DIRECT MAIL SURVEY 2008 Results
Surprising revelations about how consumers across all age groups feel about direct mail
Experts
Industry pros respond with insights and suggestions about how marketers can take advantage of direct mail
Mailers Economy A careful look at mail
Are you currently examining your mail more carefully for promotional offers or coupons than six months ago?
Yes 64%
Future
Marketers say they continue to be committed to the direct mail channel Struggling consumers of all ages turn to direct mail, seeking coupons and discounts in a variety of categories
“The responses really validate the importance of direct mail” Leslie Abi-Karam, EVP and president of mailing solutions management, Pitney Bowes
The long-term outlook for the mail channel is bright — if marketers use it right
No 36%
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Staying power To paraphrase Mark Twain, reports of direct mail’s demise as a proven lead- and sales-generating workhorse have been greatly exaggerated. In fact, spurred by the struggling economy, more consumers than ever are turning to promotional offers and coupons sent through direct mail. Pamela Oldham speaks to direct mail experts and marketers about the surprising results of the second DMNews/Pitney Bowes direct mail survey
“I
s direct mail deader than disco?” That was the question recently posed by a marketer on a business networking Web site. Judging from the wiggle room now available in mailboxes across America, it might appear that the sentiment is one shared by many companies, especially with today’s unprecedented economic trials. Marketers throughout the country are increasingly reducing their investment in or even abandoning the direct mail channel in favor of cheaper options such as digital. But do consumers actually prefer digital to mail? A new DMNews/Pitney Bowes survey on consumer attitudes and behaviors related to mailed promotional materials concludes that direct mail is still definitely a channel to be reckoned with. Results of the survey, conducted in September 2008, suggest that drastically reducing or eliminating use of the direct mail channel is probably not good for business — especially in light of the economic slowdown. What’s more, holding on to old-fashioned notions about direct mail may leave companies vulnerable to competitive promotional offers that arrive in one of today’s most personal and relatively uncluttered points of contact: the consumer mailbox. More than 1,000 consumers age 18 and up from 10 major metropolitan areas — Atlanta, Boston, Chicago, Denver, Houston, Los Angeles, Miami, New York, Phoenix and Seattle — took part in the online survey. Respondents were equally divided between male and female, and were screened to at least “sometimes” be personally involved in reviewing their mail. Despite the common perception that consumers greatly prefer e-mail, the study found consumers equally prefer to review their US Postal Service mail and their e-mail. In fact, 50% of
respondents report greater enjoyment reviewing their mail received through the USPS than scrolling through e-mail. Perhaps the single most important takeaway from the study, however, was that promotional offers sent by mail are still profoundly powerful ways to spark consumer action, and that their use has increased over the past few months of economic turmoil. The survey found that as many as 94% of consumers claim they took action on promotional offers and coupons received in the mail over the past year. Survey responses show more interest in discounts “The responses really validate the importance of direct mail and how it can be used when people are struggling and looking at their offers more closely. Done right, you can get some of the best hit rates because people desperately need those discounts on products and services,” says Leslie Abi-Karam, EVP of Pitney Bowes and president of mailing solutions management. “The opportunity in direct mail is to get very targeted. While [marketers] may not do the same volume, if they do the right targeting, it will allow them to get an even better lift now than historically.” The study shows that 85% of consumers review their USPS mail daily. Half of all consumers requested promotional materials or coupons from companies over the past six months, and these consumers are equally likely to have requested the materials or coupons to be delivered by e-mail or USPS mail. Yet, recent articles in mainstream media and business outlets describe a planned, dramatic downturn in direct mail spending as marketers in many sectors frantically seek to cut costs. However, experts such as Carolyn Goodman,
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50
Enjoyment of direct mail Do you40enjoy reviewing your USPS mail more than your e-mail?
Receipt of promotional offers/coupons How many promotional offers or coupons do you typically receive by mail in a week?
