In this era of digital communications,
using the mail as a primary marketing method may appear outmoded.
To the contrary, Abi Wood of the Royal Mail argues
that direct mail is still a highly effective tool in a life
insurer’s marketing armoury and one also highly popular among
consumers in the UK.

Most UK consumers believe providing for next of kin after death is
an important responsibility, with consultancy Mintel’s research
showing that 76 percent view life insurance as worthwhile for those
with dependents.

Yet incongruously, 42 percent of adults (20.1 million people)
highlighted by Mintel and consultancy GfK NOP have no life cover at
all. For insurers this is a massive market of potential customers
for products including life cover, critical illness cover and
mortgage life cover.

How can providers identify and engage with these potential
customers to convert them into active sales?

Thomson Rapport research has pinpointed groups most likely to be
interested in life insurance products. Of these, 25 to 44 year-olds
represent the largest potential market, followed by under 35s and
those in ‘pre-family’ stages who may be planning a family
imminently. What is similar about these groups is the way they
prefer to be communicated with – through the post.

Even in today’s digitally-dominated, multi-channel world the most
pertinent route for insurers is likely to be by traditional posted
methods. The financial services sector continues to be the largest
user of direct mail (DM), accounting for 1.12 billion items or 30
percent of all DM sent in 2007.

In the first quarter of 2008, 117.45 million mailings were sent by
insurance companies alone – up 3.4 percent compared with the same
period in 2007. This demonstrates how insurers still value the
personal, tangible, targeted and trusted nature of the post, and it
continues to feature prominently in customer retention and
acquisition campaigns.

Further research by consultancy Henley Centre also places mail in a
positive light, with 15 percent of people preferring to receive
information about new products and services by post. While 16
percent prefer to use price comparison sites, the ability of DM to
achieve cut-through can be a powerful acquisition tool, not least
for life insurance sales.

Unlike home, car, holiday or pet insurance, where customers are
likely to have experience of buying these products, first-time life
insurance buyers are likely to need support to help them understand
policy terms and conditions, and in aiding their understanding of
various product options.

Thus the potential for online sales may be significantly reduced
because of its more remote, universal nature, enabling DM to act as
a targeted, personal and relevant device to deliver a high level of

Perhaps most pertinent is DM’s ability to be highly targeted and
personalised. As noted, certain demographic groups are likely to
have a greater interest in life cover, so by identifying and
targeting these groups with tailored product information, insurers
stand to achieve higher response rates from DM by reaching the
right people with the right information.

Further analysis and testing can be done to match up the correct
approach with each potential customer, taking into account
individual circumstances.

For example, the execution and information conveyed via DM can be
honed by what is known about certain customer groups. ‘Pre-family’
consumers may respond well to messages containing carefully
explained information on entry-level life insurance, without
seeming like an unmanageable, daunting investment.

More mature recipients who may have older dependents and experience
with a life policy, may appreciate more detailed and specific
information on more comprehensive cover including elements like
critical illness.

But beyond its proven track record as a customer acquisition tool,
DM is also being lauded for its ability to support financial brands
in their compliance with the Financial Services Authority’s
Treating Customers Fairly (TCF) guidelines.

TCF sets out requirements for provision of information to
customers, in an effort to ensure they have enough information to
make an informed decision on products and services, and as a means
of countering a lack of consumer trust in financial services.

To support implementation of TCF guidelines, Royal Mail and the
Henley Centre undertook research to clarify how people approach
financial marketing information and what they regard as clear, fair
and honest communications. The study found layout, language and the
clarity and honesty of the offer to be the key factors impacting
consumers’ understanding of financial literature.

Layout must be simple, so information is structured in a clear,
legible way, easy to read, and enhanced by use of elements like
bullet points and headers for paragraphs, all helping to guide
readers easily through information and content.

Brands should also avoid jargon, especially as those with less
experience of financial products may not fully understand certain
terms. Ultimately, customers seek clarity and honesty in
information they receive, and will respond well to
easily-understood elements like comparison tables, explanations of
key points of the product and ‘things they should know’, as well as
detailed contact information.

These recommendations sit perfectly with the way life insurance
products should be marketed to potential customers; a clear, fair
and honest approach which provides potential customers with all
information needed, clearly laid out, so they can make a well
informed decision.

But for all its virtues, DM needn’t be used in isolation. Research
by consultancy Quadrangle reveals how DM and digital advertising
can work together, increasing consumer spend by up to 25 percent.
It also indicates that 84 percent of people agree there is a place
for both post and email from companies, and 69 percent feel email
is best used for supporting or clarifying mail received.

Life insurers continue to use DM to great effect, and by refining
DM strategies to bring in complementary channels like email and
online, and by taking notice of TCF and the need to be clear, fair
and honest, can engage with the vast number of potential customers
in the market.

In difficult economic times when many consumers may feel life cover
isn’t a necessity, the ability to accurately target and engage with
potential customers in a personal and direct way can make all the
difference to an acquisition campaign’s success.

Abi Wood is Royal Mail’s head of financial sector marketing.