October 8, 2010/Chapel Hill, NC:  Does anyone really have an effective financial institution social media marketing program?  That is, a program with a superior ROI when measured in actual sales?  Not according to recent conversations published on the ABA Marketing Network.

Social media marketing program bring a host of headaches just to establish.  Do you have a social media policy to show the regulators?  Is your IT department satisfied with less than 128-bit encryption?  Do you have to do a vendor due-diligence review for Facebook, Twitter, Hootsuite, and even ClickRSVP?  Who is managing the opt-in list?

Perhaps you’ve figured out that you can do an opt-out program for email list management, but your email list doesn't even reach half of your customers. 

Other than newsletters, most email marketing programs at financial institutions are lucky if the delivery rate is 90% and the open rate is better than 25% ¹.  That means that if 5% of the emails opened add the promoted product or service, you’ve got less than a 1.15% overall rate of response.

According to a recent study from the Direct Marketing Association ², direct mail using a business letter sized envelope averages a 3.42% for a house list and 1.38% for a prospect list.  The DMA’s study supports other research that finds that direct mail outperforms email by 3 to 1. 

Even factoring in the costs of direct mail, the superior response rate means you'll earn a far superior ROI using direct mail than any form of email or social media marketing.

For instance, according to ICOM’s Epsilon Targeting and their recent consumer channel preference study, the 18-34 year old demographic prefers, by a wide margin, to learn about marketing offers by direct mail rather than social media platforms.  In that study, 40% of the respondents selected direct mail as their first choice to find out what their bank offered, as compared to 12% through social media and 7% from email.

The performance gap between direct mail and electronic marketing is even greater when considering a best-in-class direct mail program such Matrix Mail from FMS.  Using behavior models to predict and target likely responders, combined with sequential contact, Matrix Mail typically triples average response rates.

Two long-term studies have established the value of Matrix Mail to build customer relationships and return bottom-line income.  In the first study, Matrix Mail was compared to true control groups and a non-participating bank over a period of two and one-half years.  During that time, accounts per household grew 400% percent more than the both the control groups and the non-participating bank, while services per household grew by 300%.

The second study was conducted during the calendar year 2009—one of the most difficult periods ever to achieve results for financial institution marketers.  Thirteen community banks, using control groups, measured Matrix Mail performance against control groups.  Of the course of the year, the participants achieved a 372% incremental gain over control groups, with an incremental cost of new account acquisition of just $26.74.  For every $1 invested in the program, the effort returned better than $37.

For copies of these and other studies, contact Bob Singer, Financial Marketing Systems, Inc., bobsinger@bankmktg.com.   FMS is the only vendor who guarantees direct mail results.

Footnotes

(1)   According to the Direct Marketing Association’s 2010 Response Rate Trend Report, the national norm for a customer list is: 19.47% open rate; 6.64 click-through rate; 1.73% conversion rate; a 3.72 bounce back rate; and an unsubscribe rate of .77%.

(2)    Direct Marketing Association’s 2010 Response Rate Trend Report.