Allstate Insurance, Research Paper Example

Allstate Insurance: Building Relationships through Email Campaigns

Introduction

Allstate Insurance has grown to be a common household name for many different venues of protection.  Their slogan, “You’re in good hands” has resonated reputability for decades.   They offer coverage options for home owners, auto, boats, renters, and life insurance to name a few.  Their success has been based on their reputation and the service that they offer to their consumers.  Determining their customers’ needs allows Allstate to successfully reach them with new products and services.  They have had a great amount of success with their previous email campaign.Redirecting the current email marketing plan is a cost efficient way to reach existing customers for additional lines of insurance.

Identifying the Target Customers

Allstate Insurance implemented an email marketing campaign that had great results during the prior year. The purpose was to be a relationship-building tool to “communicate to customers on a monthly basis, provide valuable information without selling, and start to build a relationship beyond insurance.” (Tarter, Caravella, & Zahay, 2012)  The majority of the recipients of this marketing program opened and read the sent emails.  The existing campaign creates a perfect opportunity for Roberta Borst to build off of the existing email marketing program.  In order for Borst to have success, there needs to be a clearly mapped out path of what additional lines of insurances their customers need. For example, customer A has a car insurance policy and maybe interested in home or renters insurance.  Customer B has boat insurance and maybe interested in a motorcycle policy.  It is important to determine the needs of the customer base in order to successfully sell additional policies.  Changing the marketing mentality from informing without selling to informing with intention of sales could prove to be beneficial. Current customers have their car insurance or their house insurance, but do they have enough coverage to protect their assets? What other options are available that they may be overlooking? Looking at questions like this will allow Roberta to successfully map out the new email campaign.

Roberta needs to define this market very precisely in order for it to be effective.  According to Pakoo the following characteristics, also referred to as a demographic profile, can include:

• age
• gender
• income level
• buying habits
• occupation or industry
• marital status
• family status (children or no children)
• geographic location
• ethnic group
• political affiliations or leanings, and
• hobbies and interests (Pakoo, 2012)

“The Allstate Protection business is somewhat concentrated, with about 40% of its premiums from sales in California, Florida, New York, and Texas. Although customers can purchase some products online, Allstate maintains a network of 12,800 exclusive agencies which sell its Allstate-branded insurance products.” (The Allstate Corporation, 2009)  Knowing the demographics and having the required agents will provide the adequate resources to utilize this program.  Allstate could choose to market according to the percent; however it is not the direction that they chose to pursue.  Roberta moved forward with the marketing program based on age, geographic locations, and income level.  For example, age will target new under twenty-five, middle aged, and over forty.  Geographic location will target high-risk locations.  Lastly, income level will be addressed, insurance for all including low-income, average-income, and high-income.  Because the marketing program is geared towards existing customers, this information will be easily available to the marketing department.

Customizing the Email Messages

Roberta found a substantial amount of success with the prior email campaign that was rolled out as a means to inform and educate.  Using the same concept, Allstate can inform with the intentions of adding new lines of insurance.  This is marketing with the purpose of convincing current customers to purchase new insurance policies.  However, the marketing team has to get the customers attentions.  It is important to customize the messages to reach the targeted audience.  According to Deloitte Financial Service, cross referencing customer’s data will provide the following understanding of policy holders:

• Better position products and services to capitalize on cross-sellingopportunities
• Identify the purchasing propensities of the insured,
• Understand the linkage between personal demographics andcorporate risk (Wendel, 2008)

These are important concepts to consider and analyze when pushing new policies.  This will also aid in the potential risk of new policies based on demographics.  Understanding this data will continue to aid Roberta as she customizes her advertising campaign.

The first campaign would be targeting new policies based on age. The under twenty-five, would focus on educating the consumer about increasing coverage to protect themselves.  It will also touch base on renters insurance, and other insurances that may be applicable.  The middle-aged emails will target multiple policy options, adequate coverage, and other insurances such as motorcycle and boat.  Because this customer is more likely to be established, they will most likely have more to consider covering.  The message for the over forty will cover ensuring the customer has enough coverage, and offering additional options on insurance that could be useful to this age group.  This customer wants to protect what they have worked hard for all those years, and this campaign will provide a check list to ensure just that.

