Twitter
Andrew Davidson 
Susan Menke 
Susan Wolfe 
Daniel Hayes 
Lisa Hronek 
Chris Zagorski Posts Tagged ‘direct marketing’
Auto insurance TV ads more creative; direct mail lagging
While I follow the insurance direct marketing industry, I can’t help but feel a little envious of what I’m seeing on television. At least in the Chicago area, where I sit between the two largest auto insurers Allstate and State Farm, I seem to be seeing more auto insurance commercials.
Earlier this year, Advertising Age reported that in 2009, GEICO out-spent the next highest auto insurance advertiser, Progressive, by more than 60 percent. Both State Farm and Allstate, who spend on parity with each other, spent less than half that of GEICO.
Progressive
Progressive’s concept of an insurance company as a consumer package goods superstore is continuing with Pickles, the dog, teaming up with Flo to provide a comparative quote. You can’t go wrong featuring a cute animal. Flo is now playing second banana and providing a voiceover as the commercials end with a shot of Pickles in charge.
GEICO
The Gecko has a long history with GEICO and his new commercials take advantage of his steady development as a spokesperson. No longer is he casually talking about pie and chips to a real gecko, as he did in one of his first commercials. Now he is talking in front of conference audiences with all the giveaways branded in his likeness. Like Progressive’s Flo, GEICO is capitalizing on a developed brand image.
Esurance
Still working to develop an image, Esurance seems to have placed secret agent Erin into deep cover as they now use a small group of dedicated employees who talk about their interactions with Esurance customers. Whether it’s The Saver or the Coverage Counselor, this cast of spokespersons grabs attention by playing out short stories on the experiences of being an Esurance customer.
Both of today’s leading auto insurers stick with the real life spokesperson format. Together, State Farm and Allstate challenge Progressive and GEICO’s messages of saving money and fast quotes.
State Farm
State Farm has developed its spokesman into the customer’s friend who reminds them to check whether their friends and family are one of 40 million State Farm customers. Then he one-ups the competition by telling the audience that State Farm is larger than Progressive and GEICO combined.
Allstate
Similarly, Allstate continues to rely on Denis Haysbert as the spokesperson for most of their commercials. In a new campaign he supports Dean Winters, portraying Mayhem, in a series depicting causes of accidents. Allstate, like State Farm, challenges GEICO’s message by asking if a fifteen minute call could provide the service you get from your personal agent.
It’s clear that these five companies are spending a lot on the development of new brand images. Apparently the money is coming from their print advertising since Adweek recently reported that the auto insurance industry reduced its print spending by 26 percent in 2009. Some of that decrease may include direct mail, which Comperemedia reports as having decreased five percent last year from 2008.
These five companies can be split into two groups when it comes to direct mail strategy. Both Progressive and Esurance have nearly stopped mailing. Of the others, GEICO is still the largest mailer, not segmenting who receives a solicitation, while Allstate and State Farm maintain strong mail levels and utilize their agents to guide the segments on address labels.
When I look at auto insurance direct mail, I’m surprised how different the pieces are from the companies’ commercials. There’s a dysfunctional integrated marketing strategy, a direct marketing channel disconnect. The images these companies are investing in and creating on television are not being leveraged in their direct mail solicitations.
I would think it would be an advantage to incorporate the TV brand images into mail campaigns as a reminder of the company’s brand values. After all, the advantage of advertising is it builds the brand through repetition of a message.
Time to walk the walk: More marketing to small businesses needed
On Tuesday, the Federal Reserve confirmed what we have all been thinking for the last couple months – the US economic recovery is weakening. The health of our small businesses is acknowledged as being key to the recovery and many economists agree that the inability of small firms to obtain financing has stifled economic growth. Small businesses need loans to invest in capital and hire employees so that they can begin new projects. We need to have faith in these companies in order to break the negative cycle that is holding back the country.
I was therefore shocked to read in the Mintel Comperemedia Q2 2010 Small Business Lines and Loans Review that just 3% of business panelists had received a business loan offer via direct mail during the quarter; this is down from nearly 40% two years ago.
This fact is particularly alarming when you consider some of the bold statements made recently by banks as they compete to outdo each other with various lending statistics. I take my hat off to those banks that are not just talking-up their lending activities, but are also integrating those efforts with direct marketing campaigns. In other words, reaching out to small businesses, directly, in their time of need.
PNC, BBVA Compass and Chase are doing just that:
– PNC has been promoting its Cash Flow Options program in direct mail. Cash Flow Options encompasses a suite of loan products and the bank is offering a half-point reduction off its daily quoted interest rate plus a 50% reduction off the loan origination fee.
