Consumer data is plentiful. In fact, it’s overwhelming. We know the who, what, when, where and how of transactions. But the key to getting customers to respond to an offer or appeal – the “why” – is typically missing.
The challenge is that even people of the same age, gender, marital status, zip code and household income interested in, say, the same line of furniture, all have different reasons. One is compelled by the producer’s eco-friendly policies, another values fine craftsmanship, a third has an affinity for the brand.
Direct mailers have been collecting and trying to decode consumer data for decades. Digital media is undeniably popular, but marketers in sectors that include travel and hospitality, retailers, financial services, insurance, health care, consumer product companies and charitable organizations continue to rely on direct mail. In 2018, 121.2 billion pieces were delivered to U.S. households. (Source: USPS)
They use it because it’s effective. In fact, 2018 was a banner year for direct mail. Prospect list response rates were 4.9%; house lists’ were 9% – both significantly higher than in 2017. And response rates ranged from five to nine times greater than for any digital direct marketing medium, including email, paid search and social media. (Source for all statistics: ANA/DMA Response Rate Report 2018)
Pairing direct mail with digital media is especially effective. Still, none of this means that the pressure on marketers to keep improving results and ROI has let up. But coming up with a direct mail piece that significantly outperforms the control package is challenging. Which leads back to uncovering the “why” behind consumer purchases. Here are steps that will help marketers do that.
Do the right segmentation
Transactional data is not enough, but it’s the starting point for understanding customers. Frequency of purchase, how much they spend and when they purchase provide vital insights to begin segmenting consumers. BUT don’t segment too much. With the amount of data routinely added to customer records, you can create such finely drawn segments that it’s paralyzing. And it’s ultimately counter-productive to devise customized approaches for each one.
Use the power of personas
A well-defined persona matrix with detailed emotional-cultural characteristics for each persona provides valuable insights on what motivates customers. By overlaying personas onto segments, marketers can group like-minded customers, even across affinity groups, to reduce the number of segments they target.
Take testing to the next level
Testing is the bottleneck in creating effective direct mail. Traditional testing involves multiple “tweaks” of a mail package’s format/offer/imagery, then live mailings of each version. The process typically takes one to two years, and even then only one in 10 beats the control package. The solution is to test direct mail virtually, using online panels modeled on target personas. This platform can test up to 20 cells in one pass, and deliver highly reliable results in 60 to 90 days, at a far lower cost than traditional testing.
Develop packages for each persona
Virtual testing delivers the information needed to create a manageable number of packages geared to each target persona cost-effectively.
But what about the results of virtual testing? These companies found proof in the real world.
Regional Specialty Retailer
- Virtual testing helped this retailer leverage loyalty program data into direct mail packages that increased orders
- Comparing a tri-fold vs. a post card format, they discovered that while the tri-fold did draw a higher response, it wasn’t high enough to justify the added expense
- The post card mailer lifted response rates by 200% over the control package
- It also improved all KPIs by a minimum of 19%, including redemption rate, gross sales and gross margin
Global Mutual Life Insurance Provider
- The insurer thought direct mail was an important communication channel for customers and prospects, but response rates were poor
- Virtual testing gave them clear insights into what combination of offer format, information and imagery would drive response
- The new package increased response rates by 19% over the control
- Consumers weren’t responding to this company’s direct mail offers and catalogs, but it lacked the tools, time and staff to effectively refresh creative
- Quad developed personas, then virtually tested new direct mail packages and catalogs against them
- The new packages outperformed expectations for all KPIs, delivering a 27.5% response for the retailer’s catalogs and a 47.1% response rate overall
Paraphrasing Warren Buffet, while it’s good to learn from your mistakes; it’s better to learn from other people’s. This new approach to direct mail testing lets marketers discover mistaken assumptions, virtually.