Direct Mail doesn't have to be stuck on the same channels of years past. Direct Mailers can learn a few things from the huge strides made in broadcast media when leveraging personalization and technology.
Allen: Hi, everyone, and welcome to the "2 Guys and Some Data" podcast. On this show, we don't just talk about data, we talk about how you can use data to make more money. I'm Allen Abbott.
Larry: And I'm Larry Kavanagh, and welcome to our first podcast of 2018. Well, Allen, I'm glad to say there is one topic that I don't think we're going to have to cover this year, and that is, is direct mail dead? I think by now people have realized that direct mail is alive and vibrant, really an important part of any marketing plan. Allen, did you know that this year, in 2018, businesses in the US will spend almost 50% more on direct mail than they will on digital advertising with Google?
Allen: I did not know that.
Larry: That's like $45 billion, so I think the question for 2018 is really how well are we spending that $45 billion? Are there some ways that we can use technology to help spend direct mail more effectively in 2018?
Allen: That's a great question, and I think the answer is obviously yes. We have, in my opinion, not even begun to tap the potential in direct mail, and was thinking about an analogy between direct mail and video content. If you think about the history of video content, back in the old days of broadcast media, the average person had three channels, if you grew up where Larry grew up.
Allen: Two, okay, and seven channels if you grew up near New York City as I did. And if you wanted to watch "Bonanza", you had to be in front of the television Sunday night at 9 o'clock. Then it morphed and became 40 or 50 channels, and then hundreds of channels. Now streaming video content, which is available on demand whenever you want it, makes for an almost infinite number of opportunities in video content. The bad news is, most direct marketers are still back in that broadcast media days of three to seven channels, and mailing hundreds of thousands or millions of the same catalog to a group of people, rather than using personalization and a lot of the technology that is available. And we should be doing better than that. So Larry, what do you think of that analogy?
Larry: That makes a lot of sense to me. I mean, as you point out, most direct mail is still sent in bulk at the same time to a large audience. That analogy really resonates. Now, for broadcast TV that strategy of providing sort of the same thing at the same time to everyone did work in its day. You gotta give it that. I can certainly remember on Saturday nights with my brothers and sisters watching "The Love Boat" followed by "Fantasy Island". Not so sure about this "Bonanza" stuff. But that worked for me until I got my car keys and my driver's license and found other things to do on Saturday night. But how about you? What was your event TV show?
Allen: Our go-to shows in my house were "Bonanza", so it's just one of those things, "Ed Sullivan", "The Smothers Brothers Comedy Hour", and pretty much every western ever on television. And I could probably recite the names of 20 of them that we used to watch, without any trouble at all, which I don't know what that says about me at this point. But one of the reasons, I think, that this analogy works is also there are a lot of similarities between video content and direct mail from a format standpoint.
Allen: So if you think about large production movies, "Gone with the Wind", "Star Wars", "Planet of the Apes", lots of content, huge production values, and very similar to the large catalogs that are still published and mailed by many companies. And then you have weekly television shows, which have a moderate amount of content, and they continue to run week after week, and that's sort of analogous to a direct mail package series, where you send out a piece of direct mail now and another one in a week and another one in three weeks. And you might even think of the short YouTube videos as similar to postcards. Larry, can you think of another way that the analogy works?
Larry: I can. One of the things that resonates to me about what you're saying is that sort of that form hasn't changed. You know, you've got catalog like movie, you've got series of direct mail like TV series. The format stayed the same, but if you look at sort of what's changed in video content today versus the old days, there's a tremendous amount of variety in video content today. With the explosion of channels, you've got shows now that are, they're still in that same format, but they're super-targeted. Think about things like "Ice Road Truckers" or, I'm sure one of your favorites, "Say Yes to the Dress", or "Portlandia", one of my favorites. These are like super-niche shows that never would have worked in the days of broadcast TV, but have really loyal followings today and can work in today's world.
Larry: So in the direct mail world today, you can actually do something like that. I mean, digital printing today absolutely allows for the kind of explosion of variety that we've seen in video content. You can have an incredible number of different versions of postcards or tri-folds or even catalogs. Allen, I think we've spoken in the past on this broadcast about how some grocery stores today are printing the sale flyers that they've always printed, you know, those 16-page flyers, but they're actually putting different products into different flyers, so that two people who live next door to each other might get incredible variety. One is going to get a flyer that has the products that speak to them, and the other's going to get a flyer that has products that speak to them. They're not going to get the same flyer, like they would have 20 or 30 years ago. They're going to get the kind of variety that video content now offers today.
Larry: I think you're right on, though. Most of direct mail is still stuck in that past, where there's no variety and everybody gets the same thing.
Allen: Yeah, I shop at one of those grocery stores that provides those personalized flyers, and it's really interesting. It's not that hard. The templates are exactly the same, if you study it, but it's just they're dropping images in, and they're dropping copy in specific to those products, based on the data they collect from the loyalty cards. So a lot of possibilities out there, and a lot of the industry's lagging far behind.
