By: Competiscan Insights Team
After a volatile year that reshaped most industries, what does 2021 have in store for direct and digital marketers?
Based on the marketing materials that Competiscan has collected from our panels of consumers, business owners, insurance producers, investment advisors, and mortgage brokers—it is clear that 2020 was anything but business as usual. We saw many marketers re-evaluate everything from product offerings, to marketing copy and strategy.
As we look ahead to 2021, we can draw from what strategies were successful to predict what innovation and trends we expect to see.
Our Insights Analysts have summarized our thoughts on what we expect to see in 2021 in several key verticals.
The financial services sector took a more conservative approach to direct marketing spend in 2020 as banks, lenders, credit card issuers and credit unions reassessed their risk tolerances. Competiscan anticipates an uneven and prolonged return to pre-pandemic marketing volumes.
Economic policy will continue to impact marketing volumes in 2021
Historically, direct mail volumes for savings and money market accounts have trended in line with the movement of the average Federal Funds Rate. Following the Federal Reserve Spring 2020 rate cuts, deposits mail volume remained historically low through the end of 2020. With rates expected to remain low into 2022, Competiscan does not expect a full recovery of deposits mail volume in the near future.
The “digital journey” will remain a top priority
Digital banking has been thrust forward by the pandemic and is now serving as a primary channel of interaction for many customers and their financial accounts. This will be a continued area of investment and dedicated marketing focus in 2021. Driven by those at the forefront of innovation in this space, the roadmap ahead for digital banking has evolved past simply providing transactional and account management services. With Bank of America and their largely marketed virtual assistant, Erica, and Apple introducing Apple Cash Family, digital services have accelerated with new value-added tools. Spend monitoring, budget trackers, and essentially providing customers with their very own virtual financial manager is where the bar now stands.
Continued emphasis on cash-back products
By fall of 2020, cash-back cards accounted for 47% of all credit card solicitations in the mailboxes of consumers (compared to just 36% during this time in 2019). This emphasis towards promoting cash-back, a product with broad and tangible appeal, will likely continue at least through the first half of 2021 while consumers continue to minimize travel until immunization increases and/or infection rates slow.
Flexibility used for value proposition
One of the silver-linings of 2020 as it relates to consumer credit cards was the effort made by issuers to maintain value and offer new, attractive features based on the shift in spending behaviors and interests. This trend was observed across a variety of card marketing strategies including richer sign-on bonuses, relevant usage incentives, added brand partnerships, and increased redemption options.
With many of the top issuers adding limited-time offers and complimentary perks in 2020, it will be interesting to see how these are addressed in 2021. Competiscan anticipates that issuers will continue to extend the timeframe for these added benefits or possibly move to make some permanent. Consumer choice regarding welcome offers and redemption options are new tactics that will likely see continued traction in 2021. Many cardholders may have retained larger rewards balances in 2020 which could prompt card issuers to find creative ways to encourage redemption that benefits the cardholder and assists the issuer with offloading the rewards liability.
Travel-inspired benefits and marketing will surge again
The itch exists for consumers to get back to traveling and enjoying leisurely trips, and once card issuers gain a sense that consumer confidence is returning, they will re-engage the marketing of their travel card perks and benefits. For many premium and travel cards, this is imperative to retain the cardholder’s loyalty since these cards often carry higher annual fees. In the latter portion of 2020, Competiscan observed some comeback of promotional efforts to encourage cardholders to capitalize on current travel offers with rich sign-on incentives.
Loan performance will determine acquisition marketing appetites
The post-COVID financial landscape remains shrouded by lingering pandemic concerns, legislative initiatives, and the expiration of relief programs such as payment deferrals and payroll protection. Loan performance in the second half of 2020 exceeded expectations in some cases, but does not necessarily indicate continued success in 2021. Lenders’ assessments of the risk and financing environments will determine how aggressive they are green-lighting acquisition marketing campaigns, and we expect to see a prolonged and bumpy recovery of direct mail and email volumes throughout the year.
Legislation will be a key area of focus
The CARES Act has extended emergency relief measures for federal student loan payments until the end of January 2021. For consumers with private student loan debt struggling to make their payments, many have relied on forbearance programs from their lender. As these relief programs come to an end, consumers may be ill equipped to resume payments. This may present an opportunity for refinance lenders while interest rates remain historically low. However, with uncertain macroeconomic conditions as well as potential legislative changes targeting student loan debt, Competiscan anticipates another volatile year for this industry.
