Channels. Direct Mail

Transcription

1 Direct Marketing

2 Direct Marketing In its simplest form, it involves solicitation, negotiation and purchase of a product without benefit of an intermediary. Variations include: Agent lead generation. (Invitation to inquire.) Combination marketing using direct marketing to close a sale either before or after an agent has been provided the lead(s). (Invitation to contract.) Telemarketing

3 Direct Mail Third party partners financial institutions, retail stores, utilities, or any other group with a relatively large customer base and strong affinity. True Groups typically associations or membership organizations to whom a group master contract is issued. e.g. AMA, ABA.

4 Direct Mail Quasi-groups group trusts or associations formed primarily to facilitate the purchase of insurance. Leverages flexibility of group regulations vs. individual especially for health insurance rating. Not all states have authority over out of state groups Trusts set up for the express purpose of offering insurance often called air breather trusts. AARP formed to offer health insurance to seniors

5 Direct Mail Broad market rent names from list owners such as magazine and newspaper subscribers or from compiled lists of prospects with similar interests or other characteristics.

6 Direct Mail House file Names generated from other marketing activities that have not yet purchased Also includes those that have purchased to conduct add-on, upgrade, and cross sell activities Generally a direct marketer s most valuable asset. Some companies will conduct lead generation activities at a breakeven or small loss to build a house file. Lifetime value is key to this approach.

7 Broadcast Television Celebrity endorsement vs. general ad Short form vs. long form PI vs. cash Local vs. national Specific programming versus day part (preemptable time) Station format (news, sitcom, education, etc.)

8 Broadcast Radio Canned spot vs. announcer read Prefer news format or talk radio Lower response but more committed responder

9 Print ROP FSI Bind-in blow-in take one co-op

10 Telemarketing Diminished in importance State and federal DNC lists Product needs to be simple, cheap, and guaranteed issue such as AD&D

11 Internet/e-commerce Site construction and content Functions General information Rate quotes Apply Underwrite Buy Navigation

12 Internet/e-commerce Traffic SEO / SEM Third party leads Partner links Blogs Use as app completion tool by licensed TMs

13 Internet/e-commerce Risk selection Identification who is completing the app Authentication validate personal information against a national database to determine a risk score SSN is key in addition to other personal info Online underwriting accept, reject, refer Validate address Real time MIB Real time PBM check

14 Internet/e-commerce Risk selection (continued) E-signature Click to sign or voice recorded Required for credit card or ACH authorization as well as application signature Once accepted, all data stored such that the record can never be adulterated Phone follow-up for app verification

15 Internet/e-commerce Risk selection (continued) Fraud issues Prospects are actively seeking life insurance Person completing app may not be prospective insured Normal misrepresentation issues Instantaneous approval allows for purchase on the way to the hospital

16 Markets Markets Served Historically the market that responds best to direct marketing is lower to lower middle income, blue collar, older age (40+) with females often performing better than males Markets vary with product offering (e.g Medicare Supplement, Juvenile term).

17 Markets Markets Served (cont.) Looking primarily for direct response buyer a buyer with a demonstrated preference or willingness to buy other than in person Prospects underserved by other channels such as lower income, inner city, and ethnic groups.

18 Target marketing Basic segmentation Group prospects by basic underlying characteristics such as age, gender, data source, etc Cluster models Markets Grouping of prospects with similar demographic or psychographic profiles Typically based on underlying census data Some aggregators use individual-specific data obtained from warranty cards and other data sources

19 Markets Target marketing Custom statistical models Data append from either internal or external sources Internal sources could be such things as credit limit, open to buy, late payment history, etc. on credit cards or buying behavior from retail databases. External sources would typically be data compilers similar to those used for cluster assignment.

20 Product Issues Simple to understand Guaranteed acceptance or simplified issue Graded death, term, WL, AD, HIP, HAP, Cancer Big numbers capture attention - $1,000,000 common carrier AD benefit Sell one benefit at a time limit bells & whistles. Can sell rider add-on and upgrades after issue. Affordable Purchase decision often made on monthly budget rather than needs analysis. Minimize state variations Especially important for applications.

21 Pricing Issues All acquisition cost incurred up-front before the first policy is paid. Acquisition cost does not vary directly with premium Surplus strain Adverse selection/underwriting issues Account for high denied claim rate in contestable period and high expected claims in year 3.

22 Pricing Issues Policy wording and application questions essential to controlling antiselection and defense of lawsuits for denied claims. Higher lapses than agent produced business Minimize direct bill options, reward ACH and credit card

23 Compliance Issues Free Gifts NAIC advertising guidelines plus special state requirements Special free look requirements Replacement issues Special rules for direct marketers give some relief as to timing of providing notices. Step-in provisions for incontestability and suicide