Transcript Effective Financial Criteria for Integrated Marketing

FINANCIAL MANAGEMENT OF
INTEGRATED MARKETING PROGRAMS
Jay Jaffe
President
Actuarial Enterprises, Ltd.
Chicago, IL
312-397-0099
[email protected]
September, 2009
1
Integrated Marketing
A marketing process which
uses coordinated
distribution channels, media
and messages to improve
profitability
2
The 5 Risk Elements of any Insurance
Marketing Program
 Claims
 Persistency
 Administrative
Expenses
 Investment returns
 Marketing costs
3
The 5 Risk Elements of any Direct
Marketing Program (in order)
1.
2.
3.
4.
5.
Marketing costs
Persistency
Claims
Administrative Expenses
Investment returns
4
The Primary Risk Element of any
Direct Marketing Program
MARKETING COSTS
5
Why Marketing Costs are the
#1 RISK ELEMENT
6
Why Marketing Costs are the
#1 RISK ELEMENT
 $$$
are spent < any policy is sold
 When marketing costs > marketing
allowances, it is unlikely that:
The costs will be recovered; and
The product will be profitable
7
8
Integrated Marketing
Introduces Complications
as a Result of
Multiple Distribution Channels,
Media and Messages
9
(Agents)
(Internet)
(Worksite)
(Telemarketing)
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(Mail)
(TV)
(PDA)
(Radio)
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(Fear)
(Family)
(Action)
(Free)
12
We’ve Created the Classic ….
13
&
14
And, We Tend to Create a
Mentality at Our
Companies
15
16
The Odd Couple
Jack Klugman (Oscar) and Tony Randall (Felix)
17
Some Examples of Silos
 Distribution
systems within a
company operate that independently
 Media managers each having their
own plans, budgets and bonuses
 Underwriters only worrying about
claims
18
The result is that very few
insurers have a recognizable
and consistent message --which may mean they don’t
have a picture of where they are
going.
19
20
The Secret
to
Financially Managing
Integrated Marketing
is ????
21
The Answer:
Integrating Marketing
22
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INTEGRATED MARKETING
=
JIG SAW PUZZLE
You need to look at both the
BIG PICTURE
and
all the LITTLE PIECES
in order to get everything to fit together
24
Lead Cost:
An Example of Non-Integrated
Marketing in an Integrated
Marketing Program
25
Lead Program Facets
 Multiple
lead sources
 Cost of leads varies dramatically by
source
 Paid policies (conversion) results
are not uniform
 Value of a “name” for “after sales” is
not easily determined
 Which area owns the leads?
26
Developing a Lead Program
= An Investment Strategy
The problem: All leads are not
equal in cost --- so how do you
chose which leads to acquire?
27
#1
LEAD SELECTION
CRITERIA (theoretically)
The leads that produce the
lowest cost per paid policy!
28
But What About?
 The
cost of leads given to agents who
don’t even use the leads?
 Leads that can be recycled and
produce other business?
 The value of revenue from products
marketed by other companies that are
sold to your customers?
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AND
OTHER QUESTIONS
30
Modeling Integrated Marketing
Activities is Very Complicated
(Live Oak Tree)
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Decision Making for Integrated
Marketing Systems
Requires complicated analytic models
 Calls for acquiring additional data but only
when it will improve the quality of a
decision and at an affordable cost
 Is partly a scientific and partly a gut
reaction process but decisions should be
made using more than an “I think” basis

32
Some Things You Need to do if
You Want to Make Quantitative
Decisions
Create comprehensive data bases
 Identify the key metrics that need to be
tracked and understood
 Start with simple models
 Increase the complexity of models as you
gain knowledge
 Recognize the team aspects of Integrated
Marketing

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The Team
 Multiple
marketing types
 Underwriters
 Actuaries
 Lawyers
 IT people
 Claim processors
 Etc.
34
REMEMBER RULER #1:
IF YOU CAN’T
MEASURE IT,
DON’T DO IT.
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EXAMPLES OF TARGETS
Profit
 Claims (mortality, morbidity, etc.)
 Lapses
 Conversion rates
 Expenses:
 Marketing
 Administrative

37
Actual to Expected Ratios
 A/E
rations are helpful because they
give you an instant picture
 If conversion rate A/E = 105%, then
good
 If lapse rate A/E = 105%, then bad
38
The new direct marketing is an
information-driven marketing process,
made possible by database technology,
that enables marketers to develop, test,
implement, measure, and appropriately
modify customized marketing programs
and strategies.
From The New Direct Marketing, David Sheppard Associates, p. 3
39
NEW INSURANCE PROGRAM
ASSESSMENT FORMULA

Excellent

Good

Average

Poor
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THE ULTIMATE TEST OF A
PRODUCT
WILL THE
EAT THE
???
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THE INSURANCE DIRECT MARKETING
FORUM 2009
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