Direct Marketing Changing the Face of Insurance

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Direct marketing and lead-generation technology have altered the face of every industry, market and vertical sector in American business. And nowhere is that more evident than in the once-staid insurance industry. In the late 1990s, Congress scrapped the Glass-Steagall Act, which separated the banking and insurance worlds. Since then the competition to acquire new customers, while retaining existing ones, has become among the most fiercely fought in any business arena.


And the competition continues into the new millennium, with property and casualty insurers facing stifling competition between each other. A host of new players, such as banks, mortgage companies, telemarketing clearinghouses and Internet-enabled insurers are the new reality. Direct-channel access to products and services is becoming the norm for American consumers, and these competitive pressures place additional emphasis on employing every available weapon in an insurer's sales and marketing arsenal.


Now, more than ever, direct marketing is being used in all three aspects of insurance marketing - customer acquisition, customer retention and customer cross-selling. Countless industry studies confirm that reaching a prospect or customer at the right time with the right message yields positive results.


Begin with the end. To DM professionals, most of this information is second nature. Yet for some, this insurance-based primer on creating direct marketing programs may add insight into the nuances involved in marketing multiple products with individual expiration dates and varying appeal to multiple targets within the same household.


Like any effective DM plan, it is essential to establish a clear set of goals. Many problems usually stem from an absence of clearly articulated expectations. While this may seem inherent, countless insurance carriers of all sizes have invested millions of dollars into programs that failed to deliver because of a lack in strategic purpose. A DM strategy must accomplish three goals.


First, a specific target audience must be identified. Depending on the profile of the desired customer, agents and carriers can employ varied types of segmentation. For new automobile business, this may include an "A" list of prospects segmented by income, age, residence, driving record, insurance score and expiration of current coverage. For existing customers, additional segmentation may address demographic or lifestyle factors relating to particular behavior.


Know thy customer.Second, an insurance-based direct marketing solution must generate and store specific information about key events pertaining to existing customers and prospects. Detailed customer information is critical for both customer retention and cross-selling. But it should contain more than just vital statistics; it should also note individual preferences or categorize customers by logical solicitation methods. Key events, such as birthdays, weddings and policy renewals, must be matched with the appropriate marketing message in detailed customer profiles. Insurance marketers must be able to differentiate customers who value "high-touch" relationships from those who prefer minimal correspondence. That's because once a person settles on an insurer, especially for his home and car, he is unlikely to shop around for another carrier - unless he finds lower premiums. An effective insurance direct marketing program must identify trends and patterns within both existing customer groups as well as prospects.


Weighing the options. For the insurance customer, the most important DM consideration is whether to manage the process inhouse or outsource it. This depends on the carrier's internal technical resources, the size and scope of the DM tasks, and market or markets being targeted.


In-sourcing used to be a common solution for insurers. However, as third-party vendors have become increasingly efficient and technology has advanced, in-sourcing is no longer the preferred option. Depending on the type of program, frequency and targeted prospects, outsourcing is an affordable option for even the small-size insurers or individual agents. And while general DM outsourcers are often tapped for insurance-based programs and partnerships, more carriers are looking toward providers with industry expertise.


Carriers with a large network of captive agents and independent agents demand companywide, easily customized DM applications and programs. Insurers often look for Internet-based solutions that provide agents with password-protected access to lead lists, customizable sales collateral and uploaded reporting capabilities for real-time tracking of new business acquisition and customer retention.


A good vendor relationship will meet a carrier or agent's needs effectively. That may include active prospecting for specific new business targets, retention programs with scheduled mailers for birthdays and important dates, or cross-selling campaigns aimed at narrowly defined customers.


Speak to a need. The rapidly evolving insurance industry is developing and deploying leading DM technology. Connecting with this new market requires intimate knowledge of the unique business and competitive landscape that shapes a carrier or agent's world. A DM-solutions provider must understand that an insurance company's customers and prospects are inundated with an increasing number of choices. For the agent/carrier, presenting the right person with the right offer is all that matters.
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