Whatever the circumstances, an internal job cover letter still has to include details such as the job for which you're applying, how you found out about the position and the qualifications that set you apart. As an internal candidate, however, you have the advantage of having insider company information that can add depth and interest to your letter. On the other hand, you'll also have to counteract any potentially negative marks on your employment record.
Don't Make Assumptions
Perhaps the biggest mistake made by internal job candidates is making assumptions. So hear this: Don't assume you're in a shoo-in for the job, and don't assume the hiring manager knows you. Unless you work in a tiny office, the manager in another department is not necessarily going to know how you operate or what your background is. Consequently, you need to take the job application process -- and your cover letter -- as seriously as you would if you were an external candidate, and perhaps even more.
Research the Job
In terms of job research, you'll be at an advantage. Read the job posting and look for matching skills and qualifications you can talk about in your cover letter, but also go further. Talk to current employees in that department -- or better yet -- the person currently or most recently in the job you want to find out more about the position. Ask the human resources officer handling the hiring to assess your "fit" for the position, suggests List Quast in Forbes.
Also pore over any internal memos or recent meeting notes to refresh your memory about any new products, marketing approaches or policies that you might mention. If you're applying for a marketing position, for example, share an idea you had that relates to the company's new marketing approach -- thus helping you stand out from other candidates.
Dispel Any Misconceptions
He may not know many details about you, but the hiring manager may be aware of your reputation in the workplace. He may not know that you studied finance at a top-notch school, for example, but he might have heard that you had a problem with a financial services client recently. Before you write your letter, talk to colleagues you trust to get a reading on your reputation, and things you might be known for. If any of them are negative, add a note in the cover letter that works to dispel any poor aspects of your reputation. In the example of the "issue" with the client, you could mention that you recently dealt with a difficult client, and then explain what you learned from the situation or how you worked to make it right.
Putting It All Together
As you write the letter, treat it as formally as you would any other cover letter. Use the opening paragraph to introduce yourself and mention how you found out about the position. In the subsequent paragraphs, talk about experiences you've had or lessons you've learned that have taught you the skills necessary for the job, relying on your internal research to add details that will really pack a punch. Also, express why you want to change departments or get the new job -- always focusing on how you can add value for the employer. In the final paragraph, you might add in a little levity, saying it will be easy for the manager to find you for an interview, for example.
Send a copy of your resume and the letter via the method indicated in the job posting, but also deliver a hard copy to the hiring manager in person, so you'll have a chance to introduce yourself and make a solid first impression.