What is Transactional Email and What is it Used For?

Transactional email is one of the most common and effective channels for businesses to communicate with customers. It refers to automated emails that are triggered by specific user actions or events, such as order confirmations, password reset emails, purchase receipts, shipment notifications, and more.

Unlike promotional or marketing emails, transactional emails serve a purely functional purpose – they provide service-related, non-promotional information that customers need. With the massive volume of business conducted online today, transactional emails have become indispensable for e-commerce sites, SaaS companies, and organizations of all types.

In this simple guide, we will explore what transactional email is, the types and uses of transactional emails, why they are important, best practices, and tips for creating effective transactional email campaigns.

What is Transactional Email?

A transactional email is an automated email sent from a company to a customer or user in response to a specific action or event. It delivers information related to core transactions and interactions on a company’s digital properties.

Some examples of transactional emails include

• Order confirmations
• Shipping notifications
• Password reset emails
• Account creation or signup confirmations
• Payment receipts
• Appointment or reservation confirmations
• Alerts about account changes or activity

Unlike regular email marketing campaigns that are sent to entire subscriber lists, transactional emails are triggered by specific user events and include personally relevant information like order details, account info, tracking numbers, etc.

The core differences between transactional email and marketing email are

Transactional Email

• Automated – sent in response to user action
• Personalized – customized with user details
• Timely – sent immediately based on event
• Functional – provides service, no promotions

Marketing Email

• Scheduled – planned sending cadence
• Generalized – sent to entire list
• Promotional – meant to market or advertise
• Broad targeting – not triggered by user events

Thus, the main goal of transactional email is to provide timely and relevant service information to customers, while marketing email aims to promote products, offers, content, etc. to larger audiences.

Types of Transactional Emails

There are several common categories of transactional emails that online businesses use frequently

1. Order and Payment Confirmation Emails

These are sent immediately after a customer places an order or purchases a product/service. They confirm order details like items purchased, shipping address, payment info, delivery timeframe, etc. Providing this info quickly builds trust and improves customer experience.

2. Shipping Notification Emails

Sent when an order ships, these emails share tracking numbers and shipping details so customers can track delivery status. This provides visibility into fulfillment processes.

3. Password Reset Emails

When users forget passwords or want to change them, these emails are sent with a reset link so they can easily set a new password. This is a widely used functionality across apps and websites.

4. New Account Welcome Emails

When a new account is created, these emails welcome users, provide account credentials and info, share tips for getting started, and more. They help onboard new users.

5. Receipts and Invoices

Detailed payment receipts and billing invoices are commonly sent via transactional email for documentation purposes. They provide official records of purchases and transactions.

6. Alerts and Notifications

Apps and services use transactional emails to send alerts about account activity, status changes, issues, reminders, expiration or renewal notices, and more. This provides users timely updates.

There are many other transactional email types like reservation confirmations, refund notices, newsletter subscriptions, event registrations, and so on. The use cases are extensive.

Why is Transactional Email Important?

Here are some of the key benefits and reasons why transactional email is so valuable for businesses across industries:

Improves Customer Experience – Well-designed transactional emails provide timely, relevant service information during the customer journey. This builds trust and loyalty.

Drives Revenue – Order confirmations and shipping emails help complete purchase processes and have high conversion value. Abandoned cart emails bring customers back to complete purchases.

Lower Service Costs – Automated transactional emails reduce customer inquiries for order, account, and delivery details that require staff time via phone, chat, etc. Self-service functionality lowers overhead costs.

Higher Deliverability – Transactional emails have high open and response rates because of their functional utility for recipients. Deliverability rates are higher than for unsolicited marketing emails.

Triggers Marketing – Data from transactional emails can be used to trigger highly-targeted and relevant cross-sell or upsell marketing offers. Transaction data enables personalized promotions.

Legal Record – Invoices, payment receipts, and confirmations create official documentation trails required for legal, accounting, tax, and compliance purposes.

Because of these significant benefits, businesses invest heavily in optimizing their transactional email strategies and leveraging this high-value channel.

Best Practices for Transactional Email

Here are some tips and guidelines to follow when designing and implementing transactional email campaigns:

• Provide Valuable Information – Focus on user value rather than promotional content. Share need-to-know details like order status, delivery dates, tracking numbers, account changes, etc.
• Personalize Content – Use merge tags and dynamic content to customize emails and include recipient names, order numbers, payment details, etc. Segment where possible.
• Use Responsive Templates – Ensure templates render well on mobile devices. Mobile opens account for over 50% of transactional email opens.
• Set Up Automated Triggers – Map out key user events and configure instant automated triggers to send relevant transactional emails.
• Ensure Timely Delivery – Send emails immediately on the heels of key events. Timeliness boosts relevance, utility and conversions.
• Make Templates Scannable – Use concise copy, bullets, and highlighting to make emails easy to scan quickly. Draw attention to key details.
• Test Across Devices – Check renders on mobile, tablet and desktop. Optimize templates for small screens and touch interactions.
• Check From Names – Set sender names to your brand name or a persona – avoid generic names like “noreply”.
• Monitor Performance – Track open rates, click rates, conversion metrics. Learn and optimize.

Enable Preferences – Allow customers to opt into or out of non-critical communications via preferences centers. Respect choices.

Using these best practices will help optimize transactional email performance, deliverability, and user experience. Treat transactional emails as critical customer service channels, not just operational necessities.

Conclusion and Key Takeaways

Transactional emails are automated and timely emails sent in response to user actions and events. They deliver core service, account, and order information to customers.

Key highlights include:

• Transactional emails differ from bulk marketing emails in their triggering and personalization. They are customized to user details and sent immediately based on specific events.
• There are many types – order confirmations, shipping notices, password resets, new account welcomes, payment receipts, alerts, and more.
• Transactional emails provide important utility and value for customers in terms of visibility, documentation, and convenience.
• Proper implementation improves customer experience, drives revenue, lowers service costs, and enables highly targeted marketing.
• Best practices include personalization, mobile optimization, timely sending, scannable content, segmentation, and performance tracking.

With rising consumer expectations and business conducted predominantly online post-pandemic, transactional email is one of the most critical channels for customer communication. Applying the strategies in this guide will help businesses maximize its potential.