Marketing During a Down Economy Requires Insight
Insurance Networking News, August 1, 2008
The classic role of marketing usually entails defining the customers to be targeted, determining their needs, and then meeting those needs with products and services that best match their requirements.
This often involves a carefully choreographed mix of customer research, market segmentation, product development and the marketing communications that follow, including positioning via advertising and promotions using a variety of media.
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With the pressures for sustaining growth that are inherent in today’s economy, however, many insurers are finding that “classic” marketing technologies and techniques no longer apply.
“During a recession, selecting of the right innovation tools couldn’t be more important,” says Julie Davis, executive VP for Chicago-based broker Aon Corp.’s “Wired For Growth” program. “For example, if your firm earned $10 million in annual revenue and you were able to achieve 10% organic growth, that end result may be less than your targeted year-end goal. A pipeline of new products and services may be needed to bridge the performance gap in a soft market.”
Defining these new product opportunities and the customers who will purchase them (along with the varied marketing messages that fill that pipeline) has become somewhat of a science—and one that requires sophisticated tools and technologies to execute.
Bill Jenkins, CIO of Penn National Insurance, a Harrisburg, Pa., provider of personal and commercial lines insurance, reports that his company’s IT budget is up this year in order to accommodate marketing and associated predictive analytics programs.
“We have predictive analytics initiatives in both personal lines (private passenger auto and homeowners) as well as commercial lines for workers’ comp, which, in effect, set our underwriting appetite, and also determine business segmentation and product development,” he says.
ANALYTICS AND INTELLIGENCE
The growing role played by predictive analytics and business intelligence can’t be underestimated, notes Louis Rolleigh of Acxiom, a Little Rock, Ark., provider of interactive marketing services and technologies. Culled from the company’s larger database of 70 clusters that identify individuals comprising a variety of socio-economic factors, Acxiom offers 13 segmented groups based on similar insurance assets, intentions and behaviors, i.e., insurance-buying factors, from “structured prosperity” to “pennywise renters.”
“Cost efficiencies are derived from obtaining the data (intelligence) necessary to target the right market with the right messages,” he says. “This data correlates to activity levels, which correlates to likely risk, whether that risk is in personal lines property and casualty or health insurance.” It also means finding target-market rich geographical areas and the ability to rank geographies for market potential.
As product leader for Acxiom’s PersonicX household market segmentation technology, Rolleigh works with insurers to help them gain insights into the “who, where and what” of their marketing campaigns. “Insurers who are heavy users of segmented data tend to use it with their own tools and technologies to build a picture of preferences and behaviors,” he says. “Often this involves combining life-stage information, other consumer demographics and other third-party information with our technology to establish insights. As a result, there is a lot of insight available to them.”
That insight enables carriers to create customized marketing plans tailored specifically for its target audience. Insurers also must define the most appropriate medium for that messaging.
“There is a growing trend of marketing and communications efforts that are more meaningful, industry-specific and speaks to the challenges of your target market,” notes Aon’s Davis, who advises insurers to use collateral material, Web site content, industry-focused news and focused distribution channels in their targeted marketing efforts.
“A more intelligent client or prospect wants to know their insurance provider or partner understands their key business trends and critical issues in their industry segment,” Davis adds.
ADVOCACY, EDUCATION
Davis is describing what, if applied to direct-to-consumer markets, would be called “advocacy,” notes Bill Doyle, VP and principal analyst with Cambridge, Mass.-based Forrester Research Inc.
“A large player like Progressive or Geico make, as part of their marketing efforts, rate comparisons possible,” Doyle says. “This willingness to acknowledge others’ pricing is powerful, because it supports customer advocacy. Consumers say to themselves, ‘this firm has my best interests at heart.’ United Services Automobile Association (USAA), San Antonio, uses a multi-level rating structure to go so far as recommending another carrier to the consumer. That kind of educational focus, made possible by technology, goes a long way in a down economy to create advocacy and ultimate customer loyalty.”
Bill Doyle
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