Transactional Email Delivery

Organizations use transactional email delivery providers to deliver large numbers of legitimate emails without outages or being not wrongly classified as spam. This category includes SMTP relay services and cloud email delivery.

Transactional emails are those emails that customers expect – password resets, order confirmations, and shipping notifications. A report from Borrell Associates, Inc. and Merkle revealed that 64% of consumers consider transactional emails to be the most valuable messages in their inbox. These engagements are important for customer service but also serve as a marketing tool.

Senders can increase their delivery rates by actively managing their sender reputation. Best practices include keeping their mailing lists clean, honoring permission grants, processing bounces properly, and making sure the email content is well constructed and relevant. However, even the most carefully crafted content, written according to best practices, can be blocked because of a blocked IP address, a hosted filter, or an email client filter.

Transactional email delivery providers help companies scale their delivery of transactional messages effectively and legally. They help manage one's email reputation through mailing list and email content tools. They also manage the transmission of these emails with IP selection strategies and delivery verification.

ROI: A Back of the Envelope Calculation for Email Deliverability of Transactional Emails

Email monitoring firm Return Path calculated that legitimate emails are mistakenly blocked or misclassified as spam 24% of the time! With every “lost” email, companies are losing potential revenue. Furthermore, they may also be increasing customer support costs and losing goodwill with customers who are expecting transactional emails and newsletters.

To calculate the email deliverability ROI for transactional emails, start by multiplying the number of emails you send a year by the current delivery rate. You just calculated the total contact reach. Subtract the contact reach from the number of sent emails. That’s the number of people who did not receive your email. Multiply that number by the cost of a customer support engagement like an email or call to customer support. (Note, this calculation considers only those emails that were blocked or bounced. It does not consider those which were delivered but caught in the addressee’s own spam filter. )

If you send 100,000 transactional emails a month, with a delivery rate of 76%, you could have 24,000 additional customer service requests from users looking for that missing password reset or purchase confirmation. If responding to a customer service request costs $1, email deliverability could be blamed for $24,000 in your customer service costs. Again, this estimate does not include the costs of a frustrated customer.

Your ROI is even greater if these emails serve a marketing function. Email deliverability ROI for marketing emails can be easily calculated. In this case, calculate the number of people who did not receive your marketing message as you did before. Then multiply that number by your conversion rate and the average sale value. That’s a good estimate of what the lost emails cost in potential revenue.

If you send 100,000 marketing messages a month, with a delivery rate of 76%, a typical conversion rate of 3% and an average sale of $50, you could be losing over $430,000 of revenue in one year.

Typical Pricing

Typical transactional email delivery providers offer monthly subscription packages that vary by volume and features. Monthly services can be as low as $8 a month. Given the volume schemes, these costs can be $.10 to $1 per 1,000 emails sent.

We calculated the “break even” point for about 20 email service packages on the market. Given a typical pre-deliverability rate, those messages that would have not usually been delivered cost $.01 to $.05 to be delivered. If these messages are marketing-related and you experience a typical 3% conversion rate, packages would be justified at even very low average sale values. If your average sale value is under $2.00, we recommend a more refined calculation.

Some may chose to invest in their own mail servers. However, new servers do not have an established reputation and often to have difficulties getting by many ISP and larger email providers.

Side-by-Side Price Comparisons

The following PDFs contain side-by-side comparisons of the pricing for Transactional Email Delivery solutions, solutions based on the number of emails you need to send, specific sending requirements (e.g, dedicated IP, newsletter functionality or sub-accounts), monthly budget (including solutions for those of you with no budget) and where you can try them at no cost.

How Vendors Price Solutions. This chart shows which variables influence various vendors’ pricing.

Low-Volume Solutions. Compare the smallest packages - solutions from email volumes of 1,000 to 45,000 – with this chart. In this and the following charts, green cells contain free solutions (limited trials are below). Purple cells contain solutions that offer a single dedicated IP address, multiple IP addresses or an IP subnet.

Medium-Volume Solutions. This chart covers solutions from 50,000 to 700,000 emails; one free solution (green cell), and solutions with a dedicated IP, multiple IPs or an IP subnet (purple cells). 

High-Volume Solutions. If you’re looking for free solutions, this is not the best place to start your search. Solutions ranging from email volumes of 750,000 to 110,000,000 are highlighted in this chart, including some that offer dedicated and multiple IP addresses (purple cells).

Plans by Price Range. For those of you working within a monthly budget, this chart offers a better understanding of how much you would be paying per month. Again, you will find free solutions (green) and packages that offer dedicated IP addresses (purple) in this chart.

Free Trials: You can try out the solutions you are interested in with these free trials. Please note: Only free trials (short-term) are listed. Free solutions (long-term) such as those offered by Amazon SES, MailGun, Mailjet, Mandrill, PostageApp and SendGrid are included in the monthly and low, medium and high volume pricing charts. Although you can use free solutions as trials, they can also be used as long-term solutions.

