Direct mail marketing requires expertise; otherwise, you can be making mistakes and not even know it. Too many lenders are oversimplifying the process, which is causing them to make preventable errors. To help you improve your direct mail marketing process, the following paragraphs will show you the mistakes that we have seen lenders make throughout the steps of their campaigns.
Determining Offer Goals, Analyzing Product Offers, and Building and Customizing Marketing Lists
The first step of the direct mail process is where you need to match the product offer with a compatible mailing list. It’s during this process that we see the most common mistake get made. The error occurs when you do not know your audience, have a loose idea of who your target demographic is, or when you have an outdated mailing list. This misjudgment can be catastrophic because not knowing your ideal audience means that you are unable to align your products properly, which then makes your products un-relatable to the prospects that you’re mailing to, thus causing a low response rate, poor customer acquisition, and a high cost per acquisition.
If your mailing list contains outdated information like addresses, phone numbers, etc., then you could be mailing offers to prospects who are unqualified or unlikely to respond. Mis-aligning your product and audience can also cause legal issues such as legal-in-compliance and legal-in-risk problems. To avoid these dilemmas, you need to be able to find the balance between the responsiveness and risk of a client, because we often see lenders who have a high response and low origination rates due to this critical component of the campaign.
Developing Mail Pieces
This leads us to a misconception that we see all the time, which is the “one size fits all” ideology. This mistake happens when a company believes that all prospects will respond similarly to the same mail piece and offer.
When developing a mail piece, lenders need to realize that almost every person will respond differently. All prospects will have a different reaction to things like images, examples, testimonials, and phrases. Your prospects will each have their own prejudices and opinions. Some will believe a guarantee and others will believe a testimonial. To avoid this problem, you will want to use all of these tactics, and more, to convince them to call you.
Another common mistake we see is when a lender expects that all potential borrowers will have the same level of education. This misconception can cause your company to have a low response rate because your prospects may not understand the offer due to the language you are using in your letter. You must write for reading comprehension! To prevent the possible confusion of your prospects, we suggest writing at a 7th-grade level. Each copy and campaign type should be customized for the prospect, which means going beyond just putting their name on the letter. Don’t just stop at the basics when you can further improve customization by including things such as a personalized URL and personalized offer.
Personalization will make it so your letters are less focused on sales, allowing you to focus on the prospect and their needs, thus providing you with a better opportunity to convert a potential borrower into a customer.
Getting the message wrong in your letter is another way you may be killing your ROI. Your message needs to make a logical and emotional argument in order to get a prospect to convert. Humans are controlled by their emotions, and although a logical argument seems the most reasonable tactic when trying to sell, lenders need to remember that the letter should not be focused on selling. Instead focus on the potential client, and communicating value.
The key is to come off as relatable. You want the reader to feel comfortable and attracted to the offer. This means that you need to target their emotions by showing them a problem they are facing and offering them a solution. Remember, without a problem, there is no reason to respond to the solution. This “problem-answer” format allows you to make an emotional connection with your clientele while also improving your chances of them responding to your offer.
Not testing your letters before mailing a large campaign can lead to an ineffective campaign. You want to be able to get money out on the street as fast as possible, but this can occasionally lead to a failed campaign. Testing your letters beforehand will lead to higher response rates and a low cost per acquisition. This is because you now know what type of letter works for your target demographic. Not testing your letters before mailing a massive campaign can cause you to fall into the cycle of mailing letters that do not function as they should. Don’t assume that something will work because you can never predict the results of a campaign. You need to constantly test campaigns next to each other, and proper tracking is imperative to this process because if you can’t accurately measure campaign performance, how are you going to manage subsequent campaigns?
Executing and Fulfilling Mail Campaigns
Improper planning is another massive mistake that lenders make when it comes to getting campaigns out the door. You are focused on lending, which means your internal teams may get bogged down with interferences that cause campaigns to go out late or not at all. This problem can represent millions of dollars to the bottom line. You need to ensure that you have a timely process so that important marketing drop dates are not missed.
Execution is a key step because if your execution is off, then it doesn’t matter if you’ve made any of the previously-mentioned mistakes. You are in the business of getting money on the street, so the faster and more efficient you can do that, the better.
Tracking Responders, Analyzing Campaign Results, and Determining ROI
Lenders need to be able to track their campaigns’ results because if your response tracking and reporting is unreliable or slow, you’ll be making important decisions using inaccurate information and likely killing your ROI. This is critical to the success of your campaigns because the success of your subsequent campaigns relies on this information. Being unable to track your campaigns’ progress means that you are funneling money into the unknown, which is never a good business tactic. This can lead to poor re-targeting, unclear campaign results, and a negative ROI. Tracking responders, analyzing campaign results, and determining ROI will allow you to learn what is working, and what is not, so you can optimize all future direct mail marketing campaigns.
Each step of the direct mail marketing process has room for errors, and these small errors can create big problems for lenders. It is possible to optimize each step so you can avoid these common mistakes, and a strong suggestion is to outsource your direct mail marketing to experts who know how to identify and change what is not working. A successful direct mail campaign depends on each step of the process being properly aligned and executed. Now make a list of these mistakes and go over each one of them outlining how your operations are reacting to each one. Are you making the mistake? How are you planning to solve it? Are you not making mistakes? How can you improve?
Written by Pablo Gonzalez
Marketing Coordinator / Acct. Manager
Lending Science DM