Purchase and refinance marketing volumes will rebound
After a tumultuous year, Competiscan saw auto finance marketing volumes nosedive. However, with low interest rates and an anticipated increase in auto sales in 2021, we expect marketing volumes will rebound. Building on the lessons from 2020, auto finance marketers will continue to promote digital experiences to help consumers shop and secure financing conveniently from home.
Mortgage rates will remain low
The beginning of economic recovery is expected in 2021. Despite this, mortgage rates are likely to remain flat throughout the year as the economic recovery is heavily dependent on the widespread distribution of the COVID-19 vaccine. Additionally, the unemployment rate may not improve until the second half of the year, which may impact the Federal Reserve’s decision to raise rates. With the continuation of this low-interest rate environment, the industry can expect another year of high demand. Despite the Adverse Market Refinance Fee going into effect in late 2020, demand for refinances will likely not be significantly impacted in 2021. Even with the fee, the availability of historically low rates will still be an incentive for borrowers. Additionally, consumers taking advantage of low mortgage and refinance rates are likely quality borrowers who have been less impacted financially by the COVID-19 pandemic.
Small Business Lending and PPP
During initial small business shutdowns in late Q1 2020, approved SBA lenders shifted their marketing efforts considerably to provide details and updates about the Paycheck Protection Program (PPP) and loan forgiveness. With small business lending direct mail at a virtual standstill for many lenders, only a few small business lenders mailed promotional marketing communications in this timeframe. With the possibility of new eligibility requirements for PPP loans going into 2021, the industry will likely continue to communicate primarily about SBA-backed loans in the coming months. Competiscan expects this to turn starting in Q3 2021 based on vaccine availability, the end of stay-at-home orders, and small business closure slowdowns.
Small Business Credit Cards and Banking
Acquisition activity across direct mail and email for small business cards and banking was significantly pulled back or paused soon after the initial shut-down of small businesses. Volumes remained at significantly reduced levels through the end of the year.
There was a commitment to help small business owners navigate through the pandemic. Chase introduced new online tools to reduce call center dependence while Citibank proactively sent how-to videos highlighting various account management tasks. Several banks communicated about preparing small businesses for the future, including American Express who offered free Open for Business Kits.
This digital and mobile focus is likely to expand into the new year as small businesses continue to struggle through the crisis. These changes are bound to stay in the long-run as people become more accustomed to digital interactions.
Investing & Retirement
Financial firms shared high volumes of engagement campaigns throughout 2020, as market volatility and macroeconomic conditions kept investors focused on their portfolios. Competiscan sees an opportunity for marketers to keep investors engaged in 2021 by promoting financial advice and wellness resources.
Consumers will continue to rely on professional advice and financial wellness resources through times of market volatility
As the COVID-19 pandemic continued through 2020, the markets saw high periods of volatility. Consumers received frequent campaigns that discussed the impact of volatility on their investments. In 2021, as vaccines become more available, market volatility is likely to continue. As a result, there will be a continued opportunity for marketers and financial advisors to get in front of consumers with offers for financial advice and wellness resources.
A new outlook on environmental, social and governance (ESG) investing
Despite rising consumer interest, 2020 presented new challenges to ESG investments as the Department of Labor issued its final ruling on Financial Factors in Selecting Plan Investments, which requires plan fiduciaries to solely rely on pecuniary factors when assessing the merits of an investment. In 2021, we anticipate renewed focus on making ESG products more accessible to retirement savers, and potential progress towards establishing a standardized framework for these products.
Throughout the COVID-19 pandemic, the insurance industry continued to market at pre-pandemic levels, and in some cases even increased marketing spend. In 2021, Competiscan anticipates insurers will continue to build on digital service and product innovations.
Property and Casualty Insurance
Artificial Intelligence and Machine Learning
The use of Machine Learning and Artificial Intelligence in the P&C industry continues to grow and evolve each day. This technology is helping to drive competitive advantages for carriers. This includes distribution, profitability, and advertising spend. The use of this technology is important in identifying risk, reducing costs and creating more personal, seamless experiences for customers and will continue to be a key area of focus for carriers in 2021.
Accelerated Digital Innovations and the Impact on Customer Experience
With the spread of COVID-19 this year, many carriers had to find workarounds where human contact would not be needed. This influenced carriers to speed up their digital innovation. These innovations included making the whole claims process contactless and improving the self-service capabilities for consumers.
