Direct Mail and Financial Services The Relationship Continues

Direct Mail and Financial Services: The Relationship Continues

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Latest figures from the USA indicate that direct mail levels in financial services have grown in the 1st Quarter of 2014, continuing a pattern of growth that has seen the banking sector remain the largest exponents of Direct Mail.

USA website The Financial Brand reports as seen in the previous year, the volume of checking customer acquisitions in the first quarter was higher than that seen in the fourth quarter, but with the rise even more pronounced than before. The first three months of 2014 saw a hike in both savings and checking offers, helping to continue to push the overall rise in banking customer acquisition direct mail. This climb in the first quarter has been present for the past five years, creating a very noticeable cyclical pattern.

The financial industry is one of the most active patrons of direct mail solutions, as evidenced by the data and evidence available from the big banks.

In the UK, research confirms that the FS sector remains the single largest user of direct marketing and Direct Mail services, accounting for about 1/3 of all spend with the most popular products being credit cards of one kind or another, Insurance (other), Personal loans, Insurance (life) and Mortgages and related products.

Response rates are difficult to gauge but research has suggested the following rates may be near to the mark: Savings and investments – 4.5%; Loans – 5.4%; Insurance – 7.1%; Banks – 7.2%. Volume plays a large part in the response rates: small volumes (under 1,000) provide an average response rate of 19.7%. When this number rises to 200,000-500,000 the figure slips to just 5.9%. The reason for this is that larger volumes are probably based on prospecting mail, while smaller volumes are to actual customers. A lesson for marketers here is that smaller, more targeted and more personalised Direct Mail should bring a greater response rate – providing the offer is right, of course.

Within the UK, the DMA have created the Financial Services Council to help maximise the effectiveness of mailing within this sector. The Council aims to:

  • Identify growth and optimisation opportunities in all DM channels
  • Collect, create and share business intelligence, guidelines and best practices
  • Protect and promote the industry’s interests
  • Collaborate with members to develop timely, innovative and expert solutions to the industry on common issues
  • Offer informative and convivial events for members to enhance commercial relationships and knowledge

In the month that Tesco has announced its first ‘proper’ current account, renewed competition between banks combined with increased consumer spending are likely to increase levels of Direct Mail further.

Image Credit: Bernard Spragg. NZ

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