Please join us for a webinar entitled “Insurance Marketing Mix: Social Media’s Effect on Direct Mail” with Daniel Hayes, Vice President of Insurance Services at Mintel Comperemedia.

June 30, 2010
2pm CDT / 3pm EDT
Register Here: http://bit.ly/bMwxY2

Mintel Comperemedia—which tracks direct mail, email, online and print advertising—has seen insurance companies and producers beginning to participate in social networking for business gain. Insurers are trying to catch their customers and potential customers in the right place, at the right time…and right now, they’re finding them on social media networks.

During this webinar, Daniel Hayes will examine the use of social media by insurance companies and the effect it will have on the role of direct mail as a trusted marketing tool. Expect to:

- Explore the way social media is changing insurance direct marketing as a whole
- Identify how insurance companies and producers are changing the way they communicate with customers
- See examples of how insurance companies are mixing direct mail, email, print and online advertising
- Examine marketing messages that are designed to strengthen brand value

Mintel Comperemedia’s PR team recently put out a press release about how insurance providers are inching their way into social media. Read that release here: http://bit.ly/bOJ209

To learn more about Daniel Hayes, please read his biography and some of his recent blog posts: http://www.comperemedia.com/blog/daniel-hayes/

Thanks to all who listened in on my webinar with Nielsen’s Brian Schlessinger last Thursday (June 10). We experienced audio issues during Brian’s portion of the webinar, so I apologize for any inconvenience.

To make the recording better quality, we’ve re-recorded the webinar (minus the Q&A session). You can access the new recording and the slides here: http://tinyurl.com/2duguqf.

We did have many great questions asked during the webinar and I’ve responded to all of them below. Please contact me at ADavidson@Mintel.com or visit www.comperemedia.com if you have any questions.

Q. I’m curious as to how “Revolvers” were defined by Mintel.
A. Revolvers were defined as those who typically carry a balance from month to month on their primary credit card.

Q. What triggered consumer suspicion about a decrease in teaser rate offers and balance transfer offers? What was different in actual CARD Act that negated those concerns?
A. The new payment allocation rule in which payments, above the minimum due, are allocated to the highest APR balances first caused many to suggest that the industry would not be able to make money from teaser rates and we would see a reduction of teaser rate offers in the mail. This didn’t materialize and, in fact, most offers tracked by Comperemedia promote either a teaser rate for purchases or balance transfers. Issuers have navigated the payment allocation rule by increasing fees for balance transfers with many now charging 4% or 5% of the check amount. They have also increased APRs for purchases despite the low prime rate.

Q. Once these new regulations are fully digested, what do you see as new potential loopholes issuers may take advantage of?
A. In its relatively short history, the card industry has adapted to change successfully. We have already discussed the increase in go-to purchase APRs and BT fees. During the past two years, the industry as a whole scaled back to focus on only the most profitable customers. As competition increases, card issuers will need to continue to be creative to find new ways to promote their products while increasing revenues. Comperemedia will be assessing how they do this in direct mail, email, online and print advertising during the coming months. (Learn more: www.comperemedia.com.)

Q. What do consumers need to watch out for?
A. Consumers will start seeing more offers in the mail as the competition heats up. Terms are more transparent and it is easier to compare one offer with another due to the new Schumer Box format. If they are looking to transfer a balance, they should pay close attention to BT fees and not just the duration of the intro period. In a post-CARD Act world, the better the offer, the higher the BT fee.

Q. What has been the impact of the CARD Act on Small Business cardholders, considering those cards are exempt?
A. Small business cards are exempt and there was some speculation last year that issuers would redirect their efforts towards the small business market. This didn’t happen on a significant scale and volume levels remained comparatively low. Activity did start to pick up towards the end of the year although the pattern in business cards lags behind what we see in consumer. Capital One has been a key driver in recent months along with Chase and American Express. At some point we may expect legislation regarding small business cards.

Q. What forms of media would be best to get the positive PR about the CARD Act out to consumers?
A. Education needs to be on-going and some media are better at communicating on-going messages than others. More recently, financial institutions have turned to blogs to develop an on-going dialogue with consumers. Citi established a new blog (http://new.citi.com) to help rebuild its image in the wake of the financial crisis. Wells Fargo has been cautiously navigating the Wachovia integration through various tools including a dedicated blog (http://blog.wellsfargo.com/wachovia). A more traditional format is newsletters. Statement inserts should also play a key role. As a result of the CARD Act, more consumers are paying attention to their statements and this presents an opportunity for dialogue.

Q. What is the estimated financial loss to the credit card industry as a result of the CARD Act?
A. This will be difficult to calculate. The new regulations came at a time when the industry was already at a low point due to the recession. Signs indicate a return to profits for many industry players.

