In an advertising and marketing world that feels dominated by digital communications, direct mail continues to prove itself as one of the most effective channels for advertising—especially for those organizations within the financial sector.
Yes, you absolutely read that correctly. Direct mail continues to prove itself a worthy investment for marketing strategies.
Even as the digital era continues to evolve, refining targeting and retargeting to streamline messaging, direct mail still has a well-deserved and relevant place in marketing budgets—including the ability to hone-in on distinct target markets with variable messaging.
In 2023, direct mail marketing spending in the U.S. exceeded an estimated $39 billion. This is down roughly 20% from where it was pre-Covid, 2018-2019. However, direct mail ROI continues to outperform digital channels. And, for industries such as e-comm, financial services, and banking, direct mail outperforms digital placements by over 160%.
In this blog post, we’ll define direct mail differentiators, purposes within the financial sector, and the power of integrating direct mail into advertising campaigns.
Direct Mail Differentiators
- Tangible Connection: Unlike digital communications, direct mail provides a physical connection with the recipient, creating a more memorable (first) impression.
- Targeted Approach: Direct mail allows for highly targeted campaigns, enabling financial organizations to tailor messages to specific demographics, behaviors, or customer segments.
- Reduced Digital Noise: Inboxes are often flooded with promotional emails, many of which go unread. Direct mail stands out because it’s less common and can bypass digital clutter.
Direct Mail Intent for Financial Organizations
1. Customer Acquisition
Financial organizations use direct mail to reach potential customers who may not be as accessible or feel as comfortable through digital channels. By leveraging mail data and the power of list procurement, they can identify and target high-potential prospects with personalized offers.
According to research, direct mail ROI outperforms email, paid search, digital display, social media, and SMS. Keep in mind, the average conversion rate for direct mail is between 3.4% and 5%. The average conversion rate for banking websites ranges between 2-5%, and for insurance, investment, and wealth management sites the average conversion rates range from 1-3%. These benchmarks serve as guidelines, as results can differ greatly depending on a variety of factors.
The most popular call-to-action tactics for converting direct mail recipients (in North America) include QR codes and personalized URLs.
2. Customer Retention and Loyalty Programs
Sending personalized notices, account updates, or exclusive offers via direct mail can reinforce customer loyalty. Direct mail campaigns can be an effective way to inform clients about new products, services, or benefits, enhancing their overall experience.
Being the first to know about upcoming services, products, and promotions makes us all feel like we’re VIP in the eyes of our beloved brands. Sending mail announcing upcoming services, promotions, partnerships, changes in leadership, etc. work to strengthen the bond customers have with your brand.
One of the most popular techniques for this are, “Save the Date” postcards and mailers.
However, special mailers such as those including magnets with important company contact information, tear-off membership cards, perforated spaces revealing promotional codes or variable personalized information such as how much their investments could grow with an extra XX% of monthly savings, scratch off areas revealing promotional codes or percentages for discounts unique to the customer, etc. offer an interactive element and delivers good response rates.
3. Account Statements and Financial Reports
Despite the rise of online banking since 2018, many customers still appreciate receiving tangible account information. Direct mail ensures these important documents are delivered securely and can be reviewed at the recipient’s convenience.
Banking apps and online access accounts for 60% of banking users. Having account information at our fingertips has become vital in our personal and professional accounting tasks. But it hasn’t replaced the need for physical financial documents in all situations.
Let’s consider billing. Pre-Covid, the majority of consumers preferred bills and invoices to be mailed. Forced lock down altered our lifestyles in many ways, and certainly drove more of us to manage accounts and affairs digitally. This shift to a more digital or “green” way of account management was even forced by some companies, making national headlines.
However, the rise in identity theft, privacy concerns, and account hacks has also impacted our perspective on how we and what we access online.
In a recent 2023 survey conducted by Two Sides Trend Tracker, findings revealed 81% of consumers believe they should have a choice in how they receive important financial information, on paper or electronically, and 73% believe they shouldn’t be charged for choosing paper bills or statements.
4. Educational Content
Building trust and credibility is key for client retention as well as referral programs and cross-selling products and services.
Financial literacy is a significant value-add. Sending brochures, newsletters, or booklets that educate recipients about financial planning, investment strategies, money management, market trends, and the like can position your organization as a trusted advisor.
Common Direct Mail Practices Utilized by Financial Organizations
The most common types of direct mail utilized in 2023 for financial and banking organizations were letters, brochures, and postcards.
Personalization is a rising trend that was seen across all industries. According to a report conducted by LOB, 71% of direct mail utilized the ability to customize text. Variable data continues to grow in popularity, allowing marketers to personalize messaging not only within the copy of the printed materials but also on the envelopes. In fact, 63% of direct mailers responding to the survey also said they tested messaging on the envelope and/or package.
Another popular tactic is using different direct mail formats for different audiences. 66% of direct mail tested various formats for audience segments.
Batched mail (same message delivered to a large audience) in 2023 accounted for 14% of direct mail. Most common approach was a combination of personalized and batched mail, accounting for 74%.
Integrations of Direct Mail in Financial Organizations
Direct mail campaigns can be launched independently of other channels. However, integrating direct mail with other channels such as email, search, display, etc. can increase response rates.
Most of us need multiple points of message exposure to consciously process a campaign’s intent. Incorporating direct mail alongside channels for retargeting, or even using direct mail as a way to retarget site visitors or product/service inquiries is how today’s marketers are strategizing—and maximizing—communications.
The average person needs to see an advertisement 7-8 times before it’s memorable. Utilizing multiple channels and campaign types to reach your target audience expands both your reach and frequency, driving your messaging into long term memory—and increasing brand recall.
Conclusion
Direct mail remains a viable and effective marketing strategy for financial organizations. By leveraging its ROI advantages over digital channels, financial institutions can enhance customer engagement, build and reinforce brand trust, and ultimately drive conversions.
As part of a balanced marketing mix, integrating direct mail and digital efforts is the most powerful way to deliver campaign results.
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