[Editor’s note: This is a guest post from Mike Gunderson, Founder and President of Gunderson Direct Inc., a 15-year-established direct marketing agency that helps businesses drive new leads and close more sales through traditional offline channels, especially direct mail. Clients include Innovative fintech and peer-to-peer lending companies and top-tier financial companies. Clutch has recognized Gunderson Direct as a leading direct marketing agency in 2019.]
Used correctly, direct mail and digital communications make the perfect pair for Fintech companies. They complement each other, and both have unique strengths. That’s in part why direct mail is enjoying a resurgence in general and a surge in Fintech, with increasing numbers of companies looking to integrate direct mail into their marketing platforms.
At first, this can seem counterintuitive. After all Fintech is all about technology, and therefore should use technology tools to promote itself, right? Nope.
There’s a true story of an IT consultant who travels to clients’ homes. His receipts consist of handwritten carbon copies using carbon paper. When asked why, he responded that he speaks to his audience—largely seniors—in the way that’s most familiar, friendly and effective.
Judging by Fintech consumer response to direct mail, it appears that this methodology also is proving familiar, friendly and effective. The simple fact is that when direct mail lands in the mailbox along with a check, etc., there’s a much higher chance of being viewed and acted upon. Print is anything but dead.
And that’s not just the view of older audiences. Direct mail is being embraced as a robust marketing tool by all audience ages, including millennials. Marketing strategists and direct mail recipients alike see the value, regardless of age.
A 2018 Forbes.com article frames the discussion: “With more companies evaluating their ad spend and marketing budgets, many believed they should gravitate to advertising tactics like virtual reality, digital ads and boosted social posts. However, companies have discovered these ad tactics often don’t yield the same results as traditional marketing strategies.”
The article continues, “Now, many brands are turning to their old marketing friend, direct mail, to leverage various print mediums. The $44.2 billion direct mail industry continues to thrive, even in a digital age, and it is doing so because it is a tried-and-true marketing tactic that gets results for advertisers.”
This reinforces the author’s 2016 Forbes article that notes: “Those who know me know I am the world’s biggest proponent of integrated marketing and this is a classic reason why. Do not put all your marketing eggs in one marketing basket.”
Fintech companies jump on direct mail bandwagon
A CNBC.com report points out: “Lenders are pounding the pavement looking for borrowers who want to consolidate bills, take a vacation or fix up their homes. Homes are being inundated with mail solicitations from companies like Marcus, Elevate and Lending Club, hoping to supply personal loans to consumers.”
A year-end 2018 Fico.com blogpost underscores the support for direct mail in Fintech. The article notes: “In a recent conversation with an online lender focused on the personal loan space, I heard something that blew me away. They were telling me about their aggressive growth plans for 2019 and I asked them what acquisition channel [they used] to drive that growth and they said…prescreen offers sent out in the mail! This was a fintech that has been loudly telling bankers and industry observers that they are re-inventing financial services and yet their primary acquisition channel, the key to their aggressive growth plans, is the Post Office.”
Our direct mail experiences mirror these observations. In the last three years especially, Fintech has seen huge growth in use of the direct mail channel. Response and conversion rates are increasing, as companies look to direct mail to combat digital bombardment and noise on all fronts. They’re able to target prospects more effectively; in turn, prospects are stepping up to the plate more often. Retirement services, loans and lines of credit are three major areas of Fintech direct mail focus.
A Wall Street Journal article reinforces online Fintech’s use of “old-school marketing.” The article points out: “Average monthly volume of loan offers through the mail has soared…The most unlikely beneficiary of the online-lending boom may be the U.S. Postal Service. LendingClub Corp., Prosper Marketplace Inc. and other financial technology, or ‘fintech,’ companies are spending hundreds of millions of dollars trying to pry customers away from traditional banks. The main marketing channel for these online upstarts: old-fashioned snail mail.”