The digital, virtual environment has also highlighted the need to re-evaluate customer touchpoints throughout the customer journey. As customer expectations for digital capabilities continue to accelerate, the personal experience customers desire becomes even more critical to maintaining loyalty and an affinity to the carrier brand. We anticipate that carriers will be looking for new, unique ways to engage with their customers in 2021.
Life Insurance and Annuities
Carriers will continue to expand digital capabilities
As social distancing policies and the need for remote sales resources continued throughout 2020, life and annuity carriers were forced to adapt to the new digital environment. This included easier access to e-apps and even mobile phone apps.
Meanwhile, carriers continued to expand the available criteria for accelerated underwriting programs. Some of these temporary changes were made permanent, and we expect for that trend to continue across the industry. We witnessed face amounts rise over $1 million as well as wider age ranges to accommodate younger consumers.
We expect to see a renewed focus on wellness
Competiscan expects more carriers to enter the wellness space by providing customers with technology, programs, and goals to help their overall health. Companies have incorporated wellness trackers into their life insurance products, such as John Hancock integrating the Amazon Halo wellness tracker into its Vitality offerings. Other companies have shifted focus to mental health programs for consumers. As these concerns remain top of mind for most customers, the industry will also expand interest in the space.
Increased focus on virtual health benefits and services
Throughout 2020, carriers have increasingly transitioned benefits online in an effort to keep front line workers and plan members more safe during the pandemic. With a rollout of COVID-19 vaccines expected to last throughout at least the first half of 2021 and consumers growing more comfortable with virtual health benefits, Competiscan anticipates that more carriers will continue to shift in this direction with virtual primary care and online wellness services.
Expanded access to mental health services
The events of 2020 have displayed the need for health plans to offer more mental health services to members, and we have observed that several carriers are starting to embrace emphasizing this issue in member outreach. Competiscan expects this trend to continue throughout 2021 with greater promotion of existing Employee Assistance Programs and the introduction of plans that include behavioral health visits.
Carriers will position worksite products as important tools for employee stability during uncertain economic times
Workplaces across the globe have changed drastically over the past year and worksite insurance coverage has adapted. With such drastic shifts to the workplace, worksite products play an important role in employee retention and acquisition. Competiscan anticipates a continued focus on worksite products as companies look to provide their employees with additional security in the face of economic uncertainty and to retain their employees in a tightening job market.
Additionally, the COVID-19 pandemic created an increased demand for supplemental coverage as employees sought to fill gaps and ensure additional financial security. Some carriers met this demand by enhancing their product lineups. Competiscan expects this trend to continue, with additional product introductions and enhancements to address coverage needs revealed over the past year.
Digital adoption will continue to play a key role in 2021
With so much of the workforce working remotely, many insurance producers who may have been hesitant to utilize digital and remote sales techniques have been forced to adapt and grow comfortable with these tools. Competiscan expects that the needed adoption of these techniques will result in permanent changes going forward. We anticipate additional virtual enrollment, accelerated underwriting enhancements, and digital sales techniques and demonstrations in the new year.
As social distancing has driven consumers towards their devices, the demand for Internet and wireless services has remained strong throughout the pandemic. Competiscan anticipates marketing volumes will continue to accelerate into 2021 within this vertical.
Continued adoption of 5G
The adoption and expansion of 5G will continue into 2021, and wireless competitors will seek to differentiate themselves based on their approach to the technology. This differentiation will likely take place on a macro and micro level, with wireless carriers advertising the total size of their 5G coverage while also taking a more targeted approach as 5G becomes available in new cities and via new wireless devices. Added reliance on the network in 2020 has intensified consumers’ desire for higher speeds and lower latency. How carriers address this opportunity will be key in 2021.
Pre-screen offers on the rise
Wireless competitors will increase their use of pre-screen/opt-out offers in direct mail marketing. This offer type, in which the recipient is told they have been pre-approved to get the offer, is regularly used by credit card and P&C insurance companies. Pre-screen offers were used sparingly in wireless direct mail marketing until Q3 2020, when their use increased significantly vs. recent quarters. Other competitors will likely consider this more discerning approach to direct mail marketing in 2021, causing the use of these offers to reach new heights in wireless.
Streaming service incentives and bundles
Having the ability to create points of differentiation is exceedingly important in a highly competitive space like Telecom. Competitors have sought to stand out by putting forth reasons for consumers to choose their services over those offered by competitors. In 2021, telecom companies will continue to encourage acquisition and loyalty through incentives. Free access to streaming platforms and discounts/bonuses for bundling multiple services will continue to be leveraged. Companies will also seek to develop unique new reasons for consumers to consider their offerings.
