5 Ways to Market to Credit-Crunched Consumers

You know the economy is in a sorry state when the entire American auto industry needs a bailout while consumers are being warned about what gift cards to buy for the holidays … in case that store, such as Circuit City or Sears, is no longer there when shopping time comes around. Wow.

The turmoil that began in the banking, mortgage and credit sectors, before spreading to the stock market and now automotive industry (well, trouble has been brewing there for quite some time), is taking a serious toll on direct marketing across channels.

In particular, marketers who use lists scored with consumer credit and mortgage information are experiencing this sea change firsthand. Below, two experts in marketing to consumer lists using credit information discuss what to expect and where to focus dollars now:

1. It’s Prime Time to Focus on Data
“When times are challenging, marketers really need to be able to show measurable results in their campaigns,” says Denise Hopkins, vice president of product development and marketing for Experian Marketing Services, a provider of consumer and business credit reporting and marketing services. “Marketers are going to have to justify the work that they’re doing, and they can certainly do that if they focus on using the data—so the data is there to support them,” she adds.

“The answers are in the math,” agrees Brian Rice, CEO and co-founder of Red Clay Media, a direct marketing agency specializing in direct marketing, data analytics and consumer trends experience. He says data models and conversion on response across channels are directing his agency’s creative decision making. “We’re strictly listening to the data, i.e., the consumer … that this is a predictive analysis of where we need to move to, whether it be on placement, media buy or channel,” he says.

2. Pay Attention to Consumer Attitudes
“How the customers feel about the relationship with the product and service, and in particular today, how confident they are with their personal economic condition[s], is going to drive their purchase behavior[s],” says Hopkins, who is working with financial companies to better understand how to market to households with college-bound children or households nearing retirement. “Those tend to be two real high-risk categories where they’re looking for a relationship with a financial services company that will help them feel more stable than what the stock market has provided for them,” she details.

Rice says a warm touch and a soft sell are more comfortable to prospects right now. In financial services, he advises focusing on informing and educating the consumer instead of trying to make immediate sales. “I think the feeling of ‘you’re not alone’ and ‘this is what’s going on’ and ‘this is how we’re going to reach out to you’ are really important right now,” he describes.

3. Use Multiple Channels

Use online, mail and telephone channels to penetrate to the consumer and provide convenient response paths for follow-up. “You can generate interest in direct mail and catalogs, and then you can be very personal in your communication in the online channel,” Hopkins notes. The web is an important component in reaching prospects with financial offers, and Rice says video enhances the overall online experience. However, he adds that penetration and conversion remain strongest via direct mail.

4. Consider Consumer Risk Scoring
“Consumer risk scoring is just becoming an amazing business,” Rice exclaims. Companies like Experian and Red Clay Media offer modeling capabilities where thousands of elements can be overlaid onto a model to determine the risk and worthiness of a consumer to a company. Both Rice and Hopkins agree that risk scoring is no longer entirely confined to financial services or collections efforts. “Marketers are using geodemographical data to look for what may be high-risk areas within their branch networks and their service areas,” Hopkins points out. She gives an example of a retailer using risk analysis to look at the customers living within a drive time of its stores to see how they are impacted by economic conditions, then realigning its marketing to best meet the needs of these consumers.

5. Watch the Credit Industry to Gauge Changes
Finally, as the economic situation develops, both Rice and Hopkins are keeping their eyes on the credit situation to measure future changes in consumer behavior. “Watch the credit card companies. That’s what we do. That’s the core of it all,” Rice says.

“What’s really important for us to see with the economic conditions is how intertwined credit is to many of the different industries,” explains Hopkins. She speculates that purchase behavior in the automotive and retail industries will change relative to the availability of consumer credit. “American Express is always the one to watch … if you see the restrictions change on that particular card, then that’s the universe where American Express is saying, ‘These people can truly put this money on their card every month and pay it 100 percent back,’ and that universe will shrink every day,” Rice warns.

(Originally published in Inside Direct Mail, January 2009)

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