The campaign for the demographics will target high-risk areas, and all other locations.  In the high-risk areas there will be options that traditional insurance does not cover such as fire, flood, or hurricane.  All too often, customers don’t realize that certain events are not normally covered in standard insurance policies.  This will create a need for policy holders to review their insurance and purchase additional insurances,if necessary, to be protected against these disasters.

The last message will be geared towards income level.  There is virtually no purpose in composing a message that is geared towards lower income and sending it to the high income consumer.  They have two very separate needs and there are two very separate means of addressing them.  Sending the right message to the right target is essential for this campaign to be successful.  Messages for lower-income customers would be having enough coverage for the price they can afford.  For the higher class clientele it would be different, it would be a questionnaire making sure they have enough coverage to protect themselves and their assets. The purpose of this campaign is to increase policies and sell additional services, which needs to be presented to all targeted income levels.

Email Subject Lines

Roberta had great success with the subject lines used in the previous campaign.  “Insurance Facts and Fallacies,” “Lower Your Insurance Premiums,” “Safe Driving” and “Home Preparedness” had a great return on interaction and a high opening rates.  This means that it caught the recipient’s attention enough that they were not immediately deleted.  In order for this next campaign to have the same potential results, the subject lines need to be equally effective.   They have to catch the customer’s attention and create a need or desire for them to open it.  For example, in the age campaign, the marketing department would use “Bundle and Save,”  “Does Your Insurance Protect You,” and “Understanding your Insurance Coverage”.  These questions are valid and common questions that customers ask in regards to their insurance needs.

“Email users are selective about which emails they are reading. Their tolerance is low and they have raised the quality bar when it comes to their expectations.  There is a big pay-off for those who best meet email user needs, but unfortunately for those who continue with the old email marketing style their returns will be on a steady decline.”  (Jenkins, 2009)  Spam email floods most individuals inbox, and these are quickly deleted to retrieve the relevant ones.   In order to have subject lines that will intrigue the recipient enough to open it, it has to appeal to that consumer.  Roberta went with the concept that opening the email will provide useful information to the client. They utilized the marketing idea of need as a means to obtain new lines of insurance.

“Bundle and Save” presents the email to the consumer as a means to save money.  A very important factor for Allstate and Roberta to remember is, insurance is mandatory, choosing their company is optional.  If a customer has a home, apartment, motorcycle, boat, or multiple vehicles, they are paying to insure the multiple items.  This is essentially a bottomless investment.  They are spending money on something that they hope they never have to use.   Since they have to insure such property, saving money can be extremely appealing.   Plus they get the convenience of having all their policies with one company.  Even if they choose not to bundle policies at the point of reading the email, they have been educated to the fact that Allstate is not just car insurance.

“Does Your Insurance Protect You” will appeal to consumers because they want to know that what they are paying for will benefit them in the event they ever have to file a claim.  Assuming that one has enough coverage in the event of an accident can be a very disappointing if they don’t have the adequate coverage.  From the consumer stand point, this is a nonthreatening email, appearing to have been specifically generated for them.   This opens the door to offer additional products and services or increasing current policy levels.

“Understanding your Insurance Coverage” is an appropriate subject line for the target audience based on age, and can be suitable for other campaigns as well.  As a young person, middle-aged, and over forty you still need to understand what your insurance is covering.  Using three different email templates to address the different ages, this could educate and create a need for new policies.  This subject creates a desire for the recipient to read because insurance is confusing and the more that is understood, the better prepared one would be in if it is ever needed to be used.  The idea is not age specific; it can reach all customers young and old.

Moving from Relationship-Building to Cross-Selling 

Roberta Borst and Allstate spent a significant amount of time and resources implementing a relationship-building email marketing program.   These emails provided information, tutorials, and interactive options for current policy holders.  The programs and email formats were sufficiently to avoid most spam folders and has a significant amount of read success.   The marketing department has their template to transition, with minimal expense, to a cross-selling campaign.  Cross-selling is simply selling the customers a product related to what they are already buying.