– BBVA Compass has been sending offers to small business owners promoting unsecured lines of credit and business loans. Lines range from $10,000 to $250,000 with interest rates as low as 6.00%. For 5-year term loans of $100,000 or more, small business owners can get a rate as low as 5.18%.
– Chase’s Loan for Hire campaign is the most noteworthy campaign of the national banks. Small businesses can get a half-point rate discount on each employee they hire up to three. Also, if you have a business checking account with Chase, you get another half-point discount on top of that for a total of 2% off the published daily interest rate. We haven’t seen a direct mail campaign promoting Loan for Hire yet, but Chase has blanketed the country with print and radio advertisements and has been promoting the product in its branches.
The PNC, BBVA and Chase examples are encouraging, but clearly it is not enough to keep economic recovery strong. Another positive sign is that small business credit card marketing is up significantly. This will be invaluable for many small firms as they struggle to stay afloat.
It’s time for business lending to follow suit and pull this country clear of the great recession once and for all. Yes, a rallying cry for small business marketers; nothing less than our economic future is at stake.
Delayed MLR rules could negatively impact insurer’s planning
I’m concerned about the recent delay in setting rules for the medical loss ratio (MLR) provision of health reform. With the implementation set for January 1, 2011 there is not much time for health insurers to develop their plans for next year.
Under the health reform rules, insurers are required to spend 85 percent on medical care for every premium dollar received from group plans, and 80 percent for premiums received from small group and individual plans. HHS (US Department of Health and Human Services) is charged with managing the development of the rules and guidelines. It has asked NAIC (National Association of Insurance Commissioners) for their recommendations on how to calculate and implement the MLR requirement. They have missed their target of June 30, 2010 to have rules in place. In their defense, it is complicated.
Because of the delay, a political fight is developing over the issue. Senator Al Franken is calling for vigilance to make sure the insurance industry doesn’t define medical expense as everything that is not profit. He has cited the recent announcement by Wellpoint to reclassify $500 million in administrative expenses such as health and wellness, nurse hotline, smoking cessation and weight loss programs as medical.
I’ve noticed in Comperemedia a recent letter to Assurant producers notifying them that, because of the uncertainty of the MLR rules, Assurant will reserve the right to change commissions for next year and is placing a temporary limit on first year commissions. With this uncertainty stretching well into next year’s planning cycle, I’m wondering if it is more than simply constraining planning or if it is having a material affect? More importantly, has the concern about MLR’s impact on commissions caused policy sales to slow?
Loaded Offers in a Post CARD Act World
It doesn’t seem long ago that we were speculating about the return of annual fees, the disappearance of teaser rates and the watering down of rewards programs as card issuers attempted to maintain profits in the face of restrictive new regulations. As the dust settles on the CARD Act, we continue to see evidence that this isn’t happening.
Take Discover for example. Discover was one of the first to communicate CARD Act changes to existing customers. However, unlike other top issuers, Discover delayed changing the Schumer Box displayed in its acquisition mail to the newly mandated format, prompting speculation about the issuer’s post-CARD Act strategy.
That all changed this week when I received an offer in my own mailbox for a Discover More card, displaying the new Schumer Box with rates and fees shown separately. Far from being an offer for a card with an annual fee, no teaser pricing and a reduced rewards program, this Discover offer is loaded with benefits. These include:
- a 0% introductory APR on purchases and balance transfers
- a $100 cash reward for making $799 in purchases within 3 months
- 5% Cashback Bonus in certain categories
- 5-20% Cashback Bonus for making purchases through Discover’s online shopping mall
- automatic entry into a sweepstakes to win $1 million every time the card is used for cash or any purchase
The card’s APR of 10.99% to 17.99% and the balance transfer fee of 4% (5% for subsequent transfers) may be off-putting for those looking to carry a balance from month-to-month, but for those who usually pay in full this isn’t too bad.
Furthermore, despite the squeeze on profits, Discover reported strong results in 2nd quarter. In a press release, David Nelms, Chairman and CEO, said “our very strong results this quarter were driven by a significant improvement in the credit performance of our loyal customer base along with continued solid growth in cardmember spending.” He was also optimistic about long term growth.
I’m not suggesting that the CARD Act has left the industry unscathed. Offers are still, for the most part, only being received by households with excellent credit histories. From the consumer perspective, APRs for purchases are higher than in the past and fees for balance transfers have increased on many cards. For issuers, grappling with the new regulations is an on-going challenge that continues to suck up millions of dollars as they figure out how to replace lost revenue.
However, it does appear that the CARD Act is not restricting the industry as much as it was originally thought and consumers are beginning to reap the benefits.
Click here to read more »