What is a Transactional Email? A Comprehensive Guide to Personalized Business Messaging

What is transactional email cover

Transactional emails are follow-up emails sent in response to a user action — for example, an order confirmation after a purchase. 

Typically, a transactional email will have a much higher open rate than any other type of marketing email. A reason for this is natural — the recipients have already engaged with your brand and are looking forward to transactional emails. 

While marketing campaigns and newsletters showcase promotions, tell brand stories, and sell products, transactional emails are more communicative. Learn about the key characteristics, real-world applications, and best practices related to transactional emails below.

What is Transactional Email?

A transactional email is a message related to a recent brand interaction, for example, password recovery, account confirmation, or shipping updates. 

Although these emails look similar to promotional emails, they are entirely different sides of email communication.

Promotional email communication includes:

  • Newsletters,
  • Product announcements,
  • Welcome emails,
  • Event emails, 
  • Re-engagement emails.

Transactional emails include:

  • Shipping and delivery notifications,
  • Password reset emails,
  • Account verification emails,
  • Payment receipts,
  • Travel updates.

Transactional emails are triggered by specific user actions, and promotional emails are sent to bigger audiences. 

In most cases, recipients are expecting transactional emails since they contain important information related to their request. Transactional emails are the first emails a paying customer receives from you, and understanding their attributes leads to higher opens. 

Difference between Promotional and Transactional Emails

Here are the main distinctions between the two:

AspectTransactional EmailsPromotional Emails
Primary purpose Provide information related to user interaction. Promote products, events, and services to increase sales.
Recipient expectation Expect emails as soon as they sign up or perform an action.Do not necessarily wait for the messages.
Content focus To send useful information related to the user.Uses CTAs and promotional messages to engage customers.
Frequency Sent only after an action.Sent multiple times 
Conversion goal Intend to inform the user. May contain up-selling or cross-selling of products. Built to persuade customers to buy.
Legal complianceGoverned by email laws focused on transactional messages.Subject to marketing and anti-spam laws.
Transactional emails vs. Promotional emails

Above all, transactional emails play a major role in building customer trust and retention. They add a positive user experience, enriching online interaction as a whole. This leads us to a more vital aspect — how to build transactional email campaigns for customer satisfaction. 

Key Characteristics of Transactional Emails

The most prominent feature of these emails are the quick reactions they cause, which makes them more valuable than other types of emails in customer communication.

Here are the most common features of transactional emails:

  • Personalization: Transactional emails always address the recipients by name and move on to specific information about their actions. A high level of personalization makes them relevant, and the recipient is likely to engage, given that they expected such an approach.
  • Timeliness: These emails are sent immediately after the user action. For example, password reset emails arrive in the inbox right after the user clicks the ”forgot password” button, prompting an immediate response.
  • Relevance: Since transactional emails are sent after an action, they are always concrete and relevant. The chances that a recipient who triggered an email won’t engage are low because of this. 
  • Lack of commercial content: Transactional emails distribute information and pertinent data. They usually don’t revolve around promotional content. 
  • Include information: The primary purpose of these emails is to inform the recipients about the next steps in their engagement with the brand. For instance, they will contain shipping confirmation orders or various appointment details.
  • Legal Compliance: Transactional emails follow regular requirements such as CAN-SPAM or GDPR, and are required to use customer data for a limited purpose (transactional emails are similar to data processing since they contain customers’ personal information).

Besides holding information related to customers, transactional emails also have unique uses in everyday life.

What is the Purpose of Transactional Emails?

The main purpose of transactional emails is to provide relevant, timely updates and information regarding users’ actions. These emails fulfill customer’s expectations and strengthen user interaction with the brand’s online services. Even though they may involve commercial information, they are, in essence, non-commercial emails. 

How Are Transactional Emails Used?

Transactional emails cover various aspects of customer interaction, such as reviews and shopping confirmations. However, their uses extend beyond these basic actions.