48%
30
20
28% 10
Yes 50%
No 50%
23% 11% 12%
1% 0
Reviewing direct mail How often do you go through the mail you receive?
Sometimes Often 13%
Daily 85%
Importance of price Is price more important or less important when you are making a purchasing decision?
Same 29% More Important 69% Less Important 2%
1-5
6-10
president and creative director of California-based Goodman Marketing Partners, say eliminating direct mail is a huge mistake. “Just as radio never went out of vogue with the advent of television, people have said direct mail is dead since e-mail came into vogue,” says Goodman. “I have always steadfastly said, ‘Not true.’ The US Postal Service, which is not going away any time soon, continues to be the only channel service provider that hand-delivers your communications to the doorstep, at no cost to the consumer. The Internet is not free — you pay somebody for Internet access.” A high percentage of people across age groups read their mail, the survey finds. They are increasingly interested in coupons, and are likely to take some action after they receive a promotion in the mail. Goodman says the results delight her, because it reinforces what she’s “always” believed, which is that direct mail is far from being an ineffective channel. “I think many marketers have been dismissive of direct mail and are missing a huge opportunity and way to engage or start a dialog, whether it’s b-to-b or b-to-c,” she says, adding that she has received business reply mail back on promotions that ran for clients five or six years ago. “Believe me, that [company’s] Web site was taken down long ago; that landing page doesn’t exist, but the customer perforated the reply card and sent it in to say, ‘Now I’m ready to start a dialog.’” Marketers continue to invest And many marketers remain committed to direct mail, even while they increase their investment online. “We are firmly dedicated to the mail — we will mail as much this year as we did last year,” says David Ball, VP of consumer marketing at Meredith Publishing Group, which publishes such consumer magazine titles
11-15
16+
as More, Ladies’ Home Journal and Family Circle. “I think [if you’re a] company that look short-term to cut the mail, it helps you this year, but the problem is next year you have fewer people who order from you. It’s a real downward spiral that you get into if you aren’t continuing to invest in mail.” David Shoenfeld, the USPS’ SVP of mailing services, says that mail continues to be an essential factor in running a consumer household. “A household is a business with many key functions that help [consumers] run that business smoothly, helping them make choices, shop smarter, keep connections, and manage and pay bills,” he explains. “It’s heartening to see that people enjoy mail and consider that it helps them make choices about products and brands and helps them find values is more important today than ever. They find mail is a terrific way to find specials and learn about products that can help them save time and money. It’s part of that ritual, that consumers review their mail daily.” Studies by the USPS confirm DMNews/Pitney Bowes’ findings that suggest the mail is gathered and dealt with daily, he points out. “People either make the decision [then] or they set [the direct mail offer] aside to review decisions with others in the household or use it to compare offers,” he says. Direct mail’s three-dimensional advantage, he adds, is that offers can be spread out on the kitchen counter to be shared and decided upon with others in the household or kept for future decision-making. “Direct mail induces consumers to touch the offer — recipients of mail are receiving, sorting, reading, and using direct mail to make purchasing decisions,” he says. For retailer JCPenney, direct mail is still a “huge component” of the company’s marketing, says spokesperson Kate Parkhouse. JCPenney continues to send a
“The responses really validate the importance of direct mail and how it can be used when people are struggling and looking at their offers more closely” Leslie Abi-Karam, EVP and president of mailing solutions management, Pitney Bowes
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Price importance by category
Coupon use
How important is price when making purchasing decisions on the following items? Very important
Travel
How has your use of coupons received in the mail for these products changes in the past year?
Somewhat important
65%
90%
25%
Increased a lot
62%
Electronics Groceries
57%
Home furniture
56%
Auto parts
53%
Entertainment
46%
Paper and office supplies Health & wellness products
32%
31%
89%
Health & wellness products
29%
40
80
0
33%
22% 22%
33%
19%
30%
14% 21%
Home furniture 7%
100
38%
27%
Travel 11%
80%
39%
26%
Paper & office 11% supplies
66%
41%
27%
Auto parts 11%
75%
60
14%
Electronics 11%
82%
39%
30%
36%
Entertainment 13%
84%
36%
41% 20
Groceries
88%
32%
46%
0
92%
30%
Increased a little
10
20
30
40
50
60
70
80
Promotional offers leading to purchase
Coupon receipt preference
What percentage of promotional offers or coupons that you receive by mail ultimately lead you to purchase?
