Why Leveraging Data is Key to Driving Direct Marketing ROI

The COVID-19 pandemic brought dramatic change upon nearly every facet of modern life, including how customers shop and buy products. Since the pandemic began, customers have created new habits and adopted new routines, triggering a fundamental shift in shopper behavior. Some of the trends that emerged during the pandemic are here to stay, and it’s up to marketers to make sense of these new consumer behaviors and how it may change their marketing strategy. Leveraging data to inform direct marketing campaigns (both direct mail and digital) is more important than ever, and savvy marketers are using advanced analytics to target audience segments right down to the individual to meet their customers where they are in this new customer journey.

Reaching Customers in the 'Homebody Economy'

Recent studies by McKinsey & Co. demonstrate just how profoundly customer habits have changed, with several key trends spurring marketers to make agile pivots in their strategies. Even as local and regional economies ease lockdown restrictions and begin opening up, it’s expected that the “homebody economy” will continue. To reach customers, marketers must develop targeted, proactive marketing tactics, rather than relying on more passive promotional efforts. Customers have become less brand loyal, partly due to product shortages early in the pandemic that compelled customers to purchase products from new or unfamiliar brands. To combat this, marketers must deliver consistent, individualized communications that reinforce brand relevance and connection. Customers remain mindful of “discretionary” spending. With a renewed focus on value to price, marketers must customize pricing offers to targeted segments. However, the most dramatic change in customer behavior is probably the shift in online buying across categories, with the rising customer expectation of seamless, engaging, and personalized experiences across all channels. To remain in step with their customers’ expectations, rather than focusing on siloed attribution measurements, marketers must focus on understanding the combination and pattern of touchpoints that successfully guide prospects through the customer journey.

These trends spotlight the heightened importance of data in navigating the new customer journey. Data allows us to understand how customers are engaging with brands and enables marketers to glean insights that drive more relevant personalization. Today’s customers understand the power of data, and expect brands to know who they are, what they like, and to send them a consistent stream of relevant and compelling offers.

Why Direct Mail?

Although customer shopping has shifted online, this does not mean that all marketing must be digital. On the contrary, direct mail offers opportunities for precise personalization and dynamic targeting that accelerate the customer journey. It offers a physical interaction with marketing messages that can act as a touchpoint connecting the physical and virtual worlds. Creative uses of direct mail include upscale eyeglass frame manufacturers investing in a multi-page mailer that creates a luxury experience, inviting the customer to project themselves into the world of the brand, while helping envision themselves using the product. Perfume manufacturers have long used scented samples in direct mail. Today, this technique is used by other companies, for example, a scented candle manufacturer that incorporates “scratch and sniff” functionality into their direct mail piece to drive engagement and allow customers to experience the product before making a purchase. Direct mail product sampling campaigns are a huge opportunity, especially for DTC brands, to connect individuals with targeted product offers, directly in the home. Plus, there are packaging formats available that can provide significant USPS savings.

Even more importantly, direct mail offers marketers the opportunity to better understand attribution and allocation. By embedding unique, trackable features such as QR codes, promotional codes, personalized URLs, or coupons, marketers can directly attribute customer activity to a specific direct mail campaign. This enhanced attribution also allows marketers to test different offers and messages. Going a step further, today’s marketers have access to advanced analytics that allow them to analyze which combination of marketing channels work best together and drive the greatest cumulative impact on customer lifetime value (CLTV). Integrating data from in-store visits with online buying, and doing so in as near to real-time as possible, is key.

Three Ways Direct Mail Can Lift Response Rates

How can marketers use direct mail throughout the customer journey to drive acquisition, engagement, and retain customers? There are three data use cases marketers can use to drive messaging directly to individuals and lift response rates:

1. Localization: Marketers can target prospective customers based on where existing customers live, using local sales messages to capture attention and drive acquisition. For example, hyper-localized messages such as “Three of your neighbors just purchased the same solar energy package” have proven to be highly effective.
2. Targeting based on advanced analytics: Marketers can employ predictive modeling to identify which populations/audiences are likely to be the best targets. Marketers can also use targeting data to deliver different direct mail executions to different audiences. For example, direct mail messages can be tailored to the individual based on their purchase history by offering products related to prior purchases. When combined with email messages thanking a customer for making an in-store or online purchase, marketers can create a “surround sound” effect that keeps their brand top of mind for future purchases.
3. Customer Lifetime Value Targeting: CLTV targeting delivers the ultimate in predictive, intuitive, and optimized direct marketing. This approach prioritizes the customer before the channel to meet them where they are in each stage of their lifecycle. Direct mail is a powerful touchpoint in CLTV marketing.

Customer Data Security and Privacy

While today’s marketers can leverage data to reach customers in new and impactful ways, it's of utmost importance to safeguard customer data and privacy. This is not just good for customer service and your brand - it’s the law. Marketers must develop and adhere to data policies and procedures that conform to local, state, and national regulations. For example, in 2018, California passed the California Consumer Privacy Act (CCPA) which stipulates new privacy safeguards for California customers, and just this year both Virginia and Colorado have followed similar suit. The European Union also passed the General Data Protection Regulation (GDPR) in 2016, which governs customers’ data protection and privacy in the European Union (EU) and the European Economic Area (EEA), as well as the transfer of personal data outside the EU and EEA areas. Staying on top of the evolving regulatory landscape can be a challenge unto itself. Marketers should partner closely with their legal departments to ensure compliance.

Creating hyper-personalized customer experiences in the post-pandemic era requires more than access to customer data; knowing how to use that data to inform your overall strategy is critical. When properly executed, direct mail can be an influential tool in your marketing mix, creating a tangible, physical touchpoint in the increasingly virtual customer journey that is highly measurable and lends itself to attribution. While no one can predict how customer behavior may change in the future, through enhanced personalization and dynamic targeting, you can meet your customers where they are in their unique buyer journey and make a lasting brand impression that drives sales and retention.