Direct mail needs to be heavily targeted to work, expert says

by Scot Kersgaard05 May 2016
Direct mail is dead. Long live direct mail.

Direct mail still works, said Zach South, president of marketing firm Best Rate Referrals, but only if it is highly targeted.

“If you are not targeting the right niches, or targeting people who aren’t typically targeted, then you are going to fail,” he said forthrightly.

He said he had a client who recently did a direct mail campaign aimed at drumming up VA refi business in a multi-state area.  “He picked very typical filters. We tried to steer him against it because we have not seen great response rates over the last 6 months with those filters but he insisted on running this very general type of direct mail campaign, and to be honest there are thousands of banks running that same campaign and hitting the same people. His response rate was under a quarter of one percent. You generally want to see about 1 percent, so if you send out 5000 mail pieces, you should expect about 50 calls and he barely got 10, so his response was ‘direct mail sucks’ and ‘why would anybody send direct mail?’”

South said Best Rate still has plenty of clients who are successful with direct mail. “They are sending it for very specialized programs, and they are hitting homeowners and consumers who aren’t being pounded every day with mailers from all these other banks.”

He said going beyond the usual filters can often lead to better results. An example of that, on the reverse side, he said mailing to homeowners that are over 62 and have 50% or less ltv is pretty basic but adding the filter of at least $10,000 in debt can increase the response rate on that mailer by a lot.

“Seventy percent of the success of any direct mail campaign comes down to the list and the filters used. You can have the prettiest mailer with great envelopes so that people open them, but if you aren’t targeting the right people then it doesn’t even matter what you send them,” South said.

As a company that works with clients on hundreds of direct mail campaigns all across the country every month, he said he sees what works. “We see what works and what doesn’t. At the end of the day, the more niche you get, the better it works.  If you have a unique program that qualifies people that might not have qualified 6 months or a year ago, that’s what you need to be doing in direct mail. You can’t just say I’m going to mail to VA homeowners with this loan amount and this FICO score and get a ton of results. That just isn’t going to work, even with rates low, because everyone is doing that,” South said.


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