Each of us probably receives several direct mail solicitations for credit cards every week. Something like 2 billion pieces of credit card mail was sent in 2008.
How has the proliferation of credit card mailing impacted the effectiveness of your institutions direct mail?
Are your direct mail programs generating a sufficient MROI?
Sure, the credit card industry has impacted response rates. A good response rate on prospect mail use to be 75 basis points and now institutions should expect prospect mail to generate a response rate of 35 - 45 basis points. Customer response rates have dropped also but a well planned customer campaign can still generate a 100 basis point (or higher) response rate.
There are three components of a direct mail program: target audience, relevant offer and creative.
What drives the response rate? 70% of response is tied to selecting the best population or target audience for the mailing. 20% of response is tied to the offer and the remaining 10% or response is driven by the creative.
Unfortunately, many institutions spend to much time and money on the creative and creative has the least impact on response. Creative needs to be "on brand", clearly defined the offer and have a specific "call to action." That's it!
Put the bulk of your effort into defining the target audience! Make sure you have a relevant offer!
Direct mail can still drive balances and revenue if done properly!
Have a great weekend!
Mike
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