In our 24/7/365 switched-on world, digital is everywhere. Consumers browse, buy, bank and pay digitally, and advertisers are keen to grab consumers’ attention over the digital channels in which they live, work and play. For this reason, it might be easy to assume that good ole’ direct mail is dead, but that would be a mistake.
While overall mail volume is on the decline (down nearly 30 percent since 2006 according USPS) due to such things as online bill pay and certainly more refined targeting and increased digital advertising, less crowded mailboxes mean it might be time to add direct mail into the mix alongside your digital marketing strategy. In fact, the numbers show that direct mail response rates have been on the rise in recent years — 174 percent for in-house lists and 194 percent for prospect lists since 2006, according the 2018 DMA Direct Response Rate Report.
A True Omnichannel Approach
Just as omnichannel banking includes in-person and digital channels, so too should your marketing efforts. It’s easy to write off direct mail due to its higher costs, but direct mail still holds a few compelling benefits that can complement your digital marketing nicely and help create a seamless engagement experience:
- Advanced data analytics and modeling techniques available today (more on that later) mean you can incorporate predictive needs-based offers and a high degree of personalization for more compelling and relevant messaging than ever before.
- Direct mail allows you more design creativity and the ability to appeal to more than consumers’ sense of sight. Tangible elements like paper weight and coatings, multi-dimensional structure and even fragrance can make your piece more interactive than a clickable digital offer.
- Because of the decline in direct mail, it can elicit more attention than digital these days. According to a 2017 USPS study, print mail can stimulate a 70 percent higher brand recall rate than digital.
Targeted Mail at Saturation Prices
Targeted mailings are trigger-based and/or ultra-targeted, hitting a finite group of prospects. These mailings are geared toward a select household, new movers, for example, which generally have higher response rates than non-targeted saturation mailings.
The problem with this approach is that it’s risky — while higher response rates are likely when the targeting is spot-on — the costs are also higher. It is unclear whether the return on investment will be sufficient to make up for those costs.
The second strategy goes to the other extreme, using the “spray and pray” approach of saturation mailings. This approach treats everyone within a certain geographical radius exactly the same, regardless of income, age, gender, socioeconomic status, or any other demographic information. It requires a huge volume of mailings to reach the relatively few prospects who are a right match for the financial institution.
If you’re following only one or the other of these approaches, you’re almost certainly spending too much and getting too little in return.
A third strategy is now possible. This strategy takes the best from each of the first two: highly targeted, customizable mailings at saturation prices. This flexible approach targets neighborhood clusters with the highest likelihood to respond to an institution’s offers.
The above “best of both worlds” approach requires the use of models. This can be a touchy area. Most providers of acquisition solutions do not model because their data is too finite in scope. Those that do model create general linear models based on the national footprint of checking account holders. This means that all market areas are treated the same, and different prospects receive the same mail pieces (back to the “spray and pray” approach). Imagine trying to reach someone in Des Moines with the same messaging and creative you use in New York.
Custom modeling is possible, however. It involves creating sub-models for different areas of interest. For instance, you can target as granularly as age, education, income, and outstanding types and amounts of debt, for example, if you have hundreds of attributes in your data library that can apply to a specific individual. Everything from the basic (age, education, occupation, etc.) and industry relevant (credit union member, American Express® customer, etc.) to the fascinating (foreign born, avid reader, casino gamer, organic food shopper, etc.).
This granular approach, combined with the right creative, allows the financial institution to segment mail pieces on a much more granular basis — right down to the house your ideal prospect lives in.
The bottom line is that, whether online or in the tangible world, targeting the right prospect with the right messaging and creative can be a differentiator that sets your financial institution apart from the competition — and direct mail is still a very viable way to engage your ideal prospects. In today’s highly competitive financial services marketplace, the right balance of digital offers and direct mail can help your financial institution stand out from the crowd.
>>Click here to download Vericast’s “Multi-Wave Household Acquisition Campaign Results in 340% ROMI” Case Study.