COVID-19 has accelerated pre-existing trends in retail by forcing more people to rely on online shopping for purchases large and small. While some degree of normalcy may return in time, many elements of the new normal created by COVID-19 in the retail space are likely here to stay. Marketers must understand shifting consumer desires and position their brands as ready to meet them.
Digital transformation will continue
eCommerce had a record year in 2020, as consumers made more and more purchases from the safety of their homes. With online shopping now as broadly accepted as it has ever been, retailers are incentivized to make their online shopping experience as simple yet appealing as possible. Acquiring and retaining online shoppers will be as important as ever for retailers in 2021. eCommerce will likely become further integrated into consumers’ daily lives, and will remain that way long after the COVID-19 era concludes.
Marketers can help drive online engagement and purchases by continually creating shopping occasions. It is important to reach consumers consistently across various media channels with compelling reasons why a brand deserves their attention. Virtual stores and social commerce are among the newer technologies that will help brands toward this end. Other new technologies will also surely arise as retailers seek to make the most of what eCommerce has to offer.
Retailers will rethink brick-and-mortar
Retailers had to react quickly at the onset of COVID-19 to make in-store shopping as safe as possible. In 2021, marketers will play an important role as retailers continue to refine and improve upon these changes with the knowledge that adjustments made due to the pandemic will long outlive it. Retailers will work out kinks in in-store/curbside pick-up, giving marketers the ability to promote these services as even more reliable and convenient. Store associates may be asked to serve as customer advocates responsible for monitoring transactions not immediately resolved in-store, which marketers can frame as another way the brand is looking out for customers.
Also, more partnerships in which retailers who require a smaller footprint occupy part of larger footprint stores (like Ulta’s partnership with Target) will be explored, particularly by retailers seeking alternatives to opening more brick-and-mortar locations. These partnerships offer a compelling opportunity for marketers to engage with consumers who may be outside their core demographic.
Payments will continue to evolve
COVID-19 has made the benefits of contactless payment technology evident in a way few things could have. Adoption of this method of payment will continue to increase in 2021, presenting marketers with an opportunity to position brands that offer contactless payments as tech-driven and consumer-focused. While initial adoption may be driven by COVID-related concerns, benefits like convenience and security will drive consumers to continue using contactless payments in the future.
Additionally, more consumers will use buy now pay later and other short-term financing alternatives in 2021, especially as COVID-related economic uncertainty continues to influence consumer behavior. Retail marketers should proactively consider how they will address potential consumer demand for short-term financing plans and whether they are prepared to offer them, be it directly or in partnership with a buy now pay later company.
Energy marketing volumes remained relatively unscathed throughout the COVID-19 pandemic. Competiscan anticipates increased activity in this vertical in 2021 as new opportunities arise within clean energy and solar.
Renewed focus on clean energy
Competiscan anticipates a shift in energy policy to incorporate stricter emission standards and provide more support for the renewable energy industry. With a renewed investment and demand from the public, we will most likely see more competition among retail energy providers that provide energy plans sourced entirely or partially from clean sources.
Increase in community solar availability
The availability of community solar increased in the past year and is likely to continue to grow in 2021. We anticipate that new policies aimed at creating the infrastructure for clean energy jobs may give community solar approved states the push they need to start developments and others to finish any halted projects.
After a long, sustained period of reduced marketing activity, Competiscan anticipates travel direct mail and email volume to increase substantially throughout 2021. As direct and digital marketing rebounds, we anticipate incentives, loyalty programs, and safety precautions to remain key aspects of offer messaging throughout the year.
Travel will rebound with vaccination requirements, emphasis on cleaning practices, and rewards surplus
The COVID-19 pandemic halted travel for most Americans in 2020 and severely impacted the industry as a whole. Cruise lines decided to suspend voyages, while airline and hotel industries adapted marketing to reflect their stringent cleaning and air filtering practices.
As Americans start to get vaccinated in 2021, cruise lines will prepare to resume sailings and will likely require passengers to show proof of vaccination. With Qantas’ announcement of a vaccination requirement, the airline industry is likely to follow as well with this requirement.
Estimated vaccination availability for most Americans is not until the second half of 2021. Until then, travelers will continue to be enticed with affordable domestic travel deals. Loyalty points and rewards accumulated during 2020 will also serve as an incentive and drive the travel rebound. Emphasis on cleaning protocols is likely to stay as Americans have welcomed the higher standard.