What is it about direct mail? The $500 CPM business model that refuses to die.
Recently, I was chatting with a bank marketing manager about direct mail marketing and the ever-decreasing response rates and the increasing battle for that scrap of attention in apartment building lobbies and on the porches of the suburbs every morning. She was talking about tweaking a program to get up from 15 to 20 basis points of response. I imagined the 100 other marketing managers doing the same thing for this months mailing. The consumer finance industry sends 8 billion pieces of direct mail in the US with a response rate heading to 25 basis points.
Quick math shows that a fully loaded piece of normal direct mail (color and first class postage) will go to about 40 to 50 cents plus the list cost. That’s a $500 CPM people.
What banks should do: Be the first to kill off direct mail and go all electronic. You ask your customers to do it, so practice what you preach and it should pay off in the same way.
Friday, June 8th 2007 at 2.27pm
Jay — Here’s one data point why I think your recommendation is misguided. According to Forrester Research, nearly 40% of online credit card applicants went online as a result of a direct mail offer (versus 28% who went to a Web site as a result of an email offer). So although card applicants don’t fulfill through direct mail as often as in the past, direct mail is still a major influence — an influence that isn’t measured by simply looking at DM response rates. — Ron
Wednesday, July 11th 2007 at 11.01am
Ron, thanks for the response. I actually question the validity of the Forrester survey, having seen the failure of DM in credit cards first hand. I agree that it can be a traffic driver, but should be streamlined to do so: postcards with URLs on them.