Wednesday, December 5, 2012

Direct Mail Still Preferred Over Email, Social and Mobile Marketing

Despite a greatly increasing penetration of smartphones and tablet devices and a marketing industry focus on digital, social and mobile channels, a just released study of channel preferences by Epsilon reveals that consumer desire for postal mail continues to be strong.


The new report, Channel Preferences for Both The Mobile and Non-Mobile Consumer, found that, despite a more digitally-focused world, a majority of consumers still prefer postal mail for a large portion of their multichannel communication. This was especially evident with regard to financial services communication, where 38 percent of the U.S. households surveyed preferred receiving postal mail compared to 17 percent desiring information over the internet and 7 percent via email. Only health related communication had a higher preference for postal mail, indicating the advantage of direct mail for communicating sensitive information.



Interestingly, this preference for direct mail extended to smartphone owners and was actually slightly higher for households owning a tablet device. Tablet users are also roughly 50-60% more likely to prefer receiving information via email and the internet than non-tablet owners,illustrating their more digital focus as a segment.

As can be seen below, the digital channels aren't the most preferred, but there is still a group of consumers who prefer to receive online offers. As with any group, however, this target market should be further segmented by device ownership and the ways they use their mobile devices.


In a related report from the Raddon Financial Group, it was found that while most consumers don't want to be contacted, those who did preferred direct mail over email by a small percentage.



Relevancy Still Rules

The desire for less clutter and more relevancy is an overriding desire from consumers with all channels as could be expected. The Raddon research above showed that consumers feel inundated with communication that does not interest them. That said, consumers still like postal mail.

Continuing a theme found in last year's study (covered in my blog entitled, "As Channel Proliferation Increases, Consumers Still Prefer and Trust Direct Mail for Financial Services Communication"), consumers also indicated an 'enjoyment' from visiting their mailbox and receiving direct mail, while being somewhat overwhelmed by the amount of communication received electronically.


From a marketing perspective, these attitudes emphasize the importance of sophisticated targeting and clear messaging when using any direct media. While the cost of digital channels may appear to be comparatively low on the surface, this does not validate using a 'carpet bomb' approach to communication since it definitely impacts open rates and negatively impacts the customer experience. In addition, with the majority of consumers indicating that they receive more emails than they can open, any cost advantage of digital communication may be negated if the communication goes unopened.

For those consumers who preferred direct mail, the primary reasons included the portability of the channel (you can read it now, read it later or pass it along). Interestingly, among those who preferred digital channels (email and online) to postal mail, the same two reasons (convenience, ability to refer to later) topped the list but in reverse order and with lower overall enthusiasm (45% and 42% respectively).


Direct Mail More Trusted Than Email and Social Media

Compared to a 'trusted advisor' such as a doctor, healthcare provide, friends or family member, all media channels underperform from a trust perspective as shown below. In fact, the strongest marketing channels in terms of trust (newspapers, company websites and online search) are perceived to be less than half as trustworthy as family and friends and have only a quarter of the respect as healthcare professionals.

But while trust in direct mail was modest compared to other marketing channels, the postal channel was still almost twice as trusted as email (18% vs. 11%) and three times as trusted as social media channels. From a gender perspective, women tend to be more trusting of all channels than men.

This channel/media trustworthiness should be considered when marketing financial services. Where trust is not as important in retail and other industries that are referenced in many of the marketing journals when discussing moving channel funding from direct mail and mass media to digital, mobile and social media, it is very important with banking and credit union products. This may explain the vast difference in channel preference shown above.



Impact of SoLoMo Marketing

With the increased penetration of smartphones, the combination of the power of social, local and mobile communications will definitely gain in importance. This marketing trifecta is already being tested with various degrees of success with applications like Foursquare and Groupon and independent mobile 'push' applications that can provide personalized offers based on your location and purchasing habits. But, with trustworthiness of social media still being less than 10 percent, the power of these channels to market financial services remains limited.

According to the Epsilon study, consumer desire to receive 'offline' offers based on their social media engagement is very limited (17 percent in the U.S.). The percentage of households who want to receive a mobile offer based on their location at any given time also seems to be low at this time which may be a function of awareness and understanding of the benefits as opposed to disliking the concept overall. While there may be a potential with SoLoMo marketing, the technology capability may definitely be ahead of the need in this area, especially in financial services.

Implications for Financial Services Marketers

While this most recent channel preference research by Epsilon and past research from firms covered in this blog continue to emphasize the importance of direct mail, none of these findings should be viewed in a vacuum or used to eliminate one channel or another from your marketing mix. Instead, a multichannel strategy should be pursued, understanding the importance of trust, consumer channel preference and the benefits of each communication channel. In addition, an ongoing test and learn mentality needs to be utilized to determine the ROI implications of each channel 'blend'.

