Taking Advantage of Economic Stimulus Checks

May 06, 2008 12:35 AM  By

Direct marketers have something to look forward to this summer – consumers with additional discretionary income.

Under the $168 billion economic stimulus plan, most taxpaying Americans started receiving checks on Friday. Individuals will receive $600 and couples will receive $1,200 with an additional $300 per child for both individuals and couples if they meet these earning criteria.

The rebate also varies based on household income: individuals will get the full rebate amount if they make less than $75,000 for individuals and $150,000 for couples.

With rebate checks starting to roll out and scheduled to be completed by mid-July, this is a great opportunity to be proactive with your direct mail and/or e-mail campaigns to generate sales and acquire new customers. If it fits your brand, you may also want to consider updating your creative with a call to action or special promotion urging consumers to spend their rebate checks with you.

Using the economic rescue package’s income variables, and coupled with statistical modeling of past purchasing behavior, an aggressive marketer can effectively reach a large universe of consumers with a high response potential at a time when they have an added injection of discretionary income to burn.

This is not a new strategy to stimulate the economy, as the U.S. Government sent out rebate checks to taxpaying Americans twice already this century.

The first time was after the recession in 2001, which amounted to about $500 for every eligible household. The result of these rebates was very effective in stimulating the economy as American households spent between 20% and 40% of their rebate checks within three months and another 30% in the following 90 days, according to a University of Pennsylvania study.

The second mailing occurred in 2003 and according to the University of Michigan Survey of Consumers, Americans spent slightly under a third of their rebates within the six months and approximately two-thirds within the first year.

Chad Elmendorf is manager, customer communications for Abacus, a division of Epsilon.