Here is a short breakdown of how transactional emails are used, per industry:

  1. Account Management: 
  • Account creation and verification: Transactional emails send information on new user registration, including email address verification and activation of accounts.
  • Password reset and security: When a user forgets their login information, such as username or password, transactional emails help regain access to their accounts.
  1. E-commerce & Retail:
  • Order confirmations: Once a customer places an online order, they receive information on the number of items, cost, and delivery dates.
  • Shipping notifications: Transactional emails send information about the shipping times, tracking links, and return FAQs.
  1. Financial Services: 
  • Banking & transactional alerts: Transactional emails carry data and information from financial institutions, such as account alerts, balance updates, and bank statements.
  • Loan status: Customers receive confidential information on their loan or mortgage status.
  1. Subscription Services: 
  • Subscription confirmation: When people sign up for newsletters, they receive confirmations and account details through transactional emails. Like any other type of email, transactional emails should provide easy unsubscribe options, too.
  • Updates & notifications: Subscribers get alerts on policy changes, new content, and related information.
  1. Travel & Hospitality: 
  • Booking confirmations: Transactional emails send vital information such as reservation details, booking confirmations, and any related dispute updates.
  • Travel itineraries: Customers are updated with necessary information on their trips and notified about any change in dates or cancellations.
  1. Legal:
  • Legal document signatures: Legal contracts and documents are frequently signed through transactional email links. 
  • Privacy policy updates: Brands send emails about changes in privacy policies and terms of service.
  1. Healthcare and Medical Services: 
  • Appointment reminders: Transactional emails contain critical details like upcoming medical appointments and tests.
  • Prescription refill notices: Many pharmacies send reminders to patients regarding prescription refills.
  1. Social Networking:
  • Notification alerts: Users receive emails about friend requests, mentions, and other social interactions.
  • Account summaries: Websites and social media platforms send weekly or monthly summaries about accounts.

In all these applications, transactional emails are essential for delivering information, building trust, and enhancing user experience. To grasp why crafting well-targeted and functional transactional emails are important for  a business, you need to understand the complete scale of their importance. 

Why is Transactional Email Important?

Transactional emails allow brands to deliver appropriate information on time. For businesses, these emails are an extension of email marketing. However, for customers, they are a reliable information source that improves their online experience. 

Here is our brief dissection of the importance of transactional emails:

For Brands, they contribute to:

  • Increased open rates,
  • Better customer experience,
  • Enhanced user engagement,
  • Reduced support queries,
  • Automated and scalable communication,
  • Brand building and loyalty.

For Users, they bring:

  • Confirmation and assurance,
  • Timely and relevant information,
  • Act as a digital record keeping,
  • Security and authentication,
  • Enhancing user experience.

Sending these emails after specific triggers can help your brand build deeper connections with the customers. Before preparing, know the differences between promotional and transactional emails. 

Main Components of Transactional Emails

A transactional email is also known as an operational email. As the name suggests, transactional emails involve various aspects and steps for success. 

Recognized sender addressCompany name, brand name, brand email address.
Recipient information Recipient name and validated email address.
Subject lineSummarize the content of the transactional email.
Email header and brandingProper header design, the brand logo with brand colors.
Body ContentThank you messages, Brand-related visuals, CTA and tracking links, Bullet points or lists, Testimonials, and reviews.
CTAThank you messages, Brand-related visuals, CTA and tracking link, Bullet points or lists, Testimonials, and reviews.
FooterContact information, legal information links, unsubscribe options, and social media links.
Transactional email components

Including these components in your transactional emails ensures smoother processes for the brands and better clarity for the customers. Considering that, let us look at a few best practices for creating effective emails.

Transactional Email Campaign: How It Works

The processes and requirements are similar to building any healthy email campaign. Transactional emails are easier to set up because most workflow is automated.

You’ll notice that the prerequisites for a successful transactional email campaign are the same as the ones for other campaigns. 

Here are the steps toward a successful automated transactional email campaign:

  1. Verify Your Sending Domain 

The first step to setting up a transactional email is verifying your sending domain. To do this, first set up your DKIM (DomainKeys Identified Mail), and SPF (Sender Policy Framework) records in the DNS settings. Authenticating your sending domain prevents spoofing and data breaches.

  1. Set up SMTP Access

SMTP (Simple Mail Transfer Protocol) is an internet protocol that allows the transmission of emails. Transactional emails are sent through SMTP for added reliability and consistent delivery. If you have your email marketing set up with an email service provider, the ESP will provide API and SMTP access to send transactional emails consistently.

  1. Transactional Email Templates

As the next step, it is important to design transactional email templates that reflect your brand identity. You may use HTML or design templates from ESPs to build it.

