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Industry Updates

Direct Selling for Better Insurance Business

06 Jul 2016


In a tough economy when businesses are slashing budgets and wanting a clear ROI on every Rand spent, there’s nothing like direct marketing to validate your marketing investment.


Direct marketing is about contacting existing and potential customers who have given their permission to be contacted to promote your products or services. Unlike above the line advertising which adopts a wide and untargeted approach, direct marketing enables you to segment your prospect database and match it to a suitable product, at the right price, right time and via the right channel.  Most importantly it allows you to personalise your communication and get a measurable result. Done correctly, it’s an omnipotent sales tool, even in tough economies because you know exactly who is responding to your message.

“In fact, it’s in tight economic environments when the art and science of direct selling can deliver measurable, benchmarked sales results when other marketing tools show lacklustre results.  One of the greatest assets of direct selling is the ability to drill down into your data, gain deep insights into your prospect’s buying behaviour, and then customise your offer, your language, your price and approach to talk directly to your customer’s touch points.  Direct selling is the original social network,” explains Albert Theyse, Head of Sales at O’Keeffe & Swartz, an outbound call centre that sells up to 60 000 insurance policies every month on behalf of clients using direct marketing methods.  During the 2014/2015 financial year, O’Keeffe & Swartz generated over R407 million in annualised premium income for its clients through telesales alone, amounting to more than R51 billion in insurance cover sold to almost 2 million South Africans.
 
“When markets are tough, it provides one of the best ways of measuring the exact impact of your sales and marketing efforts, allowing for ongoing refinement that can only deliver a better return on investment. It’s one of the key reasons why this discipline continues to grow in South Africa’s highly competitive insurance sector, and why it’s so effective in one of the most unique and culturally diverse populations in the world.  In fact, according to the Direct Marketing Association of South Africa (DMA SA), Financial services dominate in one particular direct channel - outbound call centres – and this type of direct marketing has, by far, the best response rates.  DMASA estimates show that it’s an industry that employs some 150 000 people across South Africa and continues to grow in size,” adds Albert.

The 2014 Reinsurance Group of America (RGA) SA Bancassurance survey shows that call centres are the key sales channel for bancassurance distribution.  The reason for this is clear - with 59 million registered mobile phones out of a population of 52 million, telemarketing’s pivotal role in the growth of the insurance sector in South Africa comes as no surprise.  It remains a highly effective direct sales channel that provides consumers with simple information and access to financial services products that were previously unavailable or difficult to obtain.

It’s a view echoed by Michelle Perrow, Strategic Director of Lesoba Difference – a long established Integrated Direct Marketing Agency. “Direct Marketing in SA is very much alive and in fact a growing discipline within the marketing mix. Even in a digital age where seemingly everything happens online, traditional tools such as direct mail, telesales and direct distribution still work extremely well for many of our clients. This is particularly true in the financial services sector where the tools and methodologies are in place to undertake deep data analytics and propensity modelling. When the art and science of direct marketing are in place, conversion rates can easily exceed 10 %. “

That said, the nature of direct has changed over the past five years from volume-based campaigns, to progressively smaller, more targeted and niche campaigns.

“The traditional channels of telephony, direct mail and direct distribution have been challenged by digital channels – such as e-marketing, mobile and social media,  but that has more to do with their lower cost per contact and changing consumer media consumption habits than efficacy.  Response rates are still far lower than traditional channels such as direct mail and telephony, although increasingly, we are seeing databases with good digital contact-ability becoming commercially available.  Savvy marketers know that they need an integrated approach to their direct selling that combines the traditional channels of mail, telesales and direct distribution with newer, convenient digital channels for added leverage and convenience for consumers to access.  At the end of the day, we always come back to the foundation of all good marketing being the right product, offered at the right time, with the right incentive, through the right channel. If it’s properly targeted and your data is on the mark, your direct campaign, whether traditional, digital or a hybrid, will fly,” says Michelle.

