How to get all excited about insurance:
talk with Ed Drake!
It was 1973. In the later part of the year I was following-up a lead from Bud Noren, SAFECO INSURANCE COMPANIES, Seattle, Washington, USA. Soon thereafter I met Ed Drake - who is todays story.
Ed worked with Bud. In the early 1970's they were looking for new ways to help their USA and Canadian independent agent network sell more SAFECO insurance products. It was decided direct mail marketing just might be the way to attract high quality leads for their agents. So, I was called in to assist.
At the time I was an Account Supervisor with a southern California direct mail house. We had a good creative team and a production shop. Could do most clients work in house. And had grown to the point where we were probably the largest independent direct mail marketing agency on the USA west coast.
Our charge was to come up with a lead generation program. Something I will never forget is the presentation breakfast meeting, held at an IHOP restaurant a block from the SAFECO headquarters, just off the campus of the University of Washington. It was just Bud Noren and me.
Lead generation for a serious business like insurance is a touchy subject. Was then. Still is today. You can't be flip with the message, or the audience will not take you seriously. Frankly, I was concerned that our "animal cartoon" approach just might be going too far.
SAFECO offers many types of products. They specialize and are a leader in personal lines: Homeowners and automobile insurance. With that knowledge we had developed a series of lead generation letter packages. The one that addressed the homeowners product, for instance, used a turtle for the "character".
Each product had a different cartoon style character around which a story was told and the message given. It was serious... at the same time the graphics were "interesting".
Each was designed to generate a quality lead for an independent insurance agent who represented SAFECO...and probably several other companies.
Obviously, this program was a smashing success. Bud Noren had the foresight to see how he could reach into the marketplace and be "different". And still uphold the SAFECO image. He saw early-on that a targeted direct mail marketing program for his individual agents, sent to prospects they selected in a geographic area where they could offer superior service, could work. And, it did!
That was the beginning for SAFECO and Direct Marketing. Things evolved and changed...and amongst the changes was one Edward F. Drake. Very early on Ed was in full charge of all programs. He established a complete Direct Marketing department for SAFECO and their agents. He moved the program through the '80's and now into the decade of the '90's.
Ed, with 32+ years of service to SAFECO, is currently National Manager Direct Marketing. With a level of responsibility that includes approximately 4 million pieces of mail a year, and 200,000 leads for 700 to 1000 participating independent insurance agents from around the States and Canada.
Ed reports some startling statistics: Since 1980 there has been a continuous erosion of personal lines (homeowners auto) marketshare by the independent agents...they have lost 50% of the market to the direct sellers. And Ed predicts they will loose another 50% by the year 2000.
Why? Primarily because most independent agencies are not making any active effort to obtain new business. They do no marketing of their services. They do not use any direct marketing techniques...no direct mail...no newsletters...no print campaigns...no broadcast...nothing! SAFECO decided to do something about this situation.
In the process of doing something about it, SAFECO has become the largest direct marketing company serving the independent insurance agency system. They use direct marketing five ways to help their 4000+ agent base increase their marketshare and become more profitable:
Target Mailing, with a special program titled TARGET PLUS Co-Operative Mailings - less target, more mass
Affinity Marketing - where third-party sponsorship is key to success Cross-Selling - working with SAFECO agents to both up-sell and cross-sell current customers additional products and Customized Mailings, such as programs directed to unique or different audiences, i.e., persons of a certain age-group, or with homes of a specific value.
Let's talk about one of these five major programs - TARGET PLUS. Here's how the program works.
TARGET PLUS is an agency prospecting program - lead generation in direct marketing terminology. It allows agents to focus on their best prospects with targeted direct mail. All leads generated from the program get a follow-up telephone chase by the agent.
TARGET PLUS operates with a simple eight step process:
- The agent selects the product line they wish to offer. SAFECO allows the agent to choose from two basic types of coverage: Auto and Homeowners. Or both...if you want to do both at once. Obviously, different direct mail packages have been created for each possibility. Making for a more effective approach.
Ed tells me that about 60% of the mailings are for auto / 40% for homeowners. Overall, the auto program gains a higher response rate and more "X" dates for the agents to work. The agents know this...and make their decision according to their goals.
- The agent then decides where to market...in which postal codes to mail. The agent determines where they will find the best selection of prospects.
