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Transactional Messaging: the Next Big Wave in E-mail and Multichannel Marketing

What is the next focused area of attention for e-mail marketers? How can e-mail be used to create a dialogue with customers, to build relevancy and to promote business? Can transactional messages be used as part of a cross-channel strategy to leverage any point of sale into more effective and highly scalable customer retention programs? How can e-mail be positioned as part of an overall customer lifecycle optimization model and behavior-driven strategy?

Let’s look first at the current landscape, mid-2006. Today’s e-mail environment is complex. It is fraught with challenging delivery requirements, sender authentication, compliance and privacy regulations, and inboxes cluttered with spam, phishing and viruses. With consumers receiving too many e-mail messages — many not relevant or sent too frequently — acquiring new e-mail subscribers has become increasingly difficult, while retaining customers through e-mail has become more complex. Business-to-business e-mail recipients may have high-powered spam filters that too often screen relevant, permission-based messages out with the bad.

The only solution is to let customers control what messages they receive and when they receive them. Successful marketers are those that will embrace the shift from bulk e-mail marketing toward transactional and customer-centric messaging.

Transactional messaging defined

E-mails sent as a result of a direct customer transaction with a company are known as transactional e-mails. Examples include registration confirmations, order receipts, shipping notifications, activation notices, product upgrades, membership updates and rewards fulfillment. Such messages are usually sent immediately after a transaction occurs, but may be delayed as part of an automated sequence of e-mails.

Transactional e-mails in the United States are treated differently than promotional e-mail by CAN-SPAM Act regulations. In order to qualify as transactional, an e-mail must be directly related to a transaction with the sender; it must have a valid “from” address, and it must not have a misleading subject line. Unlike promotional e-mails, no opt-out notice and mechanism are required.

The Federal Trade Commission has provided greater clarity on the “primary purpose” of an e-mail that differentiates commercial and transactional relationship purposes. In particular, the FTC ruled that transactional e-mails can contain marketing information, but cannot have a promotional subject line or any marketing content at the top of the e-mail body. As a result, marketing offers should only be displayed at the side or bottom of the e-mail message in order to qualify as a transactional e-mail under CAN-SPAM.

Transactional messages rise above inbox noise

Transactional e-mails are the most preferred type of commercial e-mail. Consumers not only want them — they demand them. As a result, open rates for transactional e-mail are 70 percent compared with the average opt-in open rate of 33 percent (Harte-Hanks metrics, 2005). Click-through rates for transactional e-mail are above 15 percent to as high as 30 percent compared with the average opt-in click rate of 7-8 percent.

Transactional e-mails have a high rate of deliverability because they are delivered individually, not in bulk. Internet Service Providers really want to deliver these types of e-mails to subscribers. Many ISPs offer special agreements for transactional e-mail senders to ensure inbox delivery, such as enhanced white list status, or “sanctioned” delivery using SenderScore Certification or Goodmail Certified E-mail.

Leveraged properly, transactional messages also can become a new source of revenue through embedded recommendations and offers. In this way, transactional messaging becomes transactional marketing by including:

· Cross-sell and up-sell offers based on customer purchases or preferences;

· Print-at-home incentives and certificates to drive in-store sales;

· Surveys for market research;

· Preference forms to enable further message personalization

· Automated follow-up messages to win back lost customers.

Improving the customer experience

Consumer and business individuals have high expectations of the companies with whom they choose to do business. For instance, 88 percent of customers surveyed by TargetX said they expect a response to e-mail inquiries within 24 hours — yet, many companies still don’t meet this benchmark. Today’s technology can be leveraged to meet and exceed these expectations by triggering transactional confirmations within only a few seconds and then follow up with status and update messages as needed.

When used correctly, transactional messaging can improve the customer service experience, resulting in increased customer retention, additional sales and greater operating efficiencies. Automated messaging systems such as auto responders and alert systems driven by Web site transactions or inbound messages can provide consumers with immediate FAQs [Frequently Asked Questions] and help information.

An automated customer service e-mail sequence can be triggered from a single online transaction. For example, a seminar registration may result in four customer service e-mails — an immediate confirmation message, a two-week reminder, a three-day reminder and a follow-up survey the day after the event. An online purchase might generate a confirmation, a back-order message, shipping notification and other status e-mails for each item purchased. Transactional messaging keeps customers informed and a brand top-of-mind.

Using transactional e-mail as a multichannel marketing tool

While improving the customer experience, transactional e-mail also can contain product recommendations or offers — as long as they conform to the CAN-SPAM primary purpose requirements for this type of message.

An order receipt sent as a transactional e-mail may contain one or more cross-sell or up-sell recommendations for the product purchased. The same applies to follow-up account status messages, product update messages, seminar reminders, gift suggestions, and financial or travel alerts — anything resulting from customer interaction with a business.

Since e-mail delivery per message is much more immediate and less expensive than print communication delivery, transactional e-mail also can be used in multichannel applications. A discount coupon can be e-mailed immediately after an initial purchase (either online or in-store) to drive customers back into stores for redemption. Similarly, loyalty rewards can be delivered as an e-mail promptly following an in-store purchase to deliver print-at-home certificates. Electronic fulfillment typically reduces costs by as much as 90 percent when compared to some offline alternatives, while reducing time between store visits.

The latest trend in online behavioral marketing is to combine Web analytics with transactional e-mail messaging to win back lost customers. When a customer abandons an online shopping cart, an e-mail is sent instantly with a discount incentive to encourage completion of the abandoned purchase. Assuming proper acquisition of the customer’s e-mail address, this practice is an excellent use of transactional e-mail marketing.

Multichannel transaction examples

Since personalized transactional e-mails demonstrate better delivery and open and click rates, what results can marketers expect? A retail health and fitness chain used a registration e-mail sequence containing targeted print-at-home coupons to generate a 72 percent view rate and 17.9 percent print rate, producing a lift in in-store visits. A global rapid-dining organization used its Web analytics from online purchases to automate a transactional sequence of five recapture messages to produce an average view rate of 80 percent and click-through rate of 12 percent — more than twice its marketing e-mail rates. A loyalty rewards e-mail from a leading retailer delivered a 160 percent (multiple) view rate and an 85.4 percent print rate.

Transactional messaging — the next big wave in e-mail and multichannel marketing — can be leveraged to improve customer care, purchase frequency, and customer retention — ultimately improving the profitability and satisfaction of individual customers.


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