In order to cross-sell, one has to know what it is their consumer wants.  “Focusing on your customers’ long term needs and their lifetime value to your business helps you compete and remain profitable. If you’re focused solely on one aspect, you’re leaving the door open for competition.” (Expanding Your Horizons: Cross-Selling Successfully, 2012)  Implementing the three campaigns based on age, geographic locations, and income level will move from relationship-building to cross-selling.

The email marketing campaign still has a significant amount of useful information.  A large part of successful selling is recognizing a need.  If the recipient sees the potential to insure both their house and their car with the same company, the intentions of the email were successful.  Transitioning does not mean eliminating factors that Allstate found success with prior.  The personalized, attention-getting emails were informative and well received.   The new marketing ploy has the same useful content; however it is created with the intention of cross-selling.

Measuring the Effectiveness of Cross-Selling

Measuring the effectiveness of the cross-selling through the new email marketing campaign will not be an easy task.  Roberta will continue to utilize the software that disclose the delivered, bounced, open rate, unique open rate, click through rate, and unsubscribe percentages.  The new email marketing program will also track the number of calls and actions taken as a result of the email.  If new policies are purchased from the email, that will be logged as well.  According to Bill McCormick there are four ways to measure cross-selling success:

-Average sales volume for each customer increases – measured in dollars or units, sales volume is one way to assess if up selling has occurred.

-Sales breadth expands – measured by the number of products or services for each individual

-Your aggregate cross-selling ratio improves – measured by the number of products or services divided by the number of clients.

-Customer attrition decreases – sometimes higher than normal attrition rates can means that cross-selling and up-selling attempts have been ineffective. High customer attrition can also be due to other factors as well. (McCormick, 2007)

To determine the statistical significance of email marketing, the total number of emails will be weighed against new policies that are purchase or increased.  The cost associated with the email campaign will be weighed against the potential revenue earned as well.  In order to continue on with the campaign, Allstate would like a 20 percent return on new policies.   In essence for every one hundred emails sent, twenty people purchased or increased their policy.   If the statistical data does not disclose such results, it would be viable for the marketing department to evaluate the current emails and make changes where necessary.  Since this campaign is fairly inexpensive, the cost associate with the campaign should not be an issue.

Conclusion

Redirecting the current email marketing plan is a cost efficient way to reach existing customers for additional lines of insurance.  Allstate and Roberta Borst created a new marketing plan based on age, geographic locations, and income level.  By targeting the specific needs of the new target market they can successfully determine the need and the solution.  Utilizing creative subject lines and informative emails will also aid in creating the need to purchase new and additional policies.  The transition from relationship-building to cross-selling will allow the company to continue to educate while profiting from it.  By measuring the statistical significance of this new campaign, the overall success can be determined and necessary changes can be made.  This new email marketing program will open the door for Allstate to capitalize on their current policy holders.   The only thing better than one policy, is two.

References

Tarter, Blodwen, Mary Caravella, & Debra Zahay. (2012) Allstate Insurance: Building Relationships through Email Campaigns.

Pakroo, Peri. (2012)Define a Target Market for Your Small Business. Retrieved from http://www.nolo.com/legal-encyclopedia/define-target-market-small-business-     29950.html

Wendel, Robert. (2008) Insurance Marketing in the Digital Age.  Retrieved from http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/us_fsi_InsurancemarketingdigitalageOct%2008.pdf

Jenkins, Simms. (2009) The Truth About Email Marketing.  Pearson Educational Inc.

The Allstate Corporation, Hoover’s Company Records—In-depth Records, June 5, 2009,accessed via Lexis/Nexis Academic database 11 June 2009.

Expanding Your Horizons: Cross-Selling Successfully.  (2012) Retrieved from http://www.insureme.com/insurance-agent/successful-cross-selling

McCormick, Bill. (2007) The Benefits of Up-Selling and Cross-Selling, Part 2. Retrieved from               http://www.salestrainingandresults.com/sales-training-newsletters-articles/cross- selling.html