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Monday, November 16th
Now, for the first time, the company was making a dramatic effort to thoroughly understand the needs and desires of the people who buy its life insurance, annuity and mutual fund products. The company targets affluent people and business owners. By doing that, the New England Financial was able to work with its agents to tailor marketing programs to different customer groups. And the results seem to be paying off, said William M. Korach, vice president of marketing information for New England Financial. Korach spoke Monday at "Fulfilling the e-Promise, A.M. Best Co.'s Annual Insurance Information Conference in Boston. Lead-generation programs resulting from the database marketing effort generated $9 million in premium in deposits in 1995, its first year. That jumped to $19 million in 1996, $51 million in 1997 and an estimated $70 million for 1998, Korach said. One marketing campaign resulted in a dramatic increase in the number of customers who converted term life insurance policies to cash-value policies Korach said. About 61% of those customers who converted had not bought a product from New England Financial in the past three years, Korach said. That's important because surveys show that consumers who are most satisfied with their agents have had recent contact with them. Policy applications did not provide enough personal data to really understand and segment its customers, so New England Financial goes to outside sources for information about net worth, income and propensity to buy certain products, Kovach said. One company is selling information about the combined investment holdings of the households in a ZIP-plus four.
Insurers should leverage their knowledge of their existing customers to develop and expanded product line, as opposed to expanding their product line to chase new customers, he said. Geiger, whose company helped New England Financial set up its database marketing program, predicted that the use of this information will be critical because customers will determine how products should be distributed; financial "manufacturing" will become customized at the individual level; and actuarial and underwriting systems will converge with marketing systems. |
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When New England Financial instituted a database marketing program 3 1/2 years ago, the company, then 150-years-old, went through a big cultural shift. The Boston-based company had always viewed its career agents as its primary customer.
Christopher W. Geiger, vice president of sales and marketing for Tessera Enterprise Systems, Wakefield, Mass., said insurers know that 20% of their customers generate 80% of their revenue, but they are less likely to know which customers are most profitable.