American Express® is using social media to encourage customers to spend rewards points in “less traditional ways.” According to the Advertising Age article, “AMEX Campaign Positions Rewards Points as Social Currency,” the company is rolling out a new campaign that includes print, social media and TV.

Take a look at their new Facebook page “Points” tab.

This clever page includes American Express’s popular Twitter feed where people talk about how they’ve redeemed their points. It also includes the “Deal of the Week,” which members can redeem at a 50% rate.

Deborah Curtis, vice president of advertising at American Express, says, “Card members and consumers are looking for options and choices. There’s also education…because they aren’t aware of what they can do [with their points]. Some of it is an entrenched way of thinking about rewards programs when they were heavily travel-based and people saved up points for a big trip.”

“Entrenched way of thinking.” This phrase stood out for me with regard to direct mail marketing.

Despite the wonderful innovation in the digital space, and despite the fact that so many companies are using social media to engage and interact with consumers, direct mail packages still look the way they did 5 or even 10 years ago.

We’ve been doing direct mail for more than 30 years, and there’s no argument: Direct mail is still a workhorse, especially for Heinrich’s financial services clients. A proven, response-generating direct mail package still includes:

  • Envelope with teaser
  • Letter
  • Lift note with bonus offer
  • Reply card
  • Reply envelope

Because many of our clients still rely on direct mail — and because it does produce results — we don’t want to change proven formats and formulas just to be creative.

But I, and those of us here at Heinrich, are asking lots of questions in light of consumers flocking to social media:

  • Should direct mail change its ways even though the components of direct mail have been thoroughly tested?
  • Do relatively low response rates mean direct mail is perceived as staid and boring?
  • Can direct mail take a lesson from social media and become more engaging?

A look at direct mail response rates

The Direct Marketing Association’s 2010 Response Rate Trend Report shows the typical response rates for direct marketing campaigns for five mediums: direct mail (five formats), e-mail, paid search, Internet display and telephone. According to the DMA:

“Response rates for Direct Mail have held steady over the past four years. Letter-sized envelopes, for instance, had a response rate this year of 3.42 percent for a house list and 1.38 percent for a prospect list. In addition, nearly 60 percent of direct mail campaigns in financial services aimed to produce a direct sale. The average response rate was a comparatively low 2.66 percent to a house list and 1.01 percent to a prospect list.”

According to John Schlagel, director of strategy for Heinrich, these numbers are in line with what Heinrich clients see with their direct mail packages.  However, many clients base campaign success on lift over the control.

As John explains it, “Many clients evaluate results based on lift over a hold-out group, so while even 2.66% sounds like a strong response, it’s not unusual that the hold-out group has a 2.25% sales rate, indicating that, of the 2.66% responders receiving the direct mail, only .41% of the audience responded due to the direct mail.”

My questions are: Is this good enough? And, can we do better?

Why aren’t direct mail marketers taking a cue from social?

The American Express “social currency” campaign caught my eye because it’s different. The company is featuring real customers in its print, TV and social media outreach because it’s these “savvy” customers who are telling their friends how to redeem points.

With social media, we as marketers have the potential to start a conversation — versus making an actual sale. Writing out a 140-character tweet is a hook to get people to click through to your content. In other words, the purpose of social media is to capture people’s interest.

Direct mail, on the other hand, is a direct sales opportunity. Direct mail packages haven’t changed in five years precisely because direct mail is still a direct selling opportunity — and because it’s profitable for our clients.

But, would we engage more people and get better response rates if we incorporated some of social media’s innovations?

Here at Heinrich, we’re asking ourselves these questions. In Part 2 of this article, I’ll give you a few ideas of how you can add some of social’s innovations to your direct mail packages.

Until then, what do you think? Do you agree or disagree? Leave your comments below.