Mortgage servicers anticipate very low response rates when they write or call customers offering no-brainer refi or modification propositions that — if ever consummated — would surely help these borrowers. Why the small response?

One cause should by now be familiar. Even much earlier, Ben Bernanke bewailed the fact that many mortgage delinquents are unreachable.  Because these people never occupied the mortgaged properties. They are speculators, flippers or fraudsters with good reason to make themselves unfindable. They accounted for as many as 30% of the bad mortgages. 

But still, what about the other 70% of delinquents, not to mention the larger number of non-delinquents, who now are potentially eligible for a better deal through the servicer settlement or other programs? Why would they be unresponsive?

If you're getting regularly dunned and can't or won't pay, then you stop taking the phone calls or reading the mail from the servicer. That's attested by endless data. Many mortgagors, including non-delinquents, who have already had fruitless communications with servicers or whose hopes have previously been raised and dashed, will likewise have tuned out.

But in no case are we in the financial services industry going to get more than a very tiny response to our myriad of outgoing communications aimed at getting customers (or prospective customers) to do something or other. 

We've multiplied our marketing messages way beyond the point of diminishing returns, so that we get tiny and slow return.  Each decision to mail or call may by itself earn a little money, but that's only if you ignore the costly side effect: the vast majority of recipients, who see and ignore this one, are less likely to even open the next ones you send. So, for example, each prime-credit consumer can receive an average of more than one solicitation for a new card each week. The probability that she'll respond to any one of these is only a fraction of 1%. So, will she even open and start to read any letter or e-mail from a bank? Usually not.

How about this one: "We have been aggressive with contacting customers with phone and direct mail to promote PIN" on debit cards. What's the ROI on that? Won't it and all the other campaigns diminish the response rates we can anticipate in the future, even when we have much more to offer?  

Customers have learned to recognize bills and statements for established accounts, but they increasingly prefer to initiate access to this information online, to control it. Furthermore, there is copious evidence that just getting a phone answered or an envelope opened doesn't get you anywhere near the goal. For instance, statement messages and inserts have become virtually worthless through overuse.

The low and declining efficacy both of direct mail and outbound telemarketing goes well beyond banks. This echoes the popular revulsion at "junk mail" and impersonal, computer-driven phone calls. We're not beating a dying horse. We're beating the drums ever louder, generating ever-increasing noise and the deafness it causes.

So, how do you get a customer's attention when you really need to do so? 

Many have stopped answering landline phones and stopped reading most of their snail mail. To establish a relationship that enables you to get customers' attention, you have to start with cell phones and with principal e-mail addresses. These should be required and verified. It's amazing how many account-opening or account-change forms still focus on "home phone" and "mailing address," as if it were still 1950. 

"If we really need to reach you quickly and surely, for instance because of possible identity theft, what are the best two ways to do it?"  The amount of ingenuity applied to achieving efficient dialing to reach cell phones, compliantly with FCC regulation, has been approximately zero. It's not very difficult to accomplish. Instead, we ignore the cell phones. That's even easier.

Obviously, if we overload the newer channels with impersonal and dubiously useful messages, then they too will become clogged and ineffective. We need to accept the discipline of distinguishing clearly between our priority, personal outreach to customers, and everything else we might want them to hear. This entails our avoiding dressing up the rest of our outbound traffic to make it, too, look urgent and essential.

We don't want to add to mass unemployment by contemplating elimination or drastic curtailment of our junk production. But we must find the direct routes to our customers' eyes and ears, and track them selectively rather than abusively.

Andrew Kahr is a principal in Credit Builders LLC, a financial product development company, and was the founding chief executive of First Deposit, later known as Providian.