This is key to the success of the program for several reasons. One is, at least in theory, the agent knows their own marketplace better than anyone else. So, it is logical they should be the final decision maker on exactly where the mail should go.
As with all direct marketing, getting to the right people at the right time with the right offer is elementary. This basic also includes getting into the right physical marketplace. The agent is the key element in making 100% certain this happens. The agent selects the geography.
- With the agent input, SAFECO them develops a prospect mailing list. Using a massive nationwide database of information, gathered from a number of sources over a period of time, gives SAFECO the ability to select the right people to get the agents mail. For most requests, the base demographics are these:
||Single family households
||minimum age of head of household - 25
||household income of at least US/$25,000
||family has lived at current address at least 1 full year.
These basics, combined with the geographic data supplied by the agent, and any additional criteria the agent feels might be important, allows SAFECO to make a logical list selection. They do this on an order-by-order basis for each individual agent.
- The agent then decides how many direct mail letter packages they will mail each month...and when they wish to begin.
The program must run a minimum of six months. The agent can mail as few as 300 packages a month or as many as 600 or 1000. The agent decides. The agent must decide, based on anticipated response, how many leads they can follow-up each month. And thus, how many packages to order and have mailed each month.
There is a further consideration, too. The programs are not free! The agent pays a flat fee of US/$0.50 for each mailer. It is an all inclusive price...covering everything. Everything includes list selection, paper, printing, mailing services and postage.
For example, if the agent determines that 600 mailers a month will best fit their objective, the budget for a six month program is US/$1800 ($0.50 x 600 pieces a month x 6 months = 3600 units mailed, at $1800.).
We all know that the only thing worse than too few leads is too many. So many really qualified leads that you are unable to follow-up them all up effectively and efficiently. SAFECO also helps each agent avoid the pitfalls of too few...or too many.
How? With a TARGET PLUS guarantee. SAFECO guarantees at least a 2% response over the life of the program. That is how confident they are in the database and list selection. Most agents enjoy a much higher rate...many in the 3% - 4% range. And some as high as 7%.
With a guarantee this good, combined with a history of results over years of experience, even the newest agent can dive into this program with total confidence.
- Another plus of this program is that SAFECO corporate takes total responsibility for all printing and mailing. The agent places the order and sends a check...SAFECO does the rest.
A tested, proven, effective lead generation sales letter package for each product is available. Each has been designed to get the prospect to raise their hand...to say: "Yes, I'll talk with you". All mailing is done with all identification under the agency name / address / telephone. In fact, very little mention of SAFECO occurs anywhere in the direct mail packages.
- Next, SAFECO coordinates all responses. All response cards are returned to SAFECO. Obviously, coded to the agent for which they were mailed.
Each reply is first sent a thank-you letter, with a small gift for responding. The gift is the up-front premium offered for responding. It is usually a small flashlight or a North America road atlas.
To both take the burden of this task off the agent, and to make 100% certain of a prompt response, the SAFECO Lead Management system takes over and does this part of the program for each agent. And they do this each and every month for every mailing.
- All leads are qualified by SAFECO. Depending on the answers to the questions on the reply card, each lead is qualified. All those truly interested in learning more are passed on to the agency for follow-up and follow-through.
The circle is then complete. The agency selected the product line to offer. And the geography in which they wished to mail. SAFECO did all the in-between work . . . list selection, printing and lettershop. The lead is then generated, qualified, and passed on to the agent for the final chase to a close.
- The agency chases - they telephone follow-up, further qualify and determine the prospects real need, make a presentation, and close. In most cases there is a step or two between the initial telephone talk between the agent and the prospect, and a new piece of business being written. Probably a letter with some broad product information enclosed follows the telephone talk. At some point a more specific proposal against the exact requirements of the prospect is prepared and presented. Most likely at a face-to-face meeting.
And then the A.F.T.O. (ask for the order!) takes place - and the close happens. A new client is welcomed to both the agents fold...and to SAFECO.
There are many other programs. One is called "Key Market". It is a multi-media advertising and marketing program, designed to meet two objectives:
- build consumer awareness of the SAFECO name, who they are, what they offer you, the consumer...what they bring to the marketplace, and
- generate qualified prospects - leads! - for those select agents in these selected "Key Markets".