How do you prefer to receive coupons? Mail
78%
6%-10%
24%
63%
1%-5% 11%-20%
52%
Newspaper inserts
Web sites Don’t want to receive coupons
11%
34%
21%+
8%
3% 0
51%
10
catalog every Christmas — which is also available online — and this year the retailer also produced a 48-page gift guide sent by direct mail, which emphasizes affordable gift-giving. Robert Ladd, senior director of consumer marketing at St. Louisbased cable company Charter Communications, which sends out 150 million pieces of mail per year, did not find the study results particularly surprising. “[That] the vast majority of consumers review their mail daily, we see that in our call volume responses that we track,” he says. “We find that direct mail is clearly effective for us in driving the business both with prospects with whom we do not yet have a relationship and also with our existing customers, because it helps them understand the services we have available.” And, given the current state of the economy, it’s certainly not surprising that the survey highlights the importance of pricing when making purchase decisions — it has increased among 69% of consumers compared to six months ago.
20
30
40
50
60
70
This supports the commonly held belief that today’s consumers are allocating home budgets according to a need vs. want test. For example, the survey found that pricing is most important for consumers making purchasing decisions within travel or electronics categories, which are generally perceived in this economy as non-necessities. However, with health and wellness products, for example, pricing isn’t as crucial to consumers. “I think businesses as a whole know that discounting is a strategy that can help stimulate purchases — especially in
0%
6%
80
hard economic times and with the holidays coming up, people are trying to tighten up their purchase habits and make their money go farther,” says Amy King, VP of business intelligence and insights at coupon powerhouse Valpak. “Discounting is something retailers that we haven’t seen discounting before will get involved in.” Retailers are taking to discounting strategies and using coupons as incentives – but some are even reinventing the coupon. Recently, King received a discount offer from a high-end accessories company. “It was presented as a nice little gift card, but it was a coupon nonetheless,” she says.
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According to the DMNews/ Pitney Bowes survey, the level of discount is the most important consideration for redeeming a coupon — in general, consumers expect at least a 10% to 25% discount for coupons received in the mail. Coupons offering discounts on grocery purchases are the most likely to be used, followed by entertainment and performances, and electronics. The expected level of discount is highest for bigger ticket items such as furniture and travel purchases. Importantly, 25% of consumers say they require a 50% discount to motivate a purchase. One in five consumers reports more than 10% of the offers or coupons they receive lead to a purchase. Direct mail’s staying power encourages consumers to redeem coupons for strong, well-crafted, well-targeted offers, King says. “Some people have this ‘I don’t want to purchase anything’ mindset right now, but they’re still interacting with their mail and have that in their face every day,” she explains. “They say, ‘Maybe I didn’t want to
JCPenney continues to invest strongly in direct mail, including this 48-page holiday gift-giving guide that was produced for 2008
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“I think many marketers have been dismissive of direct mail and are missing a huge opportunity and way to engage or start a dialog” Carolyn Goodman, president and creative director, Goodman Marketing Partners
buy anything from company ‘X,’ but now I’m holding this 20% off coupon. Maybe I’ll buy now.’” JCPenney is emphasizing its promotions more heavily this year than in years past, says Parkhouse, as consumers seek discounts at what has “always been a promotional department store” — including with its integrated campaign, which includes several direct mail elements. “A lot of our marketing right now is very promotional, very focused on our value proposition, on our prices, rather than just JCPenney the brand,” she explains. In another rather surprising result, given popularly held, anecdotal opinion to the contrary, 52% of consumers age 18 to 39 report greater enjoyment reviewing mail received through the USPS compared to e-mail. The survey also found that 78% of consumers prefer to receive coupons in the USPS mail, with younger consumers more likely than those over the age of 50 to prefer this form of delivery. Young consumers still respond