November 10, 2008
By Jessica Tsai, Assistant Editor, CRM magazine

Transactional Emails Add to the Action

Sometimes a short message goes a long way. In fact, according to a recent study conducted by Forrester Research unit JupiterResearch, marketers are beginning to see significant returns with the use of simple, transactional emails -- the often-automated, often-overlooked communications that are sent to confirm or update customer activity. Even more impressive? The results of the study indicate that transactional messages have the highest open rates of all email messages, providing a great platform for marketers to embed upsell and cross-sell opportunities.

Transactional messages include messages such as:

order confirmations;
password confirmations/resets;
account updates; and
other service-related messages associated with a previous transaction.

The research, which was sponsored by StrongMail, a provider of on-premises email-marketing solutions, included a survey of 200 American email marketers. Of those, 60 percent saw an increase in revenue after implementing a marketing program for transactional email; 54 percent saw an increase in brand recognition; and 50 percent saw an increase in customer satisfaction. Only 2 percent reported having seen no benefits.

B2B companies tend to be "more challenged," says David Daniels, a principal analyst at Forrester Research, primarily because they tend to use non-commercial-grade applications, opting instead for homegrown solutions. Daniels adds that B2Bs with smaller, more-focused target lists -- as well as some small and midsize B2C enterprises -- tend to be believe that, because they have fewer contacts, they don't need a dedicated transactional email system.

Ryan Deutsch, senior director of marketing strategy at StrongMail, says that companies need to evaluate precisely how critical a given transactional message is: Will the absence of that email result in costs to the contact center? How much churn exists in the customer base if customers feel their questions aren't being answered in a real-time manner? From an investment standpoint, it comes down to a matter of weighing the value of the message against the volume of the sending.

The report notes that most transactional emails have been simple text-based messages delivered through the same system that completed the transaction. Therefore, the emails often lack the ability to deliver rich, HTML-based messages capable of incorporating advertisements and offers (e.g., an offer for a printer compatible with the laptop you just purchased, or a free pattern to get you started with your new sewing machine). Moreover, they lack reporting mechanisms to capture even basic deliverability metrics. A consumer expecting to receive a confirmation email, for instance, is likely to call customer service if the message never arrives -- and customer service will have no means of verification. "Without any kind of insight or reporting, or knowledge that [the message] actually got to the recipient," Daniels says, "you're always going to be walking around with that cloud of fear...[and the potential for] additional cost hanging over you."

Deutsch says that one of his clients has transactional emails delivered from three different places:

e-commerce platform,
the contact center, and
another customer service portal.

The challenge, then, is to get the messages to work seamlessly across each channel -- a set of circumstances that is fairly typical. Only 47 percent of respondents indicated that, overall, the marketing department was in charge of transactional messaging. Without the integration of marketing data, transactional emails are limited in their ability to "implement promotional offers or ads...[resulting in a situation in which] corporate silos typically stymie innovation," the report says.

Deutsch also notes that transactional emails should expect at least twice the open and clickthrough rates of a general email campaign. Otherwise, he says, "you're doing something wrong."

In short, according to both Daniels and Deutsch, the marketing department needs to own the transactional email application. Furthermore, compared to marketers using a homegrown solution, a higher percentage of those using a commercial system dedicated to transactional messages (as opposed to bulk email marketing) report at least 5.1 percent higher revenue.

A transactional system has "subtle nuances," Daniels says. "A lot of systems designed for emails were never designed to do it in a one-off nature.... [Transactional messages] are totally not a batch-and-blast kind of scenario. Every message is getting triggered and needs to be bulletproof in uptime and scalability." The report also makes the connection that those who have a dedicated, commercial-grade transactional email application are more likely to measure revenue earned from this channel.

Though noting the importantance of having dedicated transactional and traditional email systems, the report emphasizes that the integration of the two is critical for the optimization of sending infrastructure and data collection.

In a time where companies are struggling over every dollar, it can be difficult to legitimize such an investment. Transactional messages, Daniels says, may be the exception to the rule. "If you don't do this," he says, "this revenue will go to your competitors."

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