• CritSend Free Trial: 1,000 emails
• ElasticEmail Free Trial: 1,000 emails
• JangoMail Free 1-Month Trial: 200 emails

The Levers: How to Differentiate Deliverability of Email Service Providers

The overall success is measured by the number of emails sent efficiently without outages. An email service has three key functions to ensure email deliverability:

1. email validation
2. reputation management
3. error handling

Transactional email delivery providers validate messages with SPF and DKIM. A sender policy framework (SPF) validates the sending entity. (SenderID is another authentication standard that goes slightly beyond SPF by considering the email headers.) DomainKeys Identified Mail (DKIM) uses encrypted keys to validate that the message hasn’t been tempered with or hijacked by another party.

A transactional email delivery provider can protect a reputation by testing outgoing messages for compliance within best practices, providing dedicated IPs, and getting domains on whitelist services. They can help senders improve their message content with CSS and HTML tools. Providers can also work with reputation service providers (those who keep score for ISPs) and determine the best IP address for the senders’ messages. This process considers the types of messages being sent, the sender’s parameters, ISP’s rules, and the IP reputation.

Email delivery success also depends on error handling. How well does the delivery provider learn from errors and the deliverability results? How do they pass these lessons to the senders? Transactional email delivery providers can work with ISPs to understand what is working and what is not. For instance, they can schedule (or throttle) messages to different domains to understand how deliverability suffers if send requests exceed the specific servers’ thresholds. Transactional email delivery providers should also provide the sender with feedback loop, actionable information specific to their success and any failures (e.g., what addresses are not valid and should be removed a sender’s list?).

Other Factors

Transactional email service providers differentiate their offerings by uptime rates, delivery speed, price, and additional features. Popular features include data import and export and comprehensive reporting. Some vendors offer powerful APIs that integrate with CRM systems and reporting systems. Some offer email marketing services within the same solution.

Newsletter Features: The following solutions offer newsletter features.

• ElasticEmail: ElasticEmail’s Email Marketing Platform with all plans
• MailJet: Do-it-yourself newsletter tool and template gallery with all plans
• Mandrill: wpMandrill plug-in sends emails generated by WordPress through Mandrill
• SendGrid: Newsletter App available at the Silver Plan and higher

Agency-Specific Plans/Features: The following solutions offer unlimited sub accounts.

• ElasticEmail: Sub Account Control Panel with unlimited sub accounts
• JangoMail: Agency/Account-Management Features including the following: Client sub-accounts, Multiple logins including reporting-only logins, Private label, List/group sharing, Unsubscribe/bounce sharing, Locked templates, FTP
• MailJet: Agency/Partner Features including the following: Unlimited sub-accounts (not available with free plans): Master user can determine what features each sub-user has access to (account settings, stats, newsletter tool, contact management, dashboard), Unlimited subdomains and Partner API features (NOT public, only provided to partners)
• MessageGears: Agency Plans include the following features: unlimited sub-accounts, unlimited sending domains and agency-specific APIs. These plans are priced on a "pay per use" pricing model with automatic discounts as volume increases and a $500.00 monthly minimum.

Related Product Categories

Those interested in email service providers may also be interested in Marketing Automation and Email Marketing solutions.

Marketing Automation is designed to execute marketing programs. This feature-oriented solution category includes software platforms designed for marketing departments to simplify processes by automating repetitive tasks. Labor-intensive tasks including email subscription management, scheduling outbound messages and routing inbound responses can be mechanized.

Email Marketing solutions excel at one task: email. Email marketing solutions enable direct marketing using email with personalized greetings as a means of communicating commercial or fundraising messages to an audience. These systems work most effectively for sending mass messages when you have something to say (“batch and blast” email campaigns), a simple selling process with a short business cycle or sales on an e-commerce platform. Email marketing solutions are priced by the number of people on your marketing list (with unlimited campaigns) or by the number of emails sent. When priced by number of emails, email marketing solutions can cost 20x that of transactional email service providers.

The core functionality difference between Marketing Automation and Email Marketing solutions is campaign automation; traditional email marketing solutions are not automated and are not integrated with CRM systems. However, many Email Marketing solutions have APIs or plugins that synchronize CRM systems with the Email Marketing applications.

Some of the transactional email providers listed here include marketing features typical of email marketing solutions and marketing automation; however, not all marketing automation and email marketing solutions include the benefits of transactional email delivery.

Other Resources

These are references not directly related to any one vendor

• Deliverability.com hosts blog posts from those providing thought leadership within email deliverability.
• The Email Sender and Provider Coalition focuses on email legislation, receiver relations, technology solutions, and public affairs.
• Email Experience Council is the email marketing arm of the Direct Marketing Association. It promotes the use of email as a marketing tool.