Furthermore, consumers under the age of 50 are the most likely to have increased their follow-up response to promotional offers received in the mail over the past year. As with all survey respondents, younger consumers were motivated by direct mail to make a direct purchase, make a phone call, visit a company’s bricks-andmortar or online store, visit the sender’s Web site to learn more about the brand or products, and request more information, among other actions. Linda Woolley, EVP of government affairs at the Direct Marketing Association, says she’s seeing a lot of multichannel marketing using direct mail, especially when targeting younger consumers. “When I read through the study, the first thing that jumped out at me was how many people review their mail daily and how it’s younger people in addition to the older people you’d expect. I thought that was pretty amazing,” she says. “There’s always so much emphasis on younger people being so Internet-based, so we were delighted with these figures.” Goodman says marketers need only look at the habits of their own families to see the phenomenon — and perhaps to gain insight into what she believes might be a future trend. “My 17-year-old, who is now college-bound, is getting more mail every day,” she says. “He’s getting mail from colleges that are interested in him. He’s getting handwritten notes from college coaches who want a relationship with him. They e-mail him, but they also send
New business relationships Have you ever used a new business for the first time because of information you received in the mail?
Yes 37%
No 63%
Renewed business relationships Have you ever renewed a relationship with a business after a period of time because you received a mailing or promotional item?
No 32% Yes 68%
A careful look at mail Are you currently examining your mail more carefully for promotional offers or coupons than six months ago?
Yes 64%
No 36%
mail. He’s pretty flattered, getting all this mail. So the tool called direct mail is still a very effective way to reach out and tap on people’s shoulders and say, ‘Hey, I want to have a relationship with you,’” she says. Goodman adds that her son, like others his age group, are choosing to bypass e-mail altogether, preferring to communicate by mail, instant messaging and mobile text messaging. “The under-30 crowd is a very cynical group of people. I think direct mail is a great way to reach them in that they can touch it,” Goodman says. “If you do your homework and you engage with them and get them to understand what the opportunity is, I think you have a far better chance than you do in the online world.” Sharad Verma, president of Pitney Bowes subsidiary Digital Cement, a consulting firm that helps large companies increase brand loyalty, says that a number of issues are at play right now when it comes to deciding to use direct mail. “[There’s the] whole notion that we don’t want to waste communications dollars against audiences that would never be interested in the first place. It’s important that the industry propagate the right message and that people are fully aware how this channel works. The fact is there aren’t as many negative aspects associated with direct mail as people think,” says Verma. “As marketers, we need to understand what constituents really care about. If I’m sending a hiking catalog to someone who could care less about that, it’s going straight in the garbage.” Strong response for nonprofits Another area of opportunity uncovered by the study is in the nonprofit sector. “One of the things I thought was great for the nonprofit community were the numbers for response to non-profit mail,” says Woolley. “If I were in a nonprofit, I’d be jumping up and down – 41% of consumers age 41 to 49 reported contributing to a nonprofit organization for the first time after receiving information in the mail. That is impressive.” That figure Woolley cites as impressive was the mid-range result; 44% of consumers aged 50 and up said they contributed for the first time to a nonprofit organization after receiving direct mail appeal. Among 18- to 39-year-olds, the rate was a more modest, but still amazing, 37%. But garnering strong results from direct mail isn’t just for nonprofits or existing relationships. The study found that receiving information in the mail prompted 37% of consumers to use a new
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“We are firmly dedicated to the mail — we will mail as much this year as we did last year” David Ball, VP of consumer marketing, Meredith Publishing Group
