Monday, October 29, 2007
Direct Marketing and the Impact of the Economy
If you've been reading our blog for long, you know that we've written much about how this "new" economy is impacting direct marketers. Obviously, the economy effects all of business -- and in times of economic downturn, we seem to discuss it's impact much more than when things are more rosy.
Today, there is more evidence that the slowing economy has really taken a toll on us -- particularly in the area of financial services, and more specifically, mortgage and student lending. The fact that there are increasing amounts of people that are losing their homes to foreclosure due to financing with subprime mortgage lenders has become the leading story in all of our newspapers. Plus, there is now further scrutiny by our political leaders on student loan providers (for more on this, please see our post from last week).
In today's DM News, author Eleanor Trickett reports that now "the Federal Trade Commission and a couple of Attorneys General have pointed the finger at fraudulent mortgage marketers." And further, due to this, "there’s no question that market forces have caused many direct marketers and their agency and supplier partners to reconsider how they are marketing products in such a volatile environment."
We all know of stories where people bought homes that they could not afford due to the creative financing that was available to them -- and as we watched the run-up on housing prices, we all knew from history that there would be an eventual . . . and certain . . . pullback.
At any rate, due to this focus on the mortgage industry, direct marketers have had to come up with new ways to more effectively serve the market today in order to help their companies sell more loans. As Trickett reports, "Many financial services marketers have told me that they have significantly retooled their mortgage marketing programs, from straightforward acquisition tactics to a strategy based more on education and informed decisions. What effect this will end up having on conversion rates has yet to be seen, but it will be interesting to learn how mortgage marketers are trying to maintain ROI for their DM efforts."
From our perspective, this is just another example of how we have to be continually prepared to rise to the challenges that the economy brings us. As direct marketers, we have to come up with better and more effective ways to increase response and conversion rates -- and positively impact ROI . . . even when the economy is not being particularly helpful.
We've all heard the saying "Hindsight is 20/20." We can all think of the conversations that we were having one and two years ago predicting this eventual outcome in the mortgage market. The problem was that we were all in the midst of riding the highs of that market, and striving to take advantage of those profitable times. Well, in hindsight, we did all see the downturn coming. As we continue to see the impact of the economy on mortgage lenders, we'll bet that those companies who planned for the downturn and began to plan their strategy accordingly are most likely the companies that will continue to prevail in this new economy. As we continue to track this, those companies will reveal themselves and establish (or maintain) their leadership position in the mortgage industry. We predict that the lessons learned from this difficult time will be the subject of business school case studies for years to come.
Yikes! Is it Monday or what? Have a good week! : )