Direct Mail Clinic: Dissecting Discover’s Approach to Home Loans

As Discover enters the home loan market for the first time, they are taking a different approach to direct mail offers. What can we learn from the credit card giant’s strategy?

Typical refinance loan offers focus on a rate as the primary incentive. Historically, this has been a sticky issue for financial marketers. Consumers don’t always know their current rate and can’t easily comprehend how much difference a lower rate might make. Consumers can’t calculate the changes in their heads, which leaves the financial institution with indecisive prospects who fail to respond to the offer.

While less common, a more effective approach to refi offers focuses on the monthly payment and how refinancing will reduce that payment. Here, a consumer immediately can see the reduction in monthly payments (more on those terms below). They can grasp the offer’s value without needing to know their current rate or running any calculations.

Discover’s Different Take

This envelope package from Discover Home Loans deserves attention for two reasons. First, the credit card company’s marketing efforts have been very aggressive since it entered the mortgage market. Discover bought a portion of Lending Tree in 2011 and began offering loans to its customers and the general public. More competition… great, that’s just what banks and credit unions needed right?

A second reason for examining this package is the Invitation to Apply approach. Discover uses its customer’s credit information to calculate a current monthly payment. From there, it can offer a better, but not firm offer to refinance. Phrases “up to” and the pre-screen information avoid a specific offer. This approach also means the list is prepared faster than if using a pre-qualified approach.

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The Design

The 6×9 outer envelope shows only a short teaser, but it’s a powerful one: “We’ll pay you for calling us!” That’s enough to make most of us search for the payoff.

Inside the envelope, there’s a single sheet of paper — a letter. Traditional direct marketing best practices say an envelope should hold multiple marketing pieces of different sizes that repeat the offer, play up the incentive, address consumers’ objections, and provide a response mechanism. But these days, these principles don’t really apply anymore.

Discover uses only the letter to promote the offer, and it is a powerful one. Dollar amounts are circled in orange, and a bright yellow “highlighter” focuses attention on the deadline. There’s just enough flag-waving without overdoing it.


The Copy

1. The Johnson Box fulfills the promise of the teaser. Sure, $5 isn’t much, but it maybe enough to keep the reader’s attention.

2. As a solid direct marketing letter should do, Discover lays out the offer in the first two sentences. The implied urgency — “It’s not too late” — is a great way to open the letter. Notice the word “savings” is never mentioned (per UDAAP guidelines); this offer is about lowering monthly payments, which could mean an extension of the loan, so no real savings.

3. There are multiple incentives. Discover knows the refinance process is a long one, so it dangles bigger carrots along each step of the way. This is a classic technique, and they use it well.

4. In this sidebar, notice the term “pre-selected,” not “pre-screened” or “pre-approved.” The term implies the prospect has been uniquely singled out. Only marketers will understand the difference in terminology. Bullet point number two restates the $1,356 number. Bullet three slips in a new but related offer.

5. The call to action combines the single response option phone number with the $5 offer. The phone number is repeated below.

6. Don’t overlook this copy. The invitation number, source code, and member-since date have no relevance to the offer, but the customer infers a special status and loyalty from this bit of information.

A page of disclaimer copy is jam-packed on the back.

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This may look like a traditional direct marketing mail package, but it really isn’t. Its simplicity may make it more effective than an envelope stuffed with a bunch of enclosures. It’s a compact letter with an easy-to-understand, multi-step reward offer.

This shows a complex sale — like mortgage loan refinancing — can be presented in plain language and be visually pleasing so prospects understand it and feel comfortable enough to respond.

Competing with Discover for mortgages might not be a welcome challenge for financial marketers, but you can learn from the company’s approach. The focus on a monthly payment instead of a rate make this offer one that generates more attention, greater consideration, and likely better response.

Our thanks Mintel for providing the sample from Discover.

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