The State of Direct Mail During COVID-19, and Beyond
Although GlobalWebIndex research indicates 85% of consumers are ready to see brands get back to normal, we understand many direct marketers are still juggling budgetary concerns and channel strategy given consumer sentiment and brand goals. As the U.S. embarks on its fifth month of the coronavirus pandemic and brands launch their Q3 budgets and advertising strategies, we wanted to share what we are experiencing at SeQuel Response. Here is a closer look at some emerging trends in the direct response industry and our perspective on the state of the direct mail channel during COVID-19.
Direct mail down, but far from out
Although direct mail volumes were down slightly in Q1 2020, about 9% overall yr/yr, the biggest impact of COVID-19 on mail volumes will undoubtedly be etched in history as an unprecedented hit to Q2 2020. Leveraging insights from our clients, partners and market research firms, our best guess is that the USPS will have experienced a roughly 50-60% yr/yr drop in direct mail volume.
Taken at face value, the Q2 volume dip may suggest a significant and prolonged effect on mail volumes for quarters to come. However, with sight lines to sales trends, performance data and marketing plans across dozens of varied mailers, we see encouraging signs of a meaningful and steady rebound already underway.
“Although consumer demand was paused or perhaps redirected, for the most part it remains, and in some cases is pent up,” said Erik Koenig, SeQuel’s Chief Marketing Strategist. “While it’s true that Q2 volumes dove precipitously, in the majority of cases clients were delaying or pausing efforts rather than cancelling them, with most of those campaigns having turned back on in Q3 as companies have seen sales stabilize or at least return to profitable levels. We anticipate performance to take a quarter or two to climb back to near pre-pandemic levels, but we’re in shouting distance already.”
Of course, not all brands are created equal. While a fortunate few are experiencing a boon in sales (e.g. streaming services, at home fitness, meal and liquor delivery, etc), there are several industries that have been battered by the pandemic in a way which may take years to fully recover (travel, retail, events, etc.). In most cases, the brands that fall somewhere in between are the barometer, and many seem to be normalizing.
For our clients, the pandemic arrived at a time when the direct mail channel was firmly entrenched as a consistent, reliable contributor to profitable customer growth. The scale provided by mail was unmatched by other channels. Therefore, perhaps it is not surprising that clients who did pause or reduce volumes due to COVID-19 concerns are re-entering the channel in Q3 and plan to mail pre-pandemic volumes by early 2021. Ultimately, none of SeQuel’s clients have abandoned the channel due to the coronavirus or economic skepticism. As sales recovered, along with it came a rebound in direct mail performance.
Despite the challenging environment, consumers are captive audiences in an unprecedented way and consumer behavior is in flux. Routines have been derailed and new habits are forming. Direct mail sets up as the perfect vehicle for today’s climate. Since March, SeQuel has acquired a variety of new clients who are embracing the channel to bolster brand awareness and initiate new customer relationships.
“There’s a tremendous opportunity right now for first time mailers. Consumers are actively forming new purchase behaviors and new relationships with brands. Direct mail is perhaps the most effective at introducing consumers to a new product or service, and brands who stay committed to driving new customers while others sit on the sidelines will emerge from the pandemic much healthier,” Koenig explains.
In the early stages of the coronavirus pandemic, a new DTC client recognized an opportunity and partnered with SeQuel to launch into the direct mail channel. To build a highly targeted mailing list, SeQuel leveraged the brand’s existing customers to build several predictive models for in-market competition. Pairing these models with a potent offer strategy and compelling creative succeeded in securing more than 1,550 new subscribers at a customer-acquisition-cost (CAC) 70% below goal. Read the full case study here.
Direct marketing trends and insights
While some brands were caught a bit flat-footed early on, many have done reasonably well in their efforts to adapt – whether it be adjusting messaging, channels, offers or timing. Although the socio-economic climate remains extremely fluid as the country adjusts to the next stage of the pandemic, stir-crazy consumers are returning to their pre-COVID spending habits by purchasing more than just essentials, trying new brands, embracing e-commerce, and simply craving normalcy.
“Interestingly, most of the data I’ve seen lately suggests brand strategy is lagging consumer sentiment,” notes Koenig.
Throughout the uncertainty, the U.S. Postal Service has shined by keeping Americans positive and connected during quarantine to earn its place at the top of the Harris Poll COVID-19 Essential 100 list. Many other DTC brands have also successfully pivoted to weather the storm with a focus on providing value to their audience with meaningful messaging and relevant products and services. Here are a few of the direct mail trends we have noticed over the past several months.
- DTC brands including meal, grocery and beverage delivery; home goods; entertainment and streaming services; health and wellness products (exercise, beauty, prescription, etc); pet products; and age specific items (children and elderly products).
- Home protection, home warranties and cybersecurity brands
- Financial products and services, mortgage, banking, and debt relief
- Insurance (health, vehicle, medical, life)
New mailers: New mailers are launching into the channel with introductory discounts, limited time offers and complimentary services for both new and current customers.
Seasoned mailers: Altogether, brands have focused on providing audience support with empathic and reassuring messaging. Seasoned mailers have innovated their business models with new health and safety processes and procedures as well as enhanced online resources or virtual services. Many brands are also supporting those in need through philanthropic partnerships and donation matches. Offers have been enhanced or modified to incorporate complimentary services or products, free shipping or delivery, waived membership fees, deferred payments, and special offers for repeat customers.
Integrated campaigns: Many marketers have increased their digital advertising spend in response to coronavirus induced stay-at-home orders. This rational pivot positioned brands to support the initial boost in online traffic, and now that the dust is settling, marketers are re-focusing their energy to develop a robust integrated strategy to align well-performing offline channels. Today’s direct mail and digital marketing campaigns work in-tandem to boost customer retention, re-targeting, cross-sell/up-sell, and customer acquisition objectives.
We’re here for you
Our ultimate goal is to provide our clients and partners with the insight, tools and resources needed for continued success in any climate. We hope this update inspires brands to continue to rise to the challenge of today’s marketing landscape with innovative strategies to meet your audience right where they are. Even with the growth in consumers’ digital activity, direct mail is well positioned to help you successfully reach your audience and enhance your campaign performance.
“Every brand’s situation is unique, and we will use our analytics and expertise to help guide and direct our customers on whether or not it makes sense to mail in this climate – and to what degree,” said SeQuel’s CEO, Jay Carroll. “We’re interested in longstanding prosperous client relationships and mail campaigns, not short-term gains with failed marketing efforts.”
SeQuel Response is working closely with our clients to design, develop and deliver performing direct mail and digital marketing strategies. If you have any coronavirus direct marketing strategy questions, our would like to discuss your 2020 and 2021 customer acquisition goals, we are here to help.