Allen: But let's take a short break from the discussion, and let's move to this episode's trivia question, which just happens to be about personalization. The question is, when it comes to maintaining consumer loyalty, how important is personalization?
Larry: Oh man, I really like it when you give me questions around science and technology, these sort of "Family Feud" styles, how popular is it? All right, I'm going to give it my best, but we're going to have to see.
Allen: Okay, so while you're thinking about that, how else can we use our broadcast media analogy to improve direct mail in 2018?
Larry: All right, let me get out of that trivia question and switch gears here. Another big difference, if you think about how video content appears today, is how people consume it. As we've already talked about, in the old days, whether it was "Bonanza" or whether it was "The Love Boat", you had to be in one spot at the right time in order to see that show. Well, streaming content and DVRs have completely blown up that sort of old paradigm. Now consumers can choose when they want to watch a show, and people watch shows at the time that's convenient for them.
Larry: Now, most direct mail is still sent out in these big batches that all go out at the same time. We know that many of the people receiving that piece of direct mail, they're getting it at the wrong time. They're not in the market right now, it's not the right time for them to get that piece, but we still do it that way. But it doesn't have to be that way.
Larry: Consumers are leaving all kinds of clues for us to let us know when is actually the right time to send a piece of direct mail. One of the things that NaviStone, our data science team, has uncovered is that when visitors visit a particular website, we can break them into five different clusters, based on where they are on their path to purchase. We see a big difference in response rate between people who are in the cluster that's closest to buy and people who are in the cluster who are really just beginning to shop around.
Larry: There's a huge opportunity for direct mail to pay attention to that kind of signal and really time direct mail that's sent out, so that it's hitting people at the time when they're actually ready to consume that piece of direct mail. All right, Allen, have we beaten this thing to death, or is there something else to talk about on it?
Allen: No, I think there's definitely one other thing to discuss here, and that is the topic of personalization. As you said, streaming video has changed broadcast media forever, and there are an infinite number of channels available. Whether you want to watch bullfighting from Spain or a documentary about grasshoppers in Malaysia, you can likely find it online. And since I often stay in an Airbnb here in Cincinnati that doesn't have a television, I've had ample opportunity to explore streaming video, especially on Netflix. So because of that variety of content that's available, Hulu and Netflix and Amazon and others now actually recommend shows for you, based on what you've watched previously. I think Hulu has taken it a step further. They're now airing new commercials with Anna Kendrick where they're talking about a series of TV shows or a TV station just for Anna. They've taken it that far.
Allen: And direct mail has the same opportunity. Digital presses and sophisticated image and copy storage systems allow us to individualize direct mail content any way we want to. What's holding us back there is only our imagination. The technology is available. And intent data from website visits provides a really excellent opportunity to send personalized messages to a consumer, and sort of walk them through the purchase cycle, and then hit them hard when they're ready to buy. Again, the only thing stopping us is that we haven't thought about this enough. We haven't spent enough time. We're so busy worrying about what next week's email is going to be that we're not thinking about how we can use this new technology to just do a better job. It's just really our imaginations, and there are some great imaginations in this industry.
Allen: So let's go back to our trivia question, which was when it comes to maintaining consumer loyalty, how important is personalization?
Larry: My guess is, if I just say, "Very," that's not what you're looking for, so can you give me a sense of like what's ... Are you looking for, like I say, is this "Family Feud"? Are you looking for 57% of the people say, or what are you looking for here?
Allen: What percentage of people would you say abandoned a brand because of poor personalization experiences?
Larry: Ooh. All right, I'm going to take a total shot here and say 60%.
Allen: Okay, that's actually a little higher. According to a recent study by Accenture on the topic of hyper-relevant customer experience, which sounds like something that Accenture would do a study on, four out of 10 consumers switched companies in 2017 due to poorly executed personalization.
Larry: Oh, so I was saying 60%, like over the entire life of the brand. In a single year?
Allen: In a single year.
Larry: In a single year, 40%?
Allen: Yes. And the cost of those defections, $756 billion. So this is serious stuff here. Just to summarize a little bit, granted that the technology required to make this analogy between broadcast and direct mail happen has only been developed in the last four to five years, a lot of this stuff that we've been talking about was not available seven, eight, 10 years ago, it has been available for four to five years. So we have the ability to get out there and personalize and individualize messaging for consumers through really any type of direct mail, whether it's a catalog or a postcard or a traditional envelope piece. And again, we just have to think about it more and get out there and do it. So let's get going.
Larry: Very good. No, I think you're right. This is a renaissance period. This is a time when how we use direct mail is about to switch and shift in the same way broadcast TV has morphed into this world of hyper-variety and on-demand video. So I'm excited. I think the next 10 years in direct mail are going to be very interesting.
Larry: So that'll do it for this episode of "2 Guys and Some Data". We'll be back shortly with more tips for using data to help you actually make more money. In the meantime, if you want to read more from us, check us out at NaviStone.com\blog, and if you enjoyed today's show, head over to iTunes and leave us a five-star review. Thank you for listening. I'm Larry Kavanagh.
Allen: And I'm Allen Abbott, and we'll see you next time.