Q. Will mail volume continue to grow related to the CARD Act?
A. Yes. The recent increase in mail volume is being driven primarily by Chase. Some issuers, such as Bank of America and Discover, are still mailing at relatively low levels which means there is plenty of slack to be taken up. We anticipate acquisition mail volume reaching 3-4 billion this year, up from around 2 billion last year, but still much lower than the 7-8 billion seen during the boom years.

The CARD Act mandates that consumers must be given the right to opt in for over limit fees. Until now we have not seen how the card industry will address the new rule within acquisition direct marketing. However in March, U.S. Bank made the first move by including an over limit opt in check box on application forms so that prospective cardholders can authorize future over limit transactions.

The U.S. Bank check box is shown on the application form under the heading “Overlimit transaction opt in right.” U.S. Bank (and Elan Financial Services) application forms are attached to the letter or, in some cases, included as a separate acceptance certificate. The fine print for the opt in states that “you will pay one fee per billing cycle even if you go over your credit limit multiple times.” It goes on to disclose that the bank “may still decline transactions that go over your Credit Limit, such as if you are past due or significantly over your Credit Limit.” The bank charges $39 for an over limit transaction.

U.S. Bank also communicated with customers during February and March regarding the opt in, presenting an option to sign up for “overlimit coverage.” Customers can sign up online or by calling Cardmember Service.

HSBC has been the only other issuer mentioning the opt in in its acquisition direct marketing efforts. In March, it outlined the requirement in its “Solicitation Disclosures” insert. Like the U.S. Bank communication, HSBC’s insert describes over limit “coverage,” but unlike U.S. Bank it does not provide applicants with the ability to physically opt in at the point of application. HSBC charges $19 on balances over limit but less than $250 and $30 for balances over $250.

U.S. Bank has taken the lead by adding a check box to its acquisition mail and we are now seeing the new language of “over limit coverage” from both U.S. Bank and HSBC. It is likely that others in the industry will follow as we continue to navigate the ongoing impact of the CARD Act.

Nothing annoys consumers more than paying for things that used to be free or feeling that they are being nickel and dimed. As the banking industry struggles with how to recoup money lost to overdraft fee income, they are wise to take some lessons from the airline industry.

The airline industry attempted to stem huge financial losses by charging a wide variety of fees. Flyers now pay to book the ticket, redeem frequent flyer miles, make a particular seat choice, change a ticket, check bags, obtain a pillow or blanket, and for food and drinks.

Unfortunately, added fees haven’t propelled the travel industry into profitability. AMR, parent of American Airlines, posted a $1.5 billion loss. US Air, Continental, United and Delta also posted losses. Combined, the industry lost $3.4 billion in 2009.

Southwest, however, was one airline to post a sizeable profit. The company heavily advertised “Bags Fly Free,” and that strategy may have paid off. The company’s Chairman and Chief Executive Gary Kelly attributes the success, in part, to the fees that its competitors are assessing. In a January conference call with Wall Street analysts, he was quoted as saying, “I hope they charge $100 a bag. That would be terrific. We’ll have 100 percent load factors.”

Going beyond the fee

With customer satisfaction, loyalty, and brand image on the decline over the past few years, banks can hardly afford to alienate customers. Rather than focusing on what fees to charge, the industry should focus instead on innovating services and products that give people confidence. It’s not that fees are never justified – it just might not be wise to assess fees on previously free services. In fact, a recent JD Power study indicates that high customer satisfaction rates are possible to maintain as long as consumers perceive that they are receiving sufficient value in exchange.

At the end of the day, customers know that it’s their deposits that fund the banks other, more profitable, activities. So while consumers need a place to bank, the banks need consumers just as much. Shouldn’t there be recognition of the mutual need from both parties?

Thank you everyone for attending my webinar yesterday on 2010 Banking Predictions, and thank you for submitting so many questions. I’ve answered most of your questions below, so let me know your thoughts!

If you’d like to download the slides or listen to a recording, click here.

Also, if you’re interested in learning more about Mintel Oxygen’s Finance Reports, please email Zach Leahy at zleahy@mintel.com. You can see a list of past and future titles here.

Q. Have you noticed a penetration difference between the $15 incentive and the $50 incentive. What is the optimal figure?

A. The $15 and $50 cash incentives were for increasing debit card usage. Typically on an acquisition campaign we see about $100, although amounts are increasing. For loyalty campaigns, the amounts are lower. The optimal figure is dependent on the total cost to increase debit card usage and the long term profit. Each bank is going to differ in that equation.

Q. As it relates to incentives, do these predictions still apply to non-traditional banks, like Schwab bank and other asset managers looking to acquire new clients and assets?

