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Direct Marketing Still Works in an Electronic World
Wednesday, June 14, 2017 6:20 AM

Shana Richardson, CUDE, CEO, Ser Tech

There’s no denying that the world has dramatically shifted toward electronic communication, so many people wonder if direct marketing still works. The answer is a resounding yes, mainly because direct mail has an 80 percent-plus open rate.

Google, the world’s most popular search engine, regularly uses snail-mail marketing to promote coupons for its AdWords programs and other services. Credit unions are also finding that direct snail-mail marketing is helping them grow their loan portfolios, including mortgages and home equity loans, as the real estate market continues to gain positive traction.

While the huge demand for email marketing services continues, credit unions have seen success from direct marketing mailers, postcards, and letters. Credit unions have felt a resurgence of sorts in their return on investment when it comes to direct mail marketing.

Direct mail response rates took a tremendous leap in 2016 with a 5.3 percent response rate to house lists and 2.9 percent to prospect lists. These are the highest levels the Direct Marketing Association has tracked since 2003. For comparison, in 2015 the rates were 3.7 percent and 1.0 percent, respectively. In 2010, it was 3.4 percent and 1.4 percent.

“Some people say that direct mail is dead or it doesn’t work, but we’ve seen just the opposite,” said Jackson Hunt, vice president of Marketing at Ser Technology. “When you customize the direct marketing pieces, members feel they are part of the credit union. We have seen personalization outpace standard direct marketing pieces without any personalization. There’s plenty of research out there on the effectiveness of this.”

One advantage of direct mail campaigns is that they can be far more cost-effective than mass marketing initiatives for small and midsize credit unions, allowing them to cross-sell, deepen relationships with members, loan growth, and member retention.

Almost any type of marketing campaign has two interrelated objectives: produce accounts and balances and have a positive impact of underlying customer relationship. The credit unions that do manage to track campaigns focus almost exclusively on counting accounts and balances in promoted products. However, without the broader relationship component, they may be missing a material portion of the profit generated by a campaign.

According to the Direct Marketing Association, industries with the highest use of direct mail are financial services—banks or credit unions at 71 percent, consumer packaged goods at 63 percent, retail at 55 percent, travel or hospitality at 55 percent, and publishing or media at 54 percent.

Furthermore, 48 percent of people prefer direct mail for receiving marketing from credit unions, and it’s not just the mid-life members who want the information sent to their actual mailbox. A study fielded by Experian shows that nearly every Millennial (ages 18-35) owns a smartphone, and 43 percent say that they now access the Internet more through their phone than a computer, compared with just 20 percent of adults ages 35 and older. However, despite their hyper-wired digital connectedness, Millennials as a group report that the last time they responded to direct mail campaign was within 2.4 months. That’s less than the average response time for all respondents. Similarly, Millennials open the direct mail they receive at the same high rate of 66 percent as recipients overall.

To be successful, your direct marketing campaign should enable a high degree of variability to service end consumer recipients with information that is highly relevant and personalized to their needs, ultimately leading to an improved customer experience.

“Direct marketing is an incredible tool that can add tremendously to the advertising plans of most credit unions,” Hunt explained. “Today’s world may be more digital than ever, but consumers still very much appreciate having tangible products in their hands.”

Ser Technology is an endorsed business partner of Credit Union Resources, Inc., a wholly owned subsidiary of the Cornerstone Credit Union League.