Direct mail: the standout communications channel for financial services in 2022

Direct mail has long been a vital communications channel for financial services. It’s used to engage with customers and prospects on everything from information on fluctuating interest rates to new loan and mortgage products. Its popularity is supported by research from the Direct Marketing Association (DMA), revealing that around 70 per cent of all banks and credit unions leverage direct mail, with 35 per cent planning to increase their usage.

Why direct mail is primed to be the premier communications channel in 2022

Spend on direct mail is holding up well despite the growth in digital channels offering low-cost methods for those in financial services to communicate with their audience. The plethora of digital channels – from email to social media and its content – makes it challenging to generate cut through. With consumers spending more time on their screens at home, particularly during the pandemic, people are becoming desensitised to the messages in the digital space.

It’s also important to remember that some people still cannot communicate digitally. It might be that they struggle with online communications. Or maybe they’re unconnected to the internet altogether.

Recent research from JICMAIL reveals the value of direct mail. They found 96 per cent of people engaged with direct mail in quarter two of 2020, up from 91 per cent in the same quarter of 2019. A good email open rate is between 10 and 20 per cent, but average email open rates can vary wildly.

Direct mail is important to banking (and all industry sectors, for that matter) because it provides a strong physical standout on the doormat. Your audience can’t avoid it. It’s also possible to be very creative with direct mail, as the size of a screen is not a constraint. Finally, direct mail can reinforce messages as part of a more comprehensive communications campaign across other media routes.

If accurately targeted, direct mail helps generate a strong response, whether that means to go online and fill in a form, make a purchase, or complete some other brand-friendly action.

Obtaining accurate address data is critical for direct mail success

The most significant barrier to delivering effective direct mail campaigns is inaccurate address data. Without constant attention, the quality of data in a database will decline. Contact data degrades at a rate of two per cent per month, with 25 per cent of data corrupted annually as people change residences (2.2 million individuals move every year in the UK), obtain new mobile phone numbers, or pass away. There are significant time and cost implications in correcting this faulty data, with an average of two per cent of an organisation’s revenue lost in modifying it. This is time and money that could certainly be better spent.

Another issue in the mobile age is a growing reliance on user-provided data, leading to an increase in collecting inaccurate data at the customer onboarding stage. Those keying in their contact information on a small screen are much more likely to mistype; this is often called ‘fat-finger syndrome.’ It’s not surprising that approximately 20 per cent of addresses entered online contain errors, such as spelling mistakes, wrong house numbers, and inaccurate postcodes.

Address verification and lookup ensure accuracy

Address verification and lookup tools will play a vital role in ensuring accurate address data in 2022. These automatically reveal the suggested correct version of the address as the user completes an online contact form, enabling them to select one that’s not only accurate but easily recognised and correctly formatted for their country location. These tools also negate the cost of correcting data later. Plus, an address lookup tool reduces the number of keystrokes required by up to 81 per cent when typing an address on a small mobile screen, thus improving the user experience.

In the UK, the address verification service used must have access to the Postcode Address File (PAF) from the Royal Mail and be able to enrich data by filling in any gaps such as a missing postcode. It should also provide geocodes that aid accurate delivery and improve the user experience. Finally, it needs to be able to retrospectively correct and enrich user address data.

Sustainability and ID verification

It’s worth pointing out that ensuring accuracy with verified addresses will reduce carbon emissions from producing and distributing incorrectly addressed mail that will be returned – aiding those in financial services to hit their sustainability targets. Furthermore, having accurate addresses will help with ID verification and prevent fraud.

Direct mail is set to remain the standout communications channel for those in financial services in 2022 because of its wide range of benefits, such as delivering standout in a digital world and driving engagement. However, it’s only by taking steps to obtain verified address data that those in this sector will improve the accuracy of their held address data. This will increase engagement with their direct mail campaigns, reduce the cost of mis-deliveries, and their impact on the environment, and reduce the opportunity for fraud.