In the customer communications ring, which contender comes out on top?

With competition rising to new heights in nearly every market, you need to depend more and more on your customer communications to break through the clutter. It's not enough to simply make contact — you need measurable increases in customer satisfaction, loyalty, retention and bottom-line results linked to each effort. So, how do you find the best way to send messages to your customers to achieve your goals? First Marketing helps you answer that question.

For nearly 30 years, First Marketing has promoted the use of high-quality custom newsletters as the cornerstone of an effective customer communications program. To support this mission, we sponsor an independent research project called Effectiveness Research. It examines the value of newsletters as a nonintrusive tool to achieve high readership and response.

A revealing new study on statement inserts

As part of the research project, we partnered with a large, nationwide credit card issuer to conduct a controlled market test. The objective: to compare the effectiveness of a targeted newsletter program to that of statement inserts.

For the test, a group of 100,000 active cardmembers received three consecutive newsletter issues — and no other inserts — with their monthly billing statements in October, November and December of 1997. During that same three-month period, a control group of 20,000 active cardmembers received the regularly scheduled single-message statement inserts instead of the newsletter issues.

In January 1998, the card issuer drew random samples of 1,500 "newsletter recipients" and 1,500 "insert recipients" to participate in a satisfaction survey. The survey questionnaire was developed in conjunction with Sparks and Associates, an independent market research company. The card issuer's marketing and research departments reviewed and approved the questionnaire and methodology.

In February, survey participants received a four-page questionnaire with a $1 bill as a response incentive and a postage-paid return envelope. To aid recall, newsletter recipients also received a copy of the December newsletter (front page only) while insert recipients received a sample insert from their December statements.

Inserts show limited appeal, no sales advantage

The results of the study serve as a testament to the power of newsletters. The study clearly shows that statement inserts (with their advertisement overtones) appeal to only a small segment of the cardmember base and offer no significant advantage in generating response. In fact, the majority of insert recipients did not feel that inserts are a good way to communicate with cardmembers, nor did they consider the information provided useful. Interestingly, the negative feelings toward inserts spilled over into service ratings as well: Insert recipients were 33% less likely to be "very satisfied" with the overall service provided by the company.

Newsletters achieve positive results

In contrast, professionally produced custom newsletters appealed to a larger segment of the cardmember base and were equally effective in garnering response to offers. In fact, newsletter respondents were twice as likely to have positive reactions to messages overall.

Consider these statistics:

  • Nearly 70% of the newsletter recipients surveyed felt that the newsletter helped them "better understand the benefits of using my card."
  • More than two-thirds of the newsletter recipients agreed that newsletters are "a good way to communicate with me as a cardmember."
  • 67% of newsletter recipients agreed that receiving the newsletter "makes me feel more valued as a customer."
  • Half of the newsletter recipients surveyed agreed that they would consider "making a future purchase" based on information received in the newsletter.
  • Three out of five said the newsletter provided "more reasons and ways to use my card."
  • 25% of respondents indicated that they "tried a service or product as a result of something they read in the newsletter."

Calculating payback on a communications program

This study clearly shows the positive attitude and response of newsletter recipients. But does it support the idea that a custom newsletter-based communications program is more effective than inserts with their proven revenue generation? The answer is "yes" when the findings are paired with a retention-based Return On Investment (ROI) calculation.

One of the attitudes measured in this study was overall satisfaction with the card issuer. Consider that customers who received the newsletter were much more likely to be completely satisfied than those in the statement insert group. This table shows the differences in satisfaction levels:

When you calculate how many customers can be saved through increased satisfaction, you have the figures for a retention-based ROI. You can then examine satisfaction levels like those above and determine what percentage of unsatisfied customers will attrite. (It's accepted that the major cause of attrition is dissatisfaction with the business/card issuer.)

First Marketing realizes the need to justify your communication expense beyond the general reason of "it's just good marketing." That is why we've devised an ROI calculation that can help you evaluate the impact of a customer communications program on your marketing efforts.

Find out exactly what your ROI could be by speaking with a First Marketing representative who can work through the numbers with you and apply them to your situation. Contact us for a consultation and begin a program to increase customer loyalty and retention today.

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