Testing means better results every time

With direct, you’re able to focus limited marketing resources where they are most likely to get results.
“These results can be measured precisely and analysed, which means that direct lends itself to testing different messages, offers, channels and pricing so that you can optimise your sales results and remove the unknowns from your sales strategy.  You can experiment with different telesales scripts, copy lines in your e-mail and sms, vary landing pages, segment databases to receive different offers and then analyse the results to see which approach was most successful. The beauty of direct is the ability to test your marketing with sample groups and offers to see which ones deliver the best response rate.  Which ultimately means you won’t be throwing good money after poor performing campaigns.

“While it can be difficult to measure the effects of advertising or sponsorship, direct marketing is entirely accountable.  By running a test campaign you can benchmark expected performance, work out your break-even point and what sales you need to reach set targets, work out actual response rates and the bottom line return on investment.  You can identify the prospects that are most receptive to your offers and grow customer loyalty to your brand,” says Albert Thyse, O’Keeffe & Swartz.

Data is Gold

Getting the most out of your direct marketing campaign is heavily reliant on the quality of your database.  Is your data recent, accurate and of good quality?  O’Keeffe & Swartz’s own experience confirms that the quality, accuracy and recency of the data has a direct impact on the sales results you can expect from a campaign. 

“Does the data meet the recency, frequency and monetary rule – in other words how recently did the customer buy, how often has the customer bought and how much did the customer spend? The better your data prospect performs in terms of these three factors, the greater the likelihood that they will buy on your direct campaign,” explains Albert.

Michelle Perrow of Lesoba Difference adds that the quality of data becomes especially fundamental when it comes to developing segmented, niche campaigns which is currently the preference in the financial services and insurance sector.  “Your data can tell you about your customers' buying habits, what products they already have, reveal useful information such as occupation age, gender,  location and income brackets.  This data allows you to then segment your customers into niche groups and target them with customised offers that appeal to their needs.  If your client has homeowners insurance with you, but not motor insurance, could it be an opportunity to upsell them to a combined household and motor policy? If they have medical aid, why not cross sell them a gap insurance product?  Why not offer an accidental disability or legal aid product to funeral cover clients?  Quality data can unlock many opportunities to upsell and cross-sell your existing client and prospect database, but few companies have invested enough into the deep data analytics to fully leverage the gold sitting in their existing client bases,” adds Michelle.

If you create demand and response, make sure you can service it

Direct marketing, as with all marketing and sales disciplines never stands alone, and the process from lead generation to fulfilment needs to be well planned and supportive of the direct process.  In this regard Enterprise Relationship Management (ERM) is an important factor.

“Knowledgeable staff, positive culture and motivational readiness are key to successful client engagement and this is where ERM comes in. When an organisation drives dialogue with a prospect or client market, that market may respond but will only convert if the customer experience is a positive one. Staff are largely responsible for this and as such, for securing customer acquisition driven by a direct campaign or initiatives.  Make very sure that if you are embarking on a direct campaign, that internal culture and readiness supports your lead generation efforts so that leads become satisfied customers,” adds Michelle.

Direct Marketing has, over the years had times of favour and disfavour. Experience has shown that those clients who have consistently and correctly utilised the medium, who have learned, honed, refined, enhanced data and modelled their data, continue to see huge financial returns.  In fact, according to the DMA in the UK, in an increasingly digital world it's clear the human touch still has a role to play. Human interaction improves sales results as part of an integrated programme and has the ability to make customers feel valued. Our digital lives mean alternative products and services are just a click away, but the human interaction of direct marketing, such as telesales, can improve customer loyalty and trust when it’s done right.
 
So next time you’re brainstorming your next campaign, you should have no doubts about whether or not direct works.  If you’re committed to prioritising your customers’ experience and leveraging your data with professionally developed direct marketing campaigns, you will be left with no doubt that direct marketing is one of the best tools to grow your financial services business.
 

About O’Keeffe & Swartz
O'Keeffe & Swartz (OKS) is an outbound call centre that sells up to 60 000 insurance policies every month on behalf of clients using direct marketing methods. During the 2014/2015 financial year, O’Keeffe & Swartz generated over R407 million in annualised premium income for its clients which amounts to more than R51 billion in insurance cover sold to almost 2 million South Africans. Established in 1993, its clients include the major banks and insurance companies in South Africa.