At a time when 'big data' is garnering many of the headlines, marketers would be wise to use this research as a guide for capturing 'small data' such as current email addresses, mobile phone numbers, and even customer channel preferences as part of all customer interactions much like retailers such as Nordstrom do daily. With this insight, we will be in a better position to deliver relevant messages, using each customer's preferred channel as the perfect time.

With the knowledge above collected, trust in all communication through all channels will be improved, resulting in improved results and an enhanced customer experience. This trust will provide the foundation for enhanced communication and the utilization of potentially powerful SoLoMO strategies in the future.

About the Data: 

The Epsilon report on channel preferences for the receipt of marketing information is based on the completed responses of 1,991 U.S. and 3,816 Canadian consumers to an online survey conducted in June 2012. The survey is representative sampling of U.S. and Canadian consumers and has statistical significance at the 95% confidence level. This study was preceded by studies in 2008, 2010 and 2011.

Additional Resources:

Channel Preferences for Both The Mobile and Non-Mobile Consumer: Epsilon, 2012
The Formula For Success: Preference and Trust: Epsilon, 2011
Direct Mail Still Has an Impact in a Digital World: Bank Marketing Strategy Blog, 2011





5 comments:

  1. Hey! I am glad to stop by your site and know more about direct mail. Keep it up! This is a good read. I will be looking forward to visit your page again and for your other posts as well. Thank you for sharing your thoughts about direct mail in your area.
    A recent study by the Direct Marketing Association reports that in 2010, marketers – commercial and nonprofit – spent $153.3 billion on direct marketing, which accounted for 54.2% of all ad expenditures in the United States. Measured against total US sales, these advertising expenditures generated approximately $1.798 trillion in incremental sales. In 2010, direct marketing accounted for 8.3% of total US gross domestic product. Also in 2010, there were 1.4 million direct marketing employees in the US. Their collective sales efforts directly supported 8.4 million other jobs, accounting for a total of 9.8 million US jobs.
    Is your marketing message in that box? If not, it should be, because you're missing out on an incredible marketing opportunity.

    Direct Mail Danvers MA

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  2. Great blog, Jim. I do believe that one of the reasons for preference of direct mail, particularly in smartphone and tablet users is the lack of proper rendering done by the majority of marketers out there. Looking at a messy message that require scrolling is neither enjoyable nor going to get the transpromo response companies are looking for. Direct mail doesn't have this problem.

    In your section on relevancy, you site folks getting 'enjoyment' from receiving postal mail. Giving it some thought, I have to agree that nowadays I, too, enjoy opening the occasional letter but this is not as much for relevance as it is for lack of volume and that it is almost a novelty now. The cost of sending direct mail is astronomic in comparison to the cost of an email. Volume is now no longer standing in the way of direct mail messages as it does for email messages.(Interestingly, I still remember having to put up signs on the door saying 'no junk mail.' Times they are a-changin').

    Does relevancy overcome the plaguing issue of volume? As SPAM filters become increasingly sophisticated, deliverability, sender score and other sender authentication mechanisms will become as instrumental in getting eMarketing to customers as processing the big data properly (and collecting the small data which is an enormously important point you make). How do marketers compete with volume?

    Really great post. Thanks for the figures and valuable insights!

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    Replies
    1. Great responses from both of you. As with any marketing initiative, it is a numbers game first and foremost. We need to measure the impact on a cost per account/relationship business and determine the value of the relationship over time (as opposed to just the initial response which tends to be more fluid with an online opening).

      Sarah, you are entirely right that all organizations need to make the engagement/opening process easier. Javelin did a study that showed that the abandonment rate on a typical account opening process was above 75%. Until we can actually turn shoppers into buyers seamlessly, it will be difficult to validate the value of a digital.

      Finally, we need to do a much better job of capturing consumer channel preferences and also do a much better job measuring attribution between online and offline channels. It will most likely never become an either/or proposition, but instead a dialing up or dialing down of various channels.

      Thanks for the input and watch for upcoming posts around attribution and simplified engagement processes to generate results.

      Delete
  3. I expect that studies like this will persuade the masses to move toward Direct Mail, driving the volume well beyond the billion + pieces that were delivered last year. Taking a contrarian approach, it might be a smart marketing move to let others compete with the avalanche of junk mail consumers receive today, and instead move toward alternative channels. Taking the less traveled road, as it where...

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  4. Since many marketers have moved away from direct traditional mail, there's lots of opportunity there. People can get hundreds of emails a day and begin to tune them out. People still check their mailboxes and pay attention to any mail that is addressed to them personally.

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