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May 1, 2008updated 13 Apr 2017 8:59am

Old-fashioned but still effective

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 insurers 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 Mintels research showing that 76 percent view life insurance as worthwhile for those with dependents.

By Abi Wood

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 information.

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.

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