A. Investment firms are struggling right now with an image crisis. As a result, most investment marketing is focused on regaining trust or convincing consumers that the firm is focused on the customer rather than just on selling products or services. Investment firms typically don’t rely on incentives to acquire customers. Instead they rely on free seminars, webinars, education, etc.

Q. Do you predict any differences in these trends between banks, credit unions or other types of financial institutions?

A. Credit unions and smaller banks are less likely to use cash incentives and more often offer merchandise or the offer to buy back unused checks and debit cards. Across the other trends, however, we see similar types of things. We tried to incorporate examples from all types of banks to illustrate that point.

Q. Who’s going to win, regional or big banks?

A. Big banks are always going to win on the national level. However, while it’s almost impossible for a regional bank to compete with Chase, for example, on a national level, they can certainly compete with the Chase branch across the street.

Q. What banks do you see as having best practices in social media at this point?

A. Since banks are doing so little in social media, none of them really have developed a “best practice.” Certainly Chase was successful in its Community Giving Program that it moved to Facebook. It was a program that existed offline, but in an effort to make consumers part of the decision, the company moved it online. More importantly, Chase did it in a way that allowed Facebook members to participate in a meaningful way.

Q. Have we seen debit card promotions targeted at non-customers?

A. Absolutely. Debit cards are being aggressively marketed in acquisition campaigns. We see this mainly through rewards programs, since rewards are earned primarily through debit activity. But we also see cash incentives for opening a new account tied to a debit card and debit usage.

Q. Any predictions on credit cards as stand-alone products outside of a banking relationship?

A. Companies have recently moved away from this, so I don’t expect a return anytime soon. MBNA was bought by Bank of America and Capital One obtained its banking charter so that it could use deposits to fund its lending activities.

Q. Can you explain how the deposit money app works on the iPhone?

A. The feature works through an iPhone application that customers download from the iTunes Store. When the user accesses the application they are asked for their user name and password. To deposit a check, the customer touches “Remote deposit.” The check must be placed on a dark surface. Then the customer takes a picture of the front and back of the check. While in this mode, green lines are visible so the customer can line up the check correctly. Once both sides are captured, the customer clicks submit and the transaction is complete. A video of the process is available here:

Q: Have you developed any predictions for the future of credit cards?

A. My colleague Andrew Davidson conducted a webinar last September titled “Seven Predictions for the Future of Credit Card Marketing.” If you’d like a copy of this presentation, please email press@mintel.com. His predictions were:

1. Direct mail is coming back
2. There will be more integrated marketing campaigns
3. The brand message will become more important
4. The CARD Act will lead to creative new products
5. The national wallet will shrink
6. The subprime segment will redefine itself
7. The card industry will adapt to the environment

Today (Wednesday, May 5th), Mintel Comperemedia is hosting a webinar on “Seven Predictions for the Future of Banking.” Join Susan Wolfe, Vice President of Financial Services, as she explores seven key predictions for banking in 2010, using research and examples taken directly from Mintel Comperemedia and custom consumer surveys.

You can register and learn more here: http://www.mintel.com/us-email/compere_sevenpredictions.htm

This presentation will examine:

–The return of banks to “relationship banking” and how they will promote this
–Incentives and their importance in acquisition marketing campaigns
–Use of financial literacy programs by banks as they rebuild from the financial crisis
–Mobile banking as the “new” online banking
–Use of social media among financial institutions

Date and Time: Wednesday, May 5th, 2010 2:00pm-3:00pm CST (45 minute webinar, 15 minutes of Q&A)
Cost: Free

Travel and leisure companies have been hit hard since the economy plummeted into recession. As travelers were considering how best to spend limited resources, travel companies were figuring out how to draw customers onto their cruise ships. One way observed periodically over the last year has been the creation of themed cruises, positioned as “once in a lifetime” trips to attract customers who would rather pass on “just any cruise” while finances are tight.

Themed cruising started with Disney and the Disney Cruise Line in 1998, which gave travelers the opportunity to enjoy “the Disney experience” on the open seas, extending the “happiest place on earth” to destinations all around the world. In a recent direct mail offer, Disney encouraged families to “Discover an Ocean of Tropical Wonders and Exotic Escapes.” The campaign featured 3-, 4- and 5-night cruises to the Bahamas, along with a visit the company’s “private island paradise, Castaway Cay.”

Royal Caribbean and Norwegian both took advantage of the family draw that has defined Disney’s success by offering Nickelodeon-themed cruises. Royal Caribbean positioned a summer 2009 Nickelodeon Family Cruise as “the family vacation of a lifetime.” In direct marketing tracked by Mintel Comperemedia, prospects were encouraged to book early to take advantage of low prices and “the ultimate summer vacation your whole family will never forget!”

