Over the past few weeks, there’s been much to learn how direct mail is driving revenue at public companies. Two lessons were from brick and mortar retailers disclosing that a reduction in their direct mail caused a drop in store traffic, which impacted quarterly revenues.
The third lesson is more uplifting. Publishing company Meredith Corporation’s direct mail program generated a million new subscribers.
It is rare for a marketing channel to work alone and drive revenue. Generating sales relies on multiple sales and marketing touches and smooth hand-offs from one channel to another. Let’s see the impact direct mail is making on a few public companies.
Nordstrom Moves Their Loyalty Program Off Direct Mail
A loyalty program is about saying “thank you” to customers and rewarding them for frequent purchases. Sending your thank you message in the mail makes a physical connection with your customer. This physical connection puts your message into the hand of your customer, which sets you apart and makes the statement that you really do value the relationship.
Once you’ve set this expectation, sending your thank you message in an email rings hollow, as Nordstrom recently learned.
Nordstrom co-president Erik Nordstrom confessed in the Q1 earnings call the company reduced foot traffic at all of their stores when they stopped sending rewards “notes” to its loyal customers by mail. Their rewards program was moved online in an attempt to customers faster. According to Nordstrom: “We eliminated paper notes, but later discovered that a segment of our customer base relies on receiving these notes by mail. As a result, we saw a reduction in traffic.”
Oh yeah. Another thing about loyalty programs is that they drive revenue.
This drop in traffic played a role in Q1 revenue of $3.44 billion, a 3.3% decrease from the previous year. This was short of analysts’ estimates of $3.58 billion. The first quarter performance has changed full-year projections to be a sales decline of 2% to flat growth for the year, compared to the previous outlook of a 1% to 2% increase.
J.Jill Shifts Budget From Direct Mail
J.Jill shifted budget off of direct mail, causing a decrease in brick and mortar foot traffic, which played a role in decreased quarterly revenue.
According to President and CEO Linda Heasley: “We plan some shift from direct mail to alternative media options primarily digital. In hindsight we moved too much too soon. We made adjustments quickly when we saw the results and we were able to add back some direct mail touch point along some changes in digital to better support our promotional activities. That restored traffic to planned levels albeit belatedly.”
Luckily J.Jill “quickly” realized that decreased direct mail meant decreased revenue, but not soon enough. According to EVP and CFO Mark Webb: “For the quarter, total net sales were $176.5 million, a decline of 2.8% versus last year’s $181.5 million. Total company comparable sales decreased by 3.3%, driven by our retail store channel.”
J.Jill traded revenue for long term awareness, which is not a good marketing strategy. Heasley went on to say “The digital ads we ran drove a significant number of impression[s], which should boost brand awareness over the longer term.”
Meredith Corporation Adds 1 Million Subscribers Using Direct Mail
Contrast this with Meredith Corporation, the media company that owns magazines such as Time, Sports Illustrated, and Better Homes & Gardens. Print media is similar to brick and mortar retailers in that the Internet has caused massive industry disruptions.
Meredith’s Fiscal 2019 third-quarter (ending March 31) consumer-related revenues rose 30%. This was helped by “our most recent direct mail program generated one million new subscriptions across our portfolio at significantly improved response rates,” according to President and CEO Tom Harty.
Direct Mail Works as Part of an Integrated Marketing Strategy
No marketing channel works alone, prospects need touches across multiple marketing channels to become a customer, as shown by this screenshot taking from the Google Analytics Top Conversion Paths report:
If you just look at marketing expenses it is easy to cut touches that have a significant impact on revenue. What matters is the return you make on what you spend, not what you spend.
Be sure to understand what sales and marketing touches are leading a prospect to become a customer, or a customer making an additional purchase, before making significant changes to your marketing mix.
I’d like to give a shout-out to David Rosendahl, who brought the Nordstrom and J.Jill earning calls to my attention. According to David: “Maybe direct mail is having a resurgence due to the electronic noise from all the social channels. Be confident in your assertion that print still plays an integral part in driving sales. Used wisely with digital, it can play a role that ephemeral electronic messages simply cannot.”
Direct mail is still proving it’s value in driving revenue.