Taking Risks,
Increasing Response

Assurity Life Insurance Co. is a study in innovation, change and risk-taking—from its history to its direct mail program. Innovation: In 1890, Dr. E. O. Faulkner created Modern Woodmen Accident Association because he saw a need to make accident coverage available to working people—not just the wealthy. This Lincoln, Neb., company continued to expand and add products over the next century. Change: In 1954, three Woodmen companies were merged to create Woodmen Accident and Life Co., and in 1997, the Assurity Life Insurance Co. was formed as a subsidiary of Woodmen Accident and Life. Risk-taking: Assurity Direct, the direct marketing division of Assurity Life,

Assurity Life Insurance Co. is a study in innovation, change and risk-taking—from its history to its direct mail program.

Innovation: In 1890, Dr. E. O. Faulkner created Modern Woodmen Accident Association because he saw a need to make accident coverage available to working people—not just the wealthy. This Lincoln, Neb., company continued to expand and add products over the next century. Change: In 1954, three Woodmen companies were merged to create Woodmen Accident and Life Co., and in 1997, the Assurity Life Insurance Co. was formed as a subsidiary of Woodmen Accident and Life. Risk-taking: Assurity Direct, the direct marketing division of Assurity Life, scrapped its entire direct marketing program in 2004 to start fresh with new vendors, new lists, new creative, new offers, and a new print and mailing house. In addition, the company started using database marketing analytics to refine its customer acquisition activities.

The result? Assurity Direct has seen an incredible 60 percent lift in its response rate from the new creative and an 11 percent increase from the new lists.

The Way Things Were

Assurity has been using direct mail since 1997, and has been using it as a primary method of marketing for the past six years. “We have in the past tried TV advertising, free standing inserts and most recently affinity
mailing, but our primary prospecting tool is direct mail,” says Steve Hawkins, director of marketing services at Assurity Direct.

From 1997 to 2003, Assurity boasted high response rates to its direct mail program. But starting in 2004, response rates began to decline. That would have been a great time to try new lists, test new creative and otherwise mix things up—but this was impossible. “Our former consultant had a turnkey system and was not able to get it changed around,” Hawkins says.

The Creative Challenge

One of the first things Hawkins did was hire Gary Hennerberg, founder of Hennerberg Group Inc. in Colleyville, Texas, to devise new creative that would grab the eyes—and minds—of potential customers who weren’t responding to the old creative efforts. “We’d been going to the same target market for seven years with the same type of creative and were very lucky that we’d been able to ride it for that long,” says Hawkins. “We tried new creative every year, but were using the same designer to come up with new packages. We weren’t getting something fresh and new. With this creative, we went way outside our normal efforts.”

Hennerberg collaborated with designer Perry Steinhoff of Vital Clarity in Asheville, N.C., on the package for Assurity’s term life product. The key in the copy was to educate readers that for the price of their daily cup of coffee, they could buy Assurity’s term life insurance. A four-page letter with handwriting call outs starts with the salutation, “Dear Family Breadwinner.”

“I can’t tell you how controversial this was at Assurity,” says Hennerberg. “But Steve loved it. He said, ‘Let the creative people do what the creative people do well.’ One of the big pieces of advice I would give to any reader is if you’re working with a top-notch professional who is a copywriter, don’t change a word of the copy unless it’s simply incorrect or illegal. Check your attitude about what your customer will read at the door. You probably are not like your customer.”

The envelope design on the new package entices potential customers to read the contents. “Marbling gives it a very official look,” says Hennerberg. “There’s a seal on the back flap, and on the front of the envelope in the upper right, we have an eagle in the postal indicia. Little black boxes at the edge, which look like bar codes, slow down the reader. There are lot of things design-wise that have made it work.”

In an A/B split test, the new creative showed an impressive 60 percent increase in response over the prior control, and a retest a few months later confirmed those results.

A Model Client

American List Counsel (ALC) of Corte Madera, Calif., was chosen as the list broker of choice through an RFP process. ALC Executive Vice President Laurie Cole and Vice President of Data Acquisition Rachel Mercer suggested using modeling to give Assurity Direct the opportunity to mail to bigger universes.

Assurity Direct had used modeling in the past with unimpressive results, but Hawkins didn’t let past problems influence his decision to try modeling again. “We’d always not had good results, but it’s one of those things that you research and you know it can work and it’s frustrating because it isn’t working,” he says. “I figured that it wasn’t working because there wasn’t enough communication between the list provider, our IT and the consultant.”

The first step was to find and test modeling firms. “We had a copy of Assurity’s best customer file—responders and converters,” says Mercer. “We sent them to various sources, and then had meetings to look at where [the records] matched. It was like a reality check: If we sent 100,000 best customers to company X, what did they tell us they looked like?” If company X’s results matched what Assurity and ALC already knew, the company was asked to build a model based on that information. “We felt confident going into the model that they had a good idea who our customer was,” says Mercer.

What was interesting to Assurity and ALC was that their target markets are “heavily into the Bible and their faith—but they also have a sweepstakes and gambling mentality,” says Hawkins. The companies also learned something that greatly influenced the creative of the direct mail package. Before, Assurity had always emphasized being able to provide for a spouse in its copy; but according to the modeling results, many of its prospects were actually single moms caring for their kids and grandmothers caring for their grandchildren. This insight led to new creative, which is to be tested this month, and will emphasize providing for kids and grandkids.

Five companies were asked to build models based on Assurity’s data; they built matrix models that took into consideration both responders and converters. “In a matrix model, you look at both elements and try to find a balance between the two,” says Mercer. “You want good responders so the phones keep ringing, but you want converters, too.”

Of the models from the five modeling firms, four are in the mail, and one is still in process. “Of all the models we tested, we have just one that needs to be tweaked,” says Mercer. “With the exception of that one, they’re doing exceptionally well.”

Sure, lists are important, data are important—but one of the most important ingredients in a successful modeling project is the involvement of the direct mail company itself. “In order for someone on the outside to create a model, Assurity had to pull together specific information from [its] current policyholders,” says Hennerberg. “Steve was