Starting in April 2010, Norwegian will exclusively feature Nickelodeon at Sea on the Norwegian Jewel. The experience has been positioned as a “whole new level of imaginative activities and family entertainment.” It will be interesting to see if Norwegian can be as successful as Disney in creating a long-running themed vacation option for families.

Cruising isn’t just for families, and companies like Carnival and SilverSea have used themed voyages to attract adult travelers. Carnival Cruise Lines informed email recipients that it was “cruising down memory lane” with its Malt Shop Memories Cruises. Travelers were invited to “join us on a journey back to the birth or Rock ‘n’ Roll as we head down memory lane with sock hops, dance contests and live performances.”

SilverSea Cruises offered a Beatles Tribute Voyage in August 2009. Readers were asked to “celebrate the 45th anniversary of the Beatles coming to America” with this 10-day UK cruise that featured a “Beatle Brunch and a disco party.”

Themed destinations have been a huge draw for travelers (think Disney, Las Vegas or Universal Studios) and now cruise ships are trying to create a complete themed experience to provide customers a “once in a lifetime” vacation. Themed cruises have the opportunity to attract curious travelers looking for a new experience and can help create a stronger draw as travelers decide how best to spend their money in a weak economy.

The iPad is dominating our national attention, being described as the precursor to how we will use computers and communicate in the future. Whether you believe this or not, the iPad has inspired a flurry of innovation. Insurers are determined to get onboard.

This year, insurance companies continue to announce newly developed apps, targeting the majority toward auto policy holders. Last month, Travelers added itself to the list. Named “Auto Accident Help” for the iPhone and “Quick Connect” for the BlackBerry, Travelers apps are free for download. The apps can be used to ument the misfortunes of an auto accident, and if the incident is being documented by a Travelers policy holder, the auto claim process can be started immediately through the same app.

Many other insurance companies developed smartphone capabilities last year. Now, the trend is toward integrating insurance agents into the communication channel.

Universal American seems to have taken the lead by creating an app that lets the agent connect to its Lead Management System. In an email to agents, Universal American briefly talks about how the agent can manage and access active leads anywhere, at any time.

Additionally, Progressive proactively helps its agents develop an Internet presence. Progressive’s recent “Agency Reporter” tells agents how to improve Internet sales opportunitiesm including creating and optimizing a website and communicating via Twitter. Progressive writes about a discounted website development and hosting fee available to agents through its partnership with Web.com.

In a recent Mintel Comperemedia survey of agents, almost 25% responded that getting leads “is the biggest challenge [they] face as an insurance agent.” With this being the main struggle for agents, it seems that Universal American and Progressive have developed a couple of killer apps. The more insurance companies can help their agents find and nuture leads, the better they’ll do.

A green revolution is underway in the credit card space and American Express is leading the way.

In February, American Express notified corporate cardholders that it was moving exclusively to online statements. The environmental benefits of paperless statements go without saying. Less paper, less waste.

But as American Express touts the “green factor” of paperless billing, it stresses—perhaps more important to corporate customers—that online account management provides increased security against identity theft and unauthorized card usage, as well as providing tools that enhance responsible credit usage and simplify tax preparation and accounting.

Personal and small business cardholders still have the option to receive paper statements through the mail. But as the company increasingly stresses its dedication to data security, fraud prevention, building respect for the environment and reducing its carbon footprint, how much longer might American Express customers continue to have a paper option?

In February 2010, a press release from JP Morgan Healthcare Solutions announced that Chase has seen a 30% increase in health savings accounts (HSA). The increase was partly due to their partnerships with national and regional health plans.

But as these accounts grow in number, so does a concern about the lack of regulation on HSAs. This issue was raised in an NPR story about Lon and Wendy Nestrud: a self-employed Denver couple who lost $2,000 in their HSA in an apparent fraud scheme.

Why all this activity surrounding HSAs? One reason may be pending Healthcare Reform…

President Obama is attempting to reinvigorate efforts to pass major healthcare legislation, which has many hot-button issues now within its debate. Most of them have been in front of the public since the beginning of the reform effort including health insurance portability, a public option, and mandatory consumer participation.

But just as industry innovates, so does political discourse. A new debate is developing around whether HSAs will survive or thrive if new healthcare legislation is implemented. Opponents to healthcare reform say HSAs will immediately disappear, while supporters say they are integral to reform’s success. This debate is causing insurance companies and consumers alike to pay more attention to HSAs.

I searched Mintel Comperemedia’s database of direct mail, and saw that last year, there was an almost doubling of the amount of mail sent to consumers, and a more than 50% increase in the number of pieces going to insurance producers.

Health savings accounts are an easily understood product that deserves more attention. The Department of the Treasury has estimated between 25 to 30 million people will be covered by an HSA policy in 2010. Even though direct mail for HSA products grew last year, there is plenty of room for mail to increase to reach a larger portion of that estimated market size.