  1. Configure Email Sending Settings

Before sending transactional emails, set up the sender name and email address, reply-to address, and where your emails will return if bounced. Through this process, it is always critical to maintain legal compliance.

  1. Set up Tracking and Monitoring

Like any other email sequence, setting up tracking and monitoring is essential for transactional emails. Furthermore, check key email metrics such as open rates, click-through rates, and bounce rates for effective email communication.

  1. Transactional Email Automation

To send emails as soon as a customer takes action is only possible through automating your transactional emails. Automation allows you to send emails as soon as a customer interacts with your brand. It is vital to set up a proper automation flow for an uninterrupted delivery of transactional emails. Automation also helps you set up triggers for various actions the user may take. For example, an account verification email after the customer has signed up. Or shipping confirmation email after the checkout process.

  1. Test Emails

Before sending live transactional emails, test content, design, and delivery setup.  Additionally, test on various devices to ensure the emails are optimized for each.

  1. Optimize Email Deliverability

While sending transactional emails, it is imperative to ensure high deliverability. Send relevant content and constantly monitor sender reputation.

  1. Regularly Review and Update

Review your transactional email setup periodically to ensure better open and click rates and overall compliance. 

Set Up Your Transactional Emails With Campaign Refinery

Campaign Refinery makes it easy to integrate tools and features into your transactional email campaigns.

Our automation and linking features include dynamic links that automatically change URLs and support highly targeted automation workflows.

With the user-friendly interface and easy-to-use templates, you can set up transactional campaigns effortlessly. Once you set up the process, the Cleaning Validation Tool checks for email bounces and fixes it. The layers of validation help achieve and retain the highest deliverability rate. 

After using our deliverability settings for a month, a client was able to re-engage 60% of the customers. They revived a dead email list and built a healthy one filled with opportunities for higher ROI.

Now that you know how automation works, let us go over the critical components of transactional emails to help you stay informed in all phases of email marketing.

Best Practices for Creating Effective Transactional Emails

Transactional emails are confidential and require continuous refinement. Here are the best practices below to keep your transactional emails effective: 

  1. Personalization

It is highly critical to include the recipient’s name and other personal information in your transactional emails. In addition, include event-specific information for the users. 

For example, you may send a thank you email after a customer has purchased a product that says: “Hi [customer name], welcome to [brand name] family. Thank you for buying our best-seller (product name). We hope you find it useful. For questions or assistance, please contact our support team”.

  1. Audience Segmentation

Although transactional emails refer to interaction-specific content, it is important to utilize email list segmentation. Start by dividing your audiences into groups based on specific criteria such as age, position in the marketing funnel, etc. 

The best way is to gather user data and then segment your audience according to  the following categories:

  • Demographics:  Age, gender, Income, education, etc,
  • Behavior: Purchase history, browsing history, engagement with previous emails,
  • Location: Time zone, languages, geographical location,
  • Engagement level: Active users, inactive users, occasional users,
  • Purchase frequency: One-time buyers, regular shoppers, etc,
  • User preferences: Communication preference, frequency, etc,
  • Lifecycle stage: New users, returning users, loyal customers,
  • Transaction type: Purchase, registration, notification, appointment, etc.

Campaign Refinery, for example, provides segmentation tools to create filters based on your predefined criteria. 

  1. Automation 

Automation is the process of streamlining workflows with minimal human interaction. It involves setting up triggers for each event. When the event occurs, the software sends the emails to the recipients. 

Setting up automation emails for every audience segment is crucial for timely delivery. The triggers must be activated when a user interacts within the defined criteria. Hence, paying attention to the email content and triggers set for each action is necessary.

  1. Maintain Timeliness

Transactional emails must be sent immediately after the user’s action to ensure relevance and usefulness. Delaying transactional emails by a few hours can decrease trust in your brand and disrupt the overall user experience.

  1. Clean Design

Since transactional emails carry significant information, it is mandatory to use a readable email format. Using colors and interactive elements is acceptable if they provide value to the user. Furthermore, check your email sizes and formats to ensure it’s adaptable to different devices.

  1. Include Appropriate Links

Include order tracking and other relevant links based on the user’s action. Having this information helps users have easier access to data in one place. 

  1. A/B Test 

Refining emails according to data is a great way to identify gaps and create useful customer content. Test subject lines, CTAs, and email templates to check the effectiveness of your transactional emails.

