Allstate Touts Direct Sales With Mailer

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Allstate Insurance Co. is planning its first direct mail drop later this month to support its direct sales initiative in Oregon.

Allstate, Northbrook, IL, began selling auto insurance and offering free quotes to Oregon residents via its Web site on May 1.

The company will use direct mail as part of the campaign to introduce its new business model, called the Good Hands Network, which combines direct sales channels with its traditional agent-based system.

As the company rolls out its new business model to additional states, it also plans more mailings to get the message out that consumers can take care of their auto insurance needs on the Web or by telephone. These mailings will go out 30 days after each state comes online.

The company conducted some test mailings in May and will use the results to create targeted offers for Oregon consumers, said Laura Dunne, assistant vice president of marketing at Allstate.

"There will be very specific offers to specific customers," she said. "There will be cross-sell offers to existing customers and discounts that are targeted to high-value customers that we've identified through various screening techniques."

A key component of the company's strategy, however, will be to maintain a consistent level of pricing for consumers whether they choose to go through an agent or purchase directly from Allstate.

As of late May, Allstate had not determined how many pieces it would drop in the June mailing. Dunne indicated, however, that direct mail would become a more important component of Allstate's marketing mix.

"We'll be doing a lot more mailings at the corporate level, and we will be doing them on a much more systematic, cost-effective basis," she said.

Previous Allstate mailings had been carried out primarily at the agent level.

All advertising materials will include the Good Hands Network logo along with the Web site address,, and the company's toll-free number, 1-800-Allstate. Direct mail pieces also will have contact information for local agents.

Allstate will assign new policyholders to a local agent, who then can earn commissions by either cross-selling or up-selling products. Agents voiced their concerns about the strategy at the company's annual meeting May 18, saying their commissions would be too low to continue as agents. The company reportedly expects to lose up to 15 percent of its agents because of the direct sales effort.

The company, which is in the midst of a massive restructuring, has brought some direct marketing talent into the organization and has retained a direct marketing agency, Digitas, Boston, which assisted in the creation of the company's first piece.

Jeff Lewis, vice president of multi-access integration at Allstate, said the Web site received 500 requests for quotes per day during its first few weeks of operation, although few people actually sought to make a purchase.

After Louisiana and Colorado come online in July, Allstate plans to add Arizona, Illinois, Missouri and Ohio in September; Georgia, Indiana and Michigan in October; Alabama, Maryland and Virginia in November; and Florida and Tennessee in December. All 50 states are expected to be online by the end of 2001.

As each state comes online, Allstate also is making the Web site available to existing policyholders, who can use the Web to view their policies and make changes, such as adding another vehicle, via e-mail.

Company executives said they will add six new contact centers during the next two years that will be dedicated to supporting the direct sales initiatives. The first center, which employs 150 sales representatives, opened May 1 in Vernon Hills, IL, to support the debut of the Web site in Oregon.

"We envision [the Vernon Hills center] as being a beta-test center near our home office, where we can test new ideas and concepts and then bring them into our other call centers, which will be larger," said Lynn Diegel, assistant vice president of customer information centers at Allstate.

Another center is slated to open this summer in Charlotte, NC, followed by two in September -- one in Stockton, CA, and another in Woodridge, IL.

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