business for the first time. Direct mail also helps marketers costeffectively mine the customer base; 68% of consumers renew business relationships in response to information they received via the direct mail channel. Consistent with the increased importance of pricing, researchers found an increase in consumers reviewing their mail for promotional offers and coupons (64%). But the number of offers in the mailbox may be shrinking; Almost half of all consumers — 48% — report receiving only one to five offers per week. Mailboxes offer opportunity For many direct mail marketers, the now relatively empty mailbox presents a unique opportunity — especially when compared to the increasingly crowded and highly regulated e-mail inbox. “You can easily send an e-mail to 500,000 people at the click of a button, and that’s very appealing,” says Goodman. “But if you look at open rates and click-through rates, which are declining very rapidly, you start to say to yourself, ‘How do I improve response rates?’ I think direct mail is a challenge to marketers, because the online world helped create the volume dream.” Goodman says that with online marketing, there’s only one way for consumers to respond – with a click. And there are plenty of things that can interrupt a consumer’s response behavior. “Look at all the abandoned shopping carts in the world. And how much money the online world spends on seeing what event wrong, why you abandoned the cart,” Goodman says. “Quite frankly, a lot of it is, “my boss just walked in,” “the computer crashed,” “my kid’s crying,” “the dog’s barking,” “the doorbell rang,” versus I’ve got a direct mail package and I have options [in addition to ordering online]. I can call the 800 number or fill out the order form
Coupon redemption issues What is most important to you in a mailed coupon, when choosing whether to redeem it? Ranked 2nd Ranked 3rd Ranked 1st
49%
Level of discount
Currently considering buying this product
Familiarity with the merchant carrying this product
18%
18%
Product/service is relevant to your needs
16%
17%
Span of time before expiration date Flexibility of product size and choice Product sample with the mail piece
0
16%
15%
81%
52%
14% 47%
35% 2% 12% 16% 30% 2% 8% 12% 22% 2% 6%10% 18% 3% 6%6% 15%
8% 16%
Convenience of merchant location
17%
20
and mail it, for instance, or I can go to the store.” King likens marketers’ beliefs about direct mail as a dying channel to opinions of the Internet supplanting the need for catalogs in the early 1990s. “All the cataloguers were saying, ‘We don’t have to put out as many catalogs. People can just go online and can browse through everything and order online.’ They started putting out fewer catalogs and sales went down. They became more strategic,” she says. But, she points that consumers really do have an intimate relationship with their mailbox and with their mail. “There are lots of things you can go online to find information about, but nothing’s going to prompt you to do it until you have something in your hand that you can touch and feel,” she says. Pitney Bowes’ Abi-Karam agrees, saying, “the direct mail component will always be an important piece of the pie. People like their mail.
11%
40
60
80
100
Request promotional offers/coupons Have you, in the past six months, requested coupons or promotional offers from any companies?
42%
Male
57%
Female
You can’t get away from that.” But, she adds, mail must still be relevant. “It should be valuable mail, your users should want it, and you should have the data to know what their buying habits are,” she explains. n
Women: The mail gatekeepers > If Americans still enjoy getting direct mail, female consumers take advantage of it more than their male counterparts, according to the 2008 DMNews/Pitney Bowes Direct Mail Survey. While the study found that an equal amount of men and women review their mail daily, it is women who usually collect and sort household mail. “The female is generally responsible for going through the mail. They are also the gatekeepers,” says Amy King, VP of business intelligence and insights at Valpak.
The survey found that females are more likely than males to respond to direct mail by trying a new business or renewing a business relationship (67% vs. 59%), and along with older consumers (age 50 and over) are the most likely to report a renewed relationship with a nonprofit organization. Women also report a greater level of price sensitivity compared to men for all product categories except groceries and office supplies. They are also more likely to be on the lookout for promotional offers and coupons in the mail, are particular fond of mailed coupons and more likely than men to use coupons for purchases. Women generally control the spending, the purse strings of their household, that’s kind of what our ‘sweet spot’ customer is,” says JCPenney spokesperson Kate Parkhouse. “When we talk about our customer, we usually talk about ‘her.’”