information about an application and is usually followed by a second email that provides greater details about specific features. Additional behavioral emails will then follow the first one to help ensure customers remain happy with the services.
Emails for abandoned carts are another common example of a behavioral email. These are the reminders emails that customers receive when they put items in a cart and haven’t checked out within a predefined period of time, typically ranging from a few hours to a couple of days. Reactivation emails are a similar type of behavioral email that customers receive when they haven’t used an account or service for a certain period of time. These emails encourage the customer to take some action such logging in again or completing the onboarding process.
Support and Feedback
Support and feedback emails are transactional emails that help improve customer experience through effective communications. They include confirmation emails that acknowledge receipt of a support request from a customer, which allays concerns over whether the support team received the request. Support emails also aid the communication process by notifying both parties of status updates for the support ticket.
Feedback requests are similar to support emails in that they both contribute towards a positive customer experience. This type of transactional email solicits reviews from customers at a certain point in time after they sign up for an account or make a purchase. Negative feedback provides businesses with an opportunity to contact those customers and attempt to improve their experiences.
Explicit requests are transactional emails that contain information the user has specifically asked for. These requests are usually urgent, so the user expects the responding e-mail to arrive quickly after the request. A password reset is one of the most common types of explicit requests because users need their password to access their account. The figure below provides a typical example of a password reset email.
Password Reset Email
A verification code used in two-factor authentication (TFA) is another type of explicit request. This process typically involves the user providing their password for an account, which causes the application to send a verification code to the email address associated with the account. The user must then enter the verification code to login to the account. Explicit requests are also used to retrieve lost product keys and other account-related information that prevents users from activating a new account or accessing an existing one.
Account alerts are similar to explicit requests in that both types of transactional emails are related to user accounts. Unlike explicit requests, account alerts are generated automatically based on certain changes to the account. These emails often keep customers informed about billing issues, generally for the purpose of avoiding the loss of the customer. Common examples of account alerts include failed payment attempts and overdue invoices, in which the email prompts customers to take the action needed to prevent their account from being deactivated.
Additional examples of account alerts include notifications of changes to email addresses or passwords. Account alerts also notify users of multiple failed login attempts and upcoming trial expirations.
Summaries and Digests
Summaries and digests are groups of messages sent in a single email, which some users prefer over receiving an individual email for each notification. These transactional emails usually contain a log of all the events like comments and account activity that have occurred related to the user during a specified time frame, typically daily, weekly or monthly. Summaries and digests are useful for users who don’t want their inbox cluttered with individual emails for each event but still want to be notified of important activities.
Summaries needn’t be limited to events that have already occurred, as they may also refer to events that may happen in the future. For example, a summary of scheduled appointments refers to future events.
Event-driven notifications are like push notifications for mobile phones, except they use email instead of text messages to alert users to many types of activities. These transactional emails usually don’t include actions by the recipients, unlike account alerts.
Instead, event-driven notifications deal with actions by other people such as social network posters or services. For example, they can inform users when they have a new message on a platform or a tag in a post. Event-driven notifications can also notify users when a package has been delivered or shipped. Additional uses of these transactional emails include notification of scheduled appointments.
Referrals and Invitations
Invitations allow users of a service to invite other people they know to create an account for that service. Users enter the recipients’ email addresses into a form rather than emailing them directly. The service then sends the invitation to the email address that the user provided. Referrals are similar to invitations except that referrals are typically incentivized, meaning they provide the sender with a benefit and sometimes the recipient. The incentives for a referral often include account credits and gift cards.
Benefits over Marketing Email
Traditional email marketing generally consists of sending the same message to many recipients, a method commonly known as “Spray & Pray” or “Batch & Blast.” The use of this approach is declining because virtually everyone with an email address is bombarded with marketing email, much of which is never read. It’s increasingly important for marketers to send email that’s targeted to a particular customer segment.
Monthly newsletters typically have high open rates, but they’re time-consuming to write. Furthermore, they require a professional writer to do them well, which small businesses usually can’t afford. Maintaining best practices in sending email includes maintaining and segmenting mailing lists, all of which uses resources. As a result, many businesses are unable to manage their marketing email the way they should and are shifting towards transactional email to obtain a better return on investment (ROI) for their email campaigns.
Most online businesses still use both promotional and transactional email, although they often overlook transactional email for marketing purposes. Various reasons exist for this strategy such as greater technical requirements for transactional emails. Enterprise software such as customer relationship management (CRM) and property management systems (PMS) solutions routinely trigger transactional emails, but they don't always include built-in methods of designing them without skills in tools such as CSS and HTML.
