The marketing community may have directed the lion’s share of its attention to digital strategies, but any veteran marketing professional will tell you that a comprehensive marketing plan must include direct mail, especially for financial institutions.
Direct mail marketing can perform functions that no other channel can. Direct mail reaches key demographics that are not wired or substantial internet users. Consumers react differently to a physical message at the neurological level. The lasting presence of direct mail also gives it a different impact than the transient impression digital ads provide. Most importantly, direct mail provides a greater return on investment.
Direct mail should be utilized within a comprehensive marketing strategy in order to perform the following functions:
- Connect with target segments – Financial activity skews towards older, more financially capable households, and many of these consumers are less plugged into the internet. Even consumers, who spend a large portion of their professional lives online, appreciate the physicality of direct mail letters or brochures which contrast the majority of their business interactions.
- Direct mail is a front line tactic – Direct mail flyers do not have the restrictions that emails do, so they can be used as a wider net to gather leads and disseminate key banking features that your financial institution offers. You may be hesitant to shell out more for letters to un-primed consumers, but the response rates are high enough that your institution could gain considerably more business. Although the average response rate is 1.5 percent to 2.0 percent, repeated mailings can drive this number up substantially. Coupons and discounts also will raise this number. More refined mailing strategies can also eliminate consumers who offer a minimal chance of responding.
- Deeper, more lasting impression – Direct mail has been found to impact consumers in a significant and substantial manner. Research company Millward Brown found that a message on a physical item left a more lasting impression because the brain interprets the message as more “real.” The physical activity associated with handling the message also contributes to enhanced emotional processing. This enduring message is a substantial means of increasing brand awareness.
- Fast responses – Direct mail response times are relatively fast compared to most passive marketing initiatives like ads and SEM. Because you initiate the interaction and most consumers naturally retrieve mail when it is delivered and sort through it immediately, you can accurately assess the effectiveness of your strategy. For example, if you send out a mass mailing with a coupon, you can almost immediately begin to measure the responses by customers acting on the offer.
- High ROI – The return on investment for financial instituions is relatively high with direct mail. Many factors can affect the final ROI, including the type of mailing, mailing strategy, incorporation of discounts and the target segment, but a study by Target Marketing found that direct mail usually provides the greatest ROI of any marketing channel in B2C campaigns. The survey found that 34 percent of respondents named direct mail as the most effective means of customer acquisition, while the next highest, email, only received 25 percent. Thirty seven percent of respondents also named direct mail as the channel with the highest ROI, while the next highest was email with 31 percent.
Direct mail may not replace all of your financial institution’s marketing channels, but for gathering leads, engaging key market segments and providing a high rate of response, it is virtually unrivaled- no pun intended.
If you have overlooked the importance of this tried and true marketing channel, it is in your financial institution’s best interests that you take a second look at it.