Obviously, this program is not offered everywhere. There has to be a reason for a marketplace to be titled "Key". Once it is - maybe SAFECO is introducing a new product line, maybe the area is already producing very well and the effort is to "peak the Peak" - whatever the reason, once the selection is made, a full blown integrated magazine or newspaper / television and radio / direct mail / possibly other local tie-in / all followed by telephone campaign is put into place.
As with all SAFECO marketing efforts, the idea is to totally support the individual independent agent in their drive to get and keep more business for SAFECO.
Another direct marketing program that is a must for SAFECO is to find new agents. New, good agents that will sell SAFECO.
This is a never ending task. Each year a certain number of agents "drop-out". They resign, quit...or maybe they are "fired" for poor performance. This is what happens in an entrepreneurial type business. And independent insurance agents are most certainly entrepreneurs!
So, SAFECO has to find new sources of business. There is a churn in their agent base each year.
Another reason is that SAFECO goes into new markets. Sometimes geographically...sometimes with a new product. As in every business,there are specialists in particular industry categories. SAFECO needs to look for and find those who can best represent them.
There is a program to do just that. SAFECO operates through a branch system. One of the charges of the branch is to find new agents in their area. Prospecting for new agents is done from the local level, with local identification.
Direct mail to these selected and qualified agents is personal. The package includes a one page personalized letter, a response card and return envelope - and depending on the approach, a brochure, an article reprint, some other support piece.
They have even used one such enclosure from a competing company! It was used because the message to the agents was about what their customers want. It was a message SAFECO felt needed to be shared. So, they shared it using an article from another company.
Several years ago a creative genius combined talents with a new production technique and produced a "personalized" cartoon. In the caption the name of the receiver of the direct mail offer is included.
This approach has been used successfully by SAFECO. Taking the major decision process...should I, an independent agent, consider representing a new carrier, SAFECO, or not...and grabbing the agents attention with a cartoon takes guts. It could boom...or bomb. For SAFECO it boomed!
Some of the numbers are proprietary - I can share these results with you. Prospect mailing for new agent activity are in the 6500 - 9000 range each year. About that many selected agents are invited to consider representing SAFECO.
Response - leads to be followed-up - have grown to the double-digit per- cent level...between 11-15% response. "Sales" or closes of these leads also runs in the low double-digits.
The program works. The cost per lead and the cost per sale are dropping every year. A testimonial to the SAFECO database capabilities.
A few things "creatively" apply to all SAFECO mailings. All their envelopes are without teaser copy. There is address ID.
Paper quality is high. A textured stock, for "feel" and look. The color is ivory rather than bright/stark white - as when they test there is a major lift in response - 13%!
All the basics taught by the pros are also used: indented paragraphs, nine point serif type or larger, and similar.
Testing has also taught SAFECO that a premium up-front works well to gain a qualified lead...something some others teach against. By asking for enough information (i.e., the gift comes without strings - at the same time you must complete the request form) it works well. When there is no gift, there are less questions.
The road atlas has worked for SAFECO. Why? Because, as Ed explains, the middle age to older audience who are safe drivers also have the time and money to travel. They need a road atlas. The younger, less experienced and more apt to have an accident crowd does not have money and travel time...so that particular premium appeals to them a lot less. The premium helps sort out qualified leads.
Let's close this piece with a few comments - and thoughts! - about this guy, Ed Drake. He is the man who makes all this happen. He keeps everything running.
Ed has a personal philosophy about who he is and what he does. He gives credit to Stan Rapp for the concept...I'd challenge that...I think this is all Ed, with or without a mentor influence.
Ed says you have to keep trying. Press on. Exhibit perseverance. Dream...and then work to make the dream happen.
Point two is creative. Be innovative and display imagination every day. It is interesting to note that Peter Drucker, the world wide respected management guru, said that marketing and innovation are what will make companies successful in this decade. Ed already knew that.
Something I can relate to is the third point on the Ed Drake list: you must learn your business...and keep on learning your business. Amen!
For all of you who know Ed, you know the fourth point: you have to love what you do.
I know Ed loves what he does...just look at his smiling face! And watch him move. He does not run - he always "walks" at a steady pace. He is always going somewhere. If not physically, mentally. The wheels turn constantly. He truly loves what he does. And it shows.
Some may say being a six time father and now a six time grandfather have a lot to do with that. Maybe...it probably helps. Ed Drake is Mr. Direct Marketing at SAFECO. He earned that level and reputation because he does what he says he is going to do . . . and it works!!