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What is meant by Canned Response?

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Canned response is a predefined answer that can be reused while replying to a case.
The answers will be stored in the form of an Email Template in Vtiger and then when you try to reply to a case you can directly use the stored template from the Canned Response section in the Reply section of a case.

To add a canned response please add a new template for cases module.
Menu > Email Templates > Add Template > Select the module for the template as Cases > Save.
To know more about how to add an email template, please check this link
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