Yes, it may seem odd in an age of SEO and retargeting to be talking about mail — the kind you can touch. Yet direct mail at the ripe old age of 170 remains a consistent performer for acquiring and maintaining relationships with consumers. It shouldn’t be overlooked, even as banks and credit unions increasingly use digital marketing channels.
In fact, by applying the four recommendations described below, the relevancy of direct mail will continue to improve for financial marketers. Used together, they will advance your ability to reach key audiences, connect with them through one-to-one personalized experiences, and reduce print production times.
1. Focus on Key Audiences
Millennials, Gen Z and women are key target audiences for any financial marketer’s strategic plan. Millennials currently make up 30% of the population, according to Brookings, and those in Generation Z represent 32%, Bloomberg calculates. Together these larger cohorts comprise nearly two-thirds of the population, are digital natives, and are digitally connected. Logically this should make them prime targets for digital advertising, right? Actually they are the most likely to avoid digital advertising.
More than half of Millennials actively block digital ads, according to MediaPost, and Gen Z is even more likely to use a form of ad blocking. This evidence of digital saturation and the increasing tendency toward ad blocking provides a clear opportunity for direct-to-home marketing.
Women represent the largest percentage of the U.S. population, and they are wielding their buying power by driving household and personal wealth decisions. Surprisingly, many financial marketers have not yet developed programs directed toward women. As a result, financial institutions are losing almost $800 billion in investable assets from women, according to Kantar Research.
Their level of influence and decision-making power makes women an attractive audience. Direct mail should be part of any program designed to build trust and relationships with, and sell products and services to, the very large population of women.
2. Utilize Effective Targeting Techniques
The key consumer groups just described can be reached more efficiently by using the proven selection methodologies of predictive modeling and recency-frequency-monetary (RFM) analysis. While other selection methodologies can be used, together these can provide a solid foundation and higher probability for attracting and maintaining customers.
While modeling isn’t a new concept for direct mail, building and deploying predictive models is still one of the most effective ways of focusing direct mailer campaigns on the specific consumers who are most likely to respond. Narrowing the population to the best responders is cost-effective and provides the ability to methodically adjust messaging and personalization for strategic testing.
RFM segmentation can be used by itself or side-by-side with other modeling techniques. The foundation of RFM is that it predicts future behavior based on past behavior. While each industry may define RFM components a little differently, the overall purpose is to score customers in a database using three values:
- Recency (date of the last purchase)
- Frequency (the total lifetime orders)
- Monetary value (the sum of all orders).
A score is then assigned for each customer using these three values. Analyzing scores and ratios within the scoring ranks helps determine optimal target audiences and identifies pockets of opportunity.
3. Overlay Geographic Location Data
Geo-targeting is traditionally defined as delivering marketing content to a person based on geographic location. In direct mail, geo-targeting is often used synonymously with geographic radius marketing, but there are important distinctions.
With the introduction of location-tracking technologies, geographic radius marketing is now only a portion of a comprehensive geo-targeted approach. The rise of our mobile society and proliferation of hand-held devices has facilitated the capture of deeper privacy-compliant location data. Overlaying location data offers direct marketers a new resource to better understand consumer preferences and behaviors.
Key Point: The trick is not to use the data too deeply in personalization. Instead, preferences and behaviors can be used for more subtle personalization connections, such as through images, colors, tone, and offers.
It’s important to note that a focused test-and-learn plan to build the optimal mix of predictive, RFM, and geo-targeting models can be time consuming. However, investing time and resources can pay out large dividends. More testing means more insights to help focus marketing efforts on key target audiences.
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4. Personalize Using Digital Printing
Putting audience and individual insights into practice can easily be facilitated through digital printing technology and the use of variable content. The next few years will see further growth in personalized communications that go beyond letter salutations and toward one-to-one communication with individual prospects and customers.
Variable direct mail content, personalized to the reader, helps build relevancy and an immediate connection with lifestyle and behavioral signals. It means adding images, colors, visuals, and copy that appeal directly to a reader. Depending on a financial institution’s campaign objectives, additional features can also be used to further increase interaction and response. These include personalized offers, gender-specific preferences, prefilled forms, and personalized URLs (PURLs).
When used correctly and without getting too personal, these techniques can significantly enhance a mail reader’s experience, increase response, and positively impact sales.
A traditional challenge for direct marketers has been production lead times for data compilation and printing. This challenge is being met head-on with new and evolving digital printing technologies, offering the dual advantages of shorter production timelines and the ability to use variable content.
Strategic use of digital printing increases financial marketers’ ability to reach audiences faster with the right message and the right offer. This could be a valuable opportunity for frequently changing products like CDs and home equity rates.