Direct mail effectiveness has been proven over the years as a method of improving revenue since its official invention by Aaron Montgomery Ward in 1872.

A method that has been used for so long is bound to have merit, but is it still beneficial for insurance companies with the changes in technology, regulations, and even mindset?

SeQuel Response, a Franklin Madison company, performed a 2022 direct mail industry benchmark study specifically focused on direct mail performance, volume, digital integration, opportunities, and challenges to determine if direct mail is still a viable—and even preferable—option for companies.

Key Findings of Direct Mail Performance

The SeQuel Response trends report, Direct Mail: Signed, Sealed, and Still Delivering Results, was conducted in partnership with NAPCO Research to determine how direct mail is performing even with record-level inflation, a post-pandemic economy, and increased competition. The companies surveyed in the report struggled to find marketers with budgets over $10MM who were not already using direct mail for marketing.

The report states, “In 2021, the United States Postal Service delivered 70.2 billion pieces of direct mail, an increase of nearly 5% from 2020. Total spending on direct mail reached $41.9 billion and is expected to grow $43.4 billion in 2022.”

Why Use Direct Mail?

The reasons to add direct mail to your marketing tactics are plenty.

One such reason is that direct mail is a legacy channel that holds up through trend changes. According to SeQuel’s study, “The 2021 ANA Response Rate Report found that direct mail receives the highest ROI of all media, at 112% for prospect lists. Nearly all our survey respondents reported steady performance from the mail channel in the past 12 months—65% indicated performance has improved, and 32% said performance remained consistent. Only 3% reported a decline.”

Getting a piece of paper mail is an event where one spends time retrieving the mail, sifting through each piece to find relevant offers or valuable correspondence.

To account for the increased consumer desire for marketing with brevity, self-mailers and postcards tend to be the most often sent and are reported to be the most successful.

How Do Consumers Respond to Direct Mail?

The report quotes new research from Digital Commerce 360 and Bizrate Insights that found that direct mail greatly influences a consumer’s online purchases more than popular digital marketing channels.

When a customer receives a direct mail piece and interacts with that company digitally, they are more likely to take action with the company than if they interact digitally alone. With all the scams on digital platforms, trust is a significant factor in this success, as well as the increased number of touchpoints and communication choices for the customer.

Engagement is up for direct mail as well. Bills and statements are reportedly opened by 100% of Baby Boomers, 98% of Gen X, and 97% of Millennials; promo mail is opened by 96%, 92%, and 93%, respectively; and promo mail from large national brands is opened by 92%, 90%, and 90%, respectively. Getting above a 90% engagement rate on any digital platform alone is just about impossible, regardless of how much money is spent.

The secret to a successful campaign is not determining which method works best on its own; rather, it is finding the ideal omnichannel strategy for your consumer base to provide an integrated experience.

An omnichannel marketing strategy is ideal for most industries, especially for insurance companies facing the additional challenges of compliance regulations and the need to create marketing materials that drive customers to purchase.

Since recent data privacy legislation has deeply affected the foundations of digital marketing, an omnichannel strategy is increasingly important. Direct mail bridges the gap by allowing alternative data sources typically provided by professional agencies.

Professional Agencies Can Provide Help with Direct Mailing

The survey asked participants how they are managing their direct mail programs. Answers showed that the majority of mailers partner with an agency in some capacity to help with their direct mail campaigns. The small number that use a DIY strategy find that a sustainable testing strategy is the most challenging aspect of managing direct mail in-house.

In-house teams also found tracking mail performance/attribution and developing engaging creative challenging. This is why many respondents are turning to outsourced agency partners—to utilize the expertise and resources that come with them.

Factors to Consider When Selecting Agency Partners

Choosing the right agency partner is all about asking the right questions. Here are the top 5 factors companies consider when selecting the right outsourcing partner:

With all factors weighted fairly equally, it’s clear that the essential aspects of outsourcing direct mail require resources, experience, and the right team. While all of this can be done in-house, it would be expensive and difficult to bring in all the expert employees and years of experience, plus collect the same quality of data and properly analyze it.

Direct Mail Challenges

Data privacy regulations have impacted direct mail less than other marketing mediums. However, 78% of marketers utilizing direct mail are concerned about the tightening regulations and how it will affect their ability to reach their audience. Plus, 3 out of 4 mailers reportedly worry about the pandemic’s impact on the paper industry.

Although these challenges seem uncontrollable, they are not insurmountable.

Finding reliable data-targeting alternatives can help counteract the rising costs and material shortages, and since the regulations don’t affect direct mail as much as other channels, it is significantly less of a concern with this media.

The best part about hiring an expert agency partner for omnichannel marketing is that integrating it with digital marketing efforts can—and should—be seamless. Performance can also be tracked more thoroughly because of the access to enhanced data modeling. This is especially true when the agency has a team of data scientists to collect, utilize, and analyze this data to track and measure performance.

Recommendations in the report include careful planning and having flexibility with supply chain partners, along with accepting increased timelines to plan for paper and resource needs.

We also suggest hiring professionals who can maximize the potential of your direct mail budget through the use of data-driven marketing, tried and tested creativity, and the identification of customers with the highest likelihood of making a purchase. This ensures that even though mailing costs have increased for the time being, you are getting a higher campaign ROI, as well as fostering stronger customer loyalty and longevity.

Direct Mail Remains a Top Channel for Scalable Growth

The results show that direct mail is still a top channel for sustainable and scalable growth. Direct mail provides companies access to their target audience and comprehensive testing strategies.

Getting the most out of your marketing budget matters now more than ever. The right partner also has supply chain sources to secure resources and materials more effectively. The right direct marketing agency partner can also help you integrate direct mail and omnichannel marketing strategies into your current plan.

At FM Engage, we use data and over 50 years of industry experience to help insurance companies build brand loyalty, maximize campaign ROI, improve the customer journey, and increase revenue.