How to Measure Direct Mail Success in Financial Services

Direct mail marketing is a vital tool for financial services companies seeking to engage new prospects and retain existing clients in a competitive market. The challenge, however, lies in measuring the success of direct mail programs. To ensure that your efforts are generating a sustainable return on investment, it’s crucial to identify direct mail campaign analytics that accurately gauge the impact of your initiatives. In this blog post, we’ll explore various strategies for measuring the success of direct mail campaigns within the financial services industry and highlight key practices for optimizing your approach.

Prefer to listen? Check out our podcast The Direct Effect: How to Measure Direct Mail Success in Financial Services

Making Sense of Metrics

Setting specific and quantifiable goals, whether to increase brand awareness, generate leads, cross-sell products, or foster customer loyalty, will provide a benchmark for evaluating your campaign’s effectiveness.

Once your objectives are in place, identify the key performance indicators (KPIs) that align with your goals. In financial services direct mail marketing campaigns, relevant KPIs include:

• Response rate
• Conversion rate
• Cost per acquisition (CPA)
• Cost per lead (CPL)
• Customer lifetime value (LTV)
• Average debt size

These metrics help quantify the impact of your direct mail efforts, providing insights into the immediate and long-term value generated by each campaign.

How to Measure Direct Mail Success for Financial Services Brands

“Setting specific and quantifiable goals, whether to increase brand awareness, generate leads, cross-sell products, or foster customer loyalty, will provide a benchmark for evaluating your campaign’s effectiveness.”

Tracking Responses and Conversions

The response rate is a fundamental metric for assessing the success of direct mail campaigns. By tracking the number of recipients who respond to your specific offer or call to action (dial into your call center or visit a landing page), you can gauge the effectiveness of your audience targeting and messaging. Conversely, the conversion rate measures the percentage of respondents who take the desired action, such as signing up for your service or making a purchase. The metrics help detail your mail program’s tangible impact, enabling you to refine your strategy based on actual results.

Measuring Acquisition Costs and Lifetime Value

Cost per acquisition is a valuable metric for understanding the efficiency of your financial services direct mail campaigns. Calculated by measuring the total investment divided by the number of new customers acquired, campaign CPAs allow you to determine how cost-effective your acquisition campaign is. A recent direct mail report found most financial marketers generate a CPA between $75-$149 for direct mail campaigns.

Cost per lead quantifies the amount of money spent to acquire a single qualified lead through a mail campaign. This metric allows financial services marketers to identify which mail strategies (lists, creative elements, etc.) are most effective at generating high-quality leads.

Assessing customer lifetime value helps gauge the long-term impact of a campaign by estimating the total revenue generated from a customer over the course of their relationship with your brand. Direct mail campaigns that attract and retain higher LTV customers indicate sustainable success.

Why Average Debt Size Matters

The average debt size indicates the potential revenue a new client will bring. Larger debt size generally translates to higher profitability for financial brands focused on the debt consolidation market. Therefore, this metric is often a KPI financial marketers reference when determining a mail campaign’s overall effectiveness.

Understanding the financial profiles of new clients allows marketers to adjust direct mail campaign targeting efforts to attract clients with specific debt sizes. Monitoring this metric is also helpful when assessing competitive positioning within the marketplace. Benchmarking average debt size against competitors helps campaign managers identify opportunities to differentiate brand services and enhance value propositions on their direct mail creative.

Leveraging Data-Driven Insights

By leveraging the data-driven insights shared above, financial services companies can optimize their targeting and messaging and offer strategies for direct mail success. Here are some other data-first practices to ensure a profitable direct mail program:

• A systemic direct mail testing strategy that isolates components to quickly and accurately identify the variables that have the greatest impact on campaign performance allows you to protect your budget from wasteful spending.
• Prospect modeling based on attributes from your best clients will significantly improve response and conversion rates.
• An integrated direct mail and digital marketing strategy aligns your campaigns to improve conversions and prevent waste by 30% or more.
• Financial service products often have a longer sales cycle. When measuring direct mail attribution, it’s important to give your performance a comprehensive analysis.

How Franklin Madison Direct Helps Financial Brands Build Successful Direct Mail Programs

A personal loan and debt consolidation company joined forces with FM Direct to improve its existing in-house direct mail campaigns. Recognizing the need for enhanced data targeting, FM Direct recommended testing new data segments, specifically prospects with various debt levels. This strategy maximized enrollment while minimizing the cost per dollar enrolled, and empowered the brand to make data-driven decisions moving forward.

Overall the campaign was a success, generating significant results for the financial services brand:

• New audience generated a 35% higher response rate than the typical control
• Conversion rate for key prospects was 11.4%
• Over 70% of new enrollments were in the key debt range

With an understanding of how to measure direct mail success in financial services industries, marketers can fine-tune campaigns to maximize ad spend and connect with clients in a meaningful way.

The key to success with mail is in the details: set clear campaign objectives and meticulously measure key performance indicators. With a data-driven approach, direct mail marketing will continue to be a valuable tool for engaging prospects and retaining clients in the competitive landscape of financial services.