Targeting pre-approved offers
In Fintech, being able to target prospects precisely is a major direct mail benefit. Companies can focus on exactly the customers they want within tight credit parameters—sending relevant pre-approved offers to the most qualified, well-informed and motivated candidates through a channel that will get noticed. This tight targeting leads to steady and consistent high-quality response—usually .5% to 1.5% in the finance arena.
There also is the ability to be geographically strategic—targeting specific states and ruling out others where lending licenses might prevent doing business or make it especially difficult to operate.
Heightening direct mail’s effectiveness is state-of-the-art variable data/imaging digital printing capabilities that makes prominent personalization affordable and attractive. This results in data that is more relevant to target prospects—versus one-size-fits-all.
When it comes to pre-screened offers, there are rules of engagement. Work with someone who knows their way through such areas as opting out, firm offers of credit and the like to avoid trouble. There also is the Fintech invitation to apply (ITA) that doesn’t require a relationship with a credit bureau (e.g., use a credit rating versus a credit score). But this will not be as accurate. Know the ins out outs before venturing into this realm.
Direct mail drives online visits
Companies already were jumping on direct mail four years ago, especially as a way to integrate with digital. A 2015 Entrepreneur.com article headlined “4 Reasons to Use Direct Mail Marketing Instead of Email Marketing” points out: “It’s undeniable that technology has changed the direct marketing industry. However, it has not irreparably damaged direct mail marketing. To the contrary, direct mail has been enhanced by web technologies in many ways. Direct mail is great at getting leads to visit a webpage, encouraging customers to buy online or collecting information (including email addresses!) from prospects.”
Combining direct mail and digital can create a 1+1=3 synergistic effect. Direct mail drives people to digital through such tools as QR codes, URLs and soon even voice-activated commands through smart speakers. And it works in the other direction, too. People can visit a website, provide a bit of info, then get a postcard, catalog or direct mailer delivered directly as a result.
Change the channels
Direct mail isn’t the only channel benefitting from the current trend toward multi-channel thinking. Billboards, TV and radio are getting renewed looks, especially for business-to-consumer offers. While this isn’t as prevalent in Fintech, watch for growth in all these arenas going forward—in tandem with social media. And, of course, referrals from friends and family always will be one of the most influential and important channels.
Cost of acquisition, ROI prove favorable
Direct mail by the numbers supports profitability and productivity benefits. A Smallbiztrends.com article cites a variety of compelling statistics: “U.S. advertisers spend $167 per person on direct mail to earn $2,095 worth of goods sold; a 1,300 percent return…One study, ‘The neuroscience behind the response-driving power of direct mail’ found that: Direct mail generates a motivation score [the feeling of ‘wanting’ that drives urges and decision-making] that is 20 percent higher than digital media…Direct mail was found to require 21 percent less cognitive effort. That means your message is absorbed more quickly and effectively…Brand recall was 70 percent higher among participants who were exposed to direct mail ads rather than to digital ones…The average ROI for direct mail campaigns is between 18 and 20 percent.”
In many ways, email and direct mail marketing have switched places. When digital first came on the scene, it was the new, shiny toy in contrast to a mailbox full of “junk mail.” Today, people have been so bombarded with digital—which itself has become more expensive with the cost of keywords, digital advertising, and the like—that those direct mail pieces in the mailbox look much more attractive.
Direct mail success ties to ‘in the know’ partnerships
One challenge impacting effective use of direct mail is that, despite it experiencing a renaissance, there are not as many direct mail companies skilled and experienced with getting it right the first time around. As with anything, do-it-yourself without knowing the terrain can deliver disappointing results.
With the right direct mail partner, a Fintech company can both initiate a compelling campaign and/or improve what they’re already doing. Similar to other offline channels, direct mail requires substantial expertise and know-how to integrate it most efficiently and cost-effectively into the marketing mix—versus just haphazardly throwing efforts up against the wall to see what sticks. Effective targeting and managing a complex process are two primary roles of a direct mail partnership.
Continuous improvement merits being a mantra, not just a marketing line.