Oops.
That’s the basic reaction from Nordstrom brass in their recent earnings call where they reported weaker-than-expected sales forecasts.
“On Tuesday, Nordstrom cut its forecast for full-year sales and profit after reporting weaker-than-expected first-quarter results that were hurt, in part, by stopping its use of direct mail to promote its new loyalty program,” writes Melissa Campanelli in Total Retail. “According to Yahoo Finance, co-president Erik Nordstrom said on a post-earnings conference call that the company stopped sending rewards ‘notes’ to its loyal customers by mail in an attempt to get the program online and reach customers faster.”
Apparently, faster is not necessarily better when driving loyalty for the brand; shifting to email for those loyalty notes just didn’t have the same impact, as they soon found out.
“That shift caused a reduction in foot traffic at all of its stores, Nordstrom said, as many customers rely on receiving those rewards by mail,” Campanelli writes.
“It’s rare that an executive says that cutting direct mail from a company’s advertising budget can have such a negative impact on sales, but that’s essentially what Erik Nordstrom said,” Campanelli writes.
While it’s rare to hear it said so publicly, it’s certainly not rare to see an almost immediate impact on sales when retail brands cut back or kill their direct mail. JC Penney reinstated its catalog program … and sales went up. Nordstrom stops mailing loyalty notes … and sales drop. Sure, there are a lot of other factors at play in market changes, but when the top brass say “my bad” about their decision to drop direct mail, we better pay attention.
When a brand is looking to engage an important audience – in the case of Nordstrom, its most loyal customers – direct mail has a distinct advantage. Owens Pyle cites Canada Post and True Impact’s 2015 research that found neuroscientific proof that:
- Print mail requires 21% less cognitive effort to process, which makes it easier to recall.
- Print mail elicits a higher motivation response.
- It’s visually faster to process and comprehend.
Image source: Canada Post and True Impact Research
“Integrated with new media, savvy marketers are discovering that direct mail is more powerful and return on investment-positive than ever, especially for microtargeting new customers and deepening relationships with existing ones,” wrote Bruce McMeekin in Forbes writes. “While communications channel options evolve at a rapid pace, the premise of putting the right offer in front of the right person at the right time never changes.”
It’s no surprise to us that direct mail is having a resurgence. And we still believe the best proof of direct mail’s power is provided by the brands that have stopped sending it.
Campanelli sums it up beautifully: “We’re not sure if Nordstrom will reinstate its direct mail program, but to me, it sounds like direct mail is having a ‘moment.’”
February 18, 2020, 8:17 am