Insurance company undergoes marketing makeover

Marketing was a mess at Canadian insurance company The Co-operators. Yet Peppers & Rogers describes how a few small changes led to profitable direct marketing campaigns with targeted up-sell and cross-sell initiatives.

Insurance companies must guarantee protection. That's what they're in the business to do. But how do they spur customer confidence if there's no bridge connecting customers to the company? Or what if the company has the bridges, but doesn't understand which one leads to which customer? Fifty-five-year-old Canadian insurance company The Co-operators has found a way to bridge the gap to its customers.

The Co-operators insures more than 1.2 million drivers, 832,000 homes and the lives of 519,000 Canadians. With more than 700 outlets, three call centers and 900 agents, the company must meet numerous customer needs partly through delivery of relevant products and services. However, providing relevance didn't always come easy.

Broken bridges

In recent years, the company was frustrated by inefficiencies caused by multiple data warehousing systems and no customer-information file. As a result, its bi-annual newsletter and direct mail campaigns generated little response. "There was nothing that allowed us to create a single view of the customer," says Rob Martin, director of marketing.

Offers revolved around regulatory news rather than targeted advice that generates revenue and builds relationships. The fact that households received multiple copies of the newsletter didn't help either. "It was absolutely useless as a means of generating revenue for marketing purposes," Martin admits. Only one "heavy" direct mailing was produced each year with no rhyme or reason as to which customers received which offers. The company decided it was time for a change.

Renovation begins

In 1998, the company deployed a Harte-Hanks solution, for a cost of about $250,000. In a few months The Co-operators began producing database marketing content.

Production on the first bi-annual newsletter campaign began last January, and the newsletters were mailed in May to 172,000 customers in Alberta. The newsletter is divided into seven household segments, then further customized according to a customer's individual policy, so targeted cross-sell and up-sell offers can be included. If a client only owns home insurance, for example, the newsletter might include offers for life insurance.

The company now produces six to eight yearly direct mail campaigns, which have generated $7 million. Martin says the campaigns actually have to be reduced to five in 2003 because the distribution system can't handle the load. Nonetheless, revenue from the reduced mailings will exceed that of the old mailings because at $1 per piece, the company receives $3 in revenue, he says. The company is still in the process of tracking ROI, but according to Martin, the firm expects a two-for-one return on investment.

Digging deeper

As customer data is collected, The Co-operators' next goal is to assign different values to different customers. Martin says future plans will include predictive models to assist with developing a scoring system to rank customers according to buying behaviors. Once determined, the ranked data will be used to drive future marketing programs, or in Martin's words, "It will become a tool that provides gasoline in the engine." Armed with this knowledge, The Co-operators will be in a better position not only to insure its customers, but to ensure another 55 years of success.


To read more articles like this one, visit Peppers and Rogers Group's Web site at www.1to1.com.

All materials copyright 2002 Peppers and Rogers Group - 1:1 Marketing.

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