Why Is The Financial Services Industry Not Embracing Direct Mail Marketing?

Discussion in 'Press Releases' started by ltw, Oct 27, 2006.

  1. ltw

    ltw UKBF Newcomer Free Member

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    WHY IS THE FINANCIAL SERVICES INDUSTRY NOT EMBRACING DIRECT MAIL MARKETING?

    Direct Marketing has received bad press in the past. The common myth is that the cost is high and the responses are too low to make it worth carrying out, yet the truth is far different.

    In truth Direct mail can be an extremely effective method of delivering a marketing message and generating new customers if done accurately according to Kate Outhwaite, Business Development Manager at Theydo Ltd. Who specialises in direct mail for the Financial Services Industry.

    In fact, DMS Response Rates Survey 2003 showed Financial services achieved response rates between 3.9%-7% or their direct mail campaigns.

    A massive 60% of consumer direct mail is actually opened and 40% of it read which means a massive audience can be targeted. If the profile of your target audience is analysed and determined effectively then responses can be impressive.

    Products and services have never been so ‘specific’ with many companies targeting smaller, niche markets which account for their most profitable business. The same strategy has to be used for direct marketing in order to make it effective. Sending mailers to hundreds of thousands of consumers with little or no profile may result in the company only actually reaching 10% of their responsive audience. However, if a company profiles its data from the outset the chance of a positive response is massively increased.

    In most businesses a relatively small number of customers account for a disproportionately large volume of profits. Often you will find that 80% of your profits come from just 20% of your customers. This is known as the 80:20 rule or Pareto Principle (after the Italian economist Vilfredo Federico Damaso Pareto). This means that if you can just find another 20% of the right sort of customers, you can increase your profits by 80% !

    Year on year TV advertising expenditure outweighs Direct mail, however a 30 second TV slot allows nothing more than a glimpse of a product or service whereas with direct mail you can send a more informed and detailed message to potential customers that can be referred to again and again if necessary.

    The Financial Services Industry should now, more than ever be embracing direct mail as the introduction of FSA Regulation has restricted direct marketing in certain sectors, meaning insurance and mortgage can no longer cold call potential consumers as many did so previously. Financial services industry should be looking at ways to improve their direct marketing strategy through better use of profiled data.

    Kate Outhwaite, who recently joined Theydo Ltd – a direct marketing and sales Management Company believes direct mail marketing is misunderstood and used effectively is imperative to a company’s successful marketing strategy. "direct mail marketing is hugely undervalued within companies marketing strategies at present. Direct mail can be costly, so unless it is carried out effectively to a specifically profiled database companies are wasting money on mail shots.”

    Theydo Ltd uses a direct mail system of 52 million consumer records, known as ‘Scarlet Orange’ which they allow their clients unlimited access for 12 months, allowing them to find more of their best customers. Kate went on to add, “ Scarlet Orange is an effective direct marketing tool as it not only gives access to millions of consumers but it also allows companies to change the profile of the database to suit their needs, for example a finance company could create 3 different profiles for i.e. sub prime, prime and debt management, they can do so for no additional charge and with the click of a button- it saves a lot of money and gives the client full control”

    To increase response rate companies should consider contacting each prospect more than once - and at least quarterly. Increasing the frequency normally increases the response rate and many direct marketers now prefer to contact prospects monthly. According to The Royal Mail Guide to Direct Mail for Small Businesses, a follow-up mailing arriving 10-14 days after the initial mailing will normally increase response by 25-40% so a system allowing 12 month access is hugely cost effective.





    Theydo Ltd Head office is at 4-5 Peppercorn Court, Quayside,
    Newcastle Upon Tyne and
    Kate Outhwaite can be contacted at kateouthwaite(at)theydo.co.uk, mobile 07920 20 8222.
     
    Posted: Oct 27, 2006 By: ltw Member since: Aug 23, 2006
    #1
  2. cschutrups

    cschutrups UKBF Newcomer Free Member

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    Hi There,

    DM is not something that is favour across the industry, as you may have guessed. The figures you quote are impressive, however it is proven that DM is not as effective as other forms of communications.

    I currently work for a brokerage house in the city, and "Cold Calling" proves much more effective than DM, by a long way.

    To put it frank, DM is not the most efficient, nor cost effective solution.

    Hope this answers your question.

    Regards
    Chris.
     
    Posted: Nov 3, 2007 By: cschutrups Member since: Nov 3, 2007
    #2
  3. ken_uk

    ken_uk UKBF Newcomer Free Member

    2,224 242
    I miss having a coal fire, direct mail from mailshots used to be great fuel for starting the fire....
     
    Posted: Nov 3, 2007 By: ken_uk Member since: Jul 27, 2007
    #3
  4. business123

    business123 UKBF Newcomer Free Member

    558 103
    Posted: Nov 4, 2007 By: business123 Member since: Dec 18, 2006
    #4
  5. hu101shl

    hu101shl UKBF Newcomer Free Member

    15 2
    Hi,

    Even though cold calling will have a higher response, this requires lots of employees to carry out so costs will also rise. however in direct mail you can send hundreds of thousands and increase profit by up to millions.
     
    Posted: Feb 6, 2010 By: hu101shl Member since: Feb 6, 2010
    #5
  6. hu101shl

    hu101shl UKBF Newcomer Free Member

    15 2
    Also Direct mail may not appeal to many businesses due to the fact that largely established companies never use direct marketing as far as ive seen. Because larger companies prefer to advertise using other methods.
     
    Posted: Feb 6, 2010 By: hu101shl Member since: Feb 6, 2010
    #6
  7. Adzooma

    Adzooma UKBF Newcomer Free Member

    22 2
    We are currently working with a couple of large UK financial organisations. (Pensions and Car Insurance) to enable them to use a form of Social Media to contact people who are specifically interested in their products.
     
    Posted: Feb 7, 2010 By: Adzooma Member since: Dec 27, 2009
    #7
  8. Frimley111R

    Frimley111R UKBF Regular Free Member

    428 36
    DM can be brilliant or dire. The industry you are in and the execution of the campaign affect whether it is worth doing or not. Our cold calling sees a 50% drop out rate for seminar bookings while DM bookings are nearer 20%.
     
    Posted: Feb 15, 2010 By: Frimley111R Member since: Nov 1, 2009
    #8
  9. Alayna01

    Alayna01 UKBF Newcomer Free Member

    1 0
    Even though direct mail is not used in many companies as an offline tool to market, it is very essential in protecting the information getting transferred from person to person. This service is used to send the information to specified or unique persons who wish to purchase the product.
     
    Posted: May 18, 2010 By: Alayna01 Member since: May 18, 2010
    #9