Maybe you’ve heard the term “lifecycle marketing.” But what is it, and what role does it play in direct marketing, particularly within the direct mail channel? Lifecycle marketing, also sometimes referred to as Customer Relationship Management/Marketing (CRM), is an active, planned engagement strategy to reach customers at all points of their relationship with your product or service. It’s built on the knowledge that existing customers spend 33% more on average than new ones, and that 80% of profits will come from just 20% of your customers. It also assumes that acquiring a new customer is not where your marketing ends, but rather where it really begins.
“Mental Opt-Out” and Why Direct Mail is Crucial to Lifecycle Marketing
We can engage customers through a variety of marketing channels, including social media, email, relevant content, mobile SMS, and many more. For years, email has been the favored go-to direct channel for customer engagement. It’s inexpensive, measurable, and is quick and simple to create and deliver. It’s so easy to use that it’s become a crutch for many marketers, who believe that as long as their email opt-out rates don’t rise, customers must not be tiring of it.
Because email is so inexpensive, many marketers put little effort into email customer segmentation—it’s just easier to send the same content and creative to everyone on the email list, rather than personalizing based on identified audiences. What’s not accounted for is the fatigue factor. Consumers receive so many promotional emails in the course of a day that they’re forced to make split-second decisions on whether to open and read, ignore, or delete them. Consumers receive an average of more than 500 emails a week. Like anything else, too much email leads to a “de-valuing” of the message, offer, and product. So the “mental opt-out” rate for email is usually much higher than the numbers reveal.
Making Customer Engagement More Effective with Lifecycle Marketing
Marketers are discovering that direct mail is an effective customer engagement and revenue driver. During the past 10 years, direct mail has predominantly been used for acquisition, as email used for acquisition is widely considered spam. But as email open and click-through rates continue to decline, marketers are also returning to direct mail for strong lifecycle marketing.
With a typical maximum email open rate of 30% (and often much lower), this means that 70% of email subscribers are not even seeing the message. Compare this to direct mail: In the recent InfoTrends study, “Direct Marketing Production Printing & Value-Added Services: A Strategy for Growth,” consumers reported viewing two-thirds of the direct mail that they receive. Furthermore, when consumers were asked what they did with their direct mail, 82% reported reviewing their direct mail pieces for a minute or more.
The 2016 DMA Response Rate Report states that customer direct mail averages a 5.3% response rate versus 0.6% for email—a response rate advantage of more than 700% . In contrast to email, the typical consumer only receives an average of 25 pieces of direct mail a week. Direct mail provides more real estate for you to tell your story and make your argument. Its physical nature means the message sticks around the home a lot longer, especially when compared to digital messaging. It can also be leveraged to reach the more than 70% of your email subscribers who are not opening your emails.
Am I suggesting that we replace email with direct mail? No. I’m recommending that email and direct mail be coordinated in an integrated campaign that can be used as the basis for lifecycle marketing, often doubling email open rate and lifting direct mail response by 20 to 30%. Marketing is becoming more automated, with trigger campaigns on the rise. Direct mail is frequently used for these trigger campaigns, particularly in the financial and insurance industry verticals. We find that it can be equally effective driving triggered retention efforts across all industries.
How We Attract, Retain, and Win Back Customers
At IWCO Direct, we help our clients build targeted customer welcome and thank you packages for their new customers and loyalty programs. Single buyers are converted to exponentially more valuable multi-buyers with strong, strategic direct mail offer packages. But our customer engagement strategies don’t end there. We carry that same momentum beyond initial acquisition for robust lifecycle marketing efforts, as well.
We help our clients reach out to customers who are purchasing and engaging less frequently with relevant, segmented direct mail offers that re-engage them at the right time. Customer direct mail winback programs break through the promotional clutter to win customers back. Driving these efforts are IWCO Direct’s strategy and creative teams, enabling our clients to send direct mail that works. And customers respond and spend at a much higher rate than prospects, giving us the opportunity to generate a positive ROI for our clients more quickly.
If your email and other customer engagement channel metrics are flat or declining, or your retention efforts need a boost, you should take a look at complementing them with direct mail as part of a lifecycle marketing strategy. Contact me if you have a question about improving your customer retention efforts.