Organizations have historically separated the infrastructure for transactional and marketing emails, although these two worlds have begun to intersect during the last few years. For example, MailChimp acquired Mandrill to help them transition to transactional emails. Sendgrid has been a major player in the transactional space for years and has recently started adding new marketing features to its platform to position it as a one-stop shop for all marketing requirements.
Analysts generally consider transactional emails to be worth 300 percent more than marketing email, so organizations should generally include at least some transactional email in their marketing budget. While marketing isn't the primary purpose of transactional email, it still provides benefits in this area. Furthermore, data security requirements such as the General Data Protection Regulation (GDPR) doesn't apply to transactional emails, but it does apply to marketing email. The primary distinction between the two types with respect to the GDP R is that marketing email is primarily commercial in nature, and is sent in bulk for promotional purposes. As a result, transactional email is regulated differently from marketing email in Europe.
Transactional and marketing email also affect in distinctly different ways. The chart below comes from Experian’s Transactional Email Report, which shows open and click rates for various types of transactional email:
Average Open and Click Rates for Transactional Email
The chart above shows open and click-through rates (CTRs) for three types of transactional emails, including order confirmations, order information and refunds. The open rates for order confirmations, order information and refunds is about 114 percent, 107 percent and 97 percent, respectively. The CTR for order confirmation, order information and refunds is 12.5 percent, 20.8 percent and 18.9 percent, respectively. Few, if any, businesses ever achieve these rates with promotional email. The above chart makes it quite clear that recipients often open transactional e-mails more than once, and the CTRs are also much better than with promotional email.
The differences in the revenue generated between the two types of e-mail tells a similar story, as indicated by the following graph.:
Revenue Generated by Email Type
The chart above shows the average revenue generated by transaction and marketing email for orders, shipping and refunds. Transactional email clearly generates more revenue across all three processes. Furthermore, back links to an organization's website from transactional emails also generate substantially more revenue than those from marketing email. Transactional email usually has much higher engagement rates than marketing emails because transactional emails are more personal. They’re directed towards a specific user and are directly associated with actions the user has taken, making them highly anticipated.
In general, transactional emails are more beneficial to businesses because recipients are more likely to open them quickly and repeatedly than marketing email. It’s therefore easy to see how transactional email can continue improving user experience. As a result, businesses should consider using well-designed transactional emails to promote their brand, products and services. It’s also critically important that users be able to seamlessly navigate from these emails to the website while maintaining consistent branding.
The companies that achieve the greatest success with transactional emails treat them as opportunities instead of obligations. They regard these emails as chances to improve customer relationships and the perception of their brands. Best practices for implementing transactional email include prompt responses, personalized content, offers and
A fast reply that contains required information is particularly important for transactional email since they’re usually generated in response to some action the user has taken. Transactional emails with the highest priority include password resets, which should contain instructions. A receipt for a purchase should also include information like the expected arrival date. Organizations should send welcome emails as soon as possible after a visitor does anything that involves providing an email address, including subscribing to a blog or enrolling in a free service.
Transactional emails should contain personalized information such as the customer’s name, order number and purchase details, helping the customer feel valued. These emails should also use basic email etiquette, of course, but other details can further assist a company’s brand in standing out from its competition. For example, the subject line should be concise but descriptive, ensuring the user clearly understands why they’re receiving it.
Customers are more likely buy from a company if they’ve already bought something from that company in the past, which is why offers are a major part of marketing emails. Transactional email can also contain offers for products and services, but it’s essential that not overwhelm the primary message. This practice is especially effective with order confirmations, provided the offer is simple. The copy in transactional email should also be helpful and enthusiastic, with consistent messaging that reflects the company’s brand.
The transition from marketing email to transactional email is one of the most significant technological trends in 2021. Transactional email can be highly beneficial for businesses of all sizes, whether it’s a well-established e-commerce company with many products or a small startup with a single mobile app.
The generation of transactional emails by behavioral triggers allows them to improve customer engagement, thereby increasing revenue. They also reduce the workload of support teams by automating many communications that would otherwise be done manually. In addition, the personalization that’s possible with transactional email helps build customer loyalty. Transactional email can thus help companies improve their customer experience, provided it is used appropriately so that it doesn’t overwhelm users or detract from the email’s core message.
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