Abstract
In South Africa, some of the bigger credit issuers operating in the direct marketing environment, specifically non-bank, personal finance companies, have complained that they are not seeing the return-on-investment they have come to expect from their direct mail campaigns, due to poor direct mail response rates. Low response rates have been encountered even though the market segment in which these companies are operating, has shown growing demand. With an increase in mailing costs and fierce competition in the direct marketing industry, lenders are constantly looking for ways to improve the effectiveness and profitability of their mailing campaigns. The approach followed was to analyse the response rate of a mailing campaign, and through regression analysis, determine the relationship between the number of active retail credit accounts held and response rates. This was done against the backdrop of segmentation opportunities and an increasingly credit-active South African population. The results indicate that, in the personal finance and loan marketing environment, there is a positive linear relationship between the number of active retail accounts held by prospective clients and the response rates to credit-related marketing offers. Finally, the implications for direct marketing companies are discussed, limitations presented and future research opportunities outlined.
Highlights
Direct marketing evolved with the aim of establishing and maintaining long-term, structural, direct relationships between a supplier and its customers (Vriens, Van der Scheer, Hoekstra & Bult, 1998: 323-324)
Some consumer segments may already be overexposed in terms of their credit. This highlights the fact that many companies are not seeing the return-on-investment they have come to expect from their direct mail campaigns due to poor direct mail response rates
H1: In the personal finance and loan direct marketing environment, the number of active retail accounts1 held by prospective clients will have a positive linear relationship with the response rates to credit-related marketing offers in the form of a ‘convenience cheque’
Summary
Direct marketing evolved with the aim of establishing and maintaining long-term, structural, direct relationships between a supplier and its customers (Vriens, Van der Scheer, Hoekstra & Bult, 1998: 323-324). A relationship develops through regular interaction, in which both parties respond to one another's actions. In direct marketing this interaction is accomplished through direct communication and/or direct distribution. Data and the database play an important role in this relationship in that large amounts of resources are expended on data collection, regular data updates and data analysis before the customer is even contacted (Forcht & Cochran, 1999: 189). It is important to develop ways to improve the effectiveness of direct mail campaigns (Vriens et al, 1998: 324)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