  1. Tracking

Email campaign metrics are helpful to understand and maximize your email marketing performance. Track key campaign metrics such as open rates, click-through rates, and number of subscribers.

  1. Authentication

Phishing and spoofing are hard to deal with, especially with transactional emails. Implementing authentication mechanisms like DKIM will add secure emails and protect your sender reputation. 

  1. Work With a Reliable ESP

To fine-tune your processes and build a system, work with an ESP that is known for higher deliverability and performance.

Campaign Refinery provides cutting-edge tools and features, including automatic list cleaning and credit system that make your email marketing efforts easier. 

  1. Use a Dedicated IP Address

A dedicated IP address sends all your emails from a unique address that belongs to you. Using a dedicated IP address ensures your emails are reaching the intended recipients, increasing email deliverability rates. However, you may also use a shared IP address if you trust the sender you’re sharing it with. At Campaign Refinery, we handle a large volume of shared and dedicated IP addresses with safety and security.

  1. Monitor Your Sender Reputation

Maintaining a good sender reputation is essential for higher delivery rates. Authenticate and periodically check your sending domain’s reputation. Follow email best practices such as maintaining a low bounce rate, legal compliance, and lower spam complaints for increased email deliverability.

Implementing email best practices will help you achieve higher deliverability and open rates for your transactional emails. Now that you know the best practices, let us see how real-world brands use them.

Real-World Applications of Transactional Emails

Brands use transactional emails to answer order queries, even before customers bring them up. For example, ”order arriving late” notifications to help customers track their product. Here are examples of brands that made effective use of transactional emails.

  1. New Account Details: Slack

When a user signs up for a platform, they expect a welcome message and an email with account details. Account detail emails include primary information such as username, password, and a link to the website. 

In the below email example, Slack includes a greeting, a link to the app, and tips to get started. This is a good example of a transactional email that benefits the user.

Slack welcome email
Slack welcome email. Source
  1. Confirm Your Email: Vevo

Confirmation emails are sent to verify the recipient’s email address. The primary purpose of confirmation emails is to know that the recipient is a real person and they have consented to receive information. The automation process activates with the ”sign up” trigger.

Similar to the brand below, it is best to use simple language and include relevant content for transactional emails.

Vevo confirmation email
Vevo email confirmation. Source
  1. New Download: Gumroad

Transactional emails also inform the users about new sales, downloads, or disputes. In this example, the transactional email is sent to a creator to notify them of a new download. 

To make your transactional emails more user-friendly, use easy-to-read typefaces, and pastel colors with lots of white space (the space surrounding the elements). 

Gumroad new download email
Gumroad new download email. Source
  1. Purchase Email: Etsy

Along with the purchase information, a transactional email may also contain up-selling or cross-selling products. Although transactional emails are not commercial, a few brands may choose to utilize this opportunity to promote relevant products. 

There are numerous ways to personalize your transactional email templates. The following example also includes a note from the owner, which establishes a connection with the customer. 

Etsy order confirmation email
Etsy order confirmation email. Source
  1. Reservation Confirmation: Airbnb

Reservation emails confirm the booking status and are a requirement for travel businesses. These emails are part of transactional emails, preparing customers for the upcoming journey. 

Being transparent in your transactional emails increases trust in your business. For example, AirBNB communicates the current status through reservation receipt email. It also includes necessary information such as the photo of the place of stay, booking status, payment, dates, and FAQs.

Airbnb reservetion receipt email
Airbnb reservetion receipt. Source

Use the examples above serve as motivation to create effective transactional emails. If you are looking for expert help, you are welcome to optimize your transactional emails with us.

Sending Transactional Emails With Campaign Refinery

As you prepare to send transactional emails, Campaign Refinery can help you set up your workflows, validate recipient addresses, maintain list hygiene, and provide the highest deliverability in the market.

Apply to become our client and see your email revenue grow!

We have seen the highest results for our customers, and we want to help you achieve maximum results from your email marketing, too. To help your emails consistently hit the inbox, our founder, Travis Ketchum, has packed his expertise in the Inbox Formula — a comprehensive, actionable guide on how to increase your deliverability by yourself

And you can have it for free, today — download the Inbox Formula here. 

After reading our deliverability guide, you’ll have sufficient knowledge to consistently get higher open rates, click-through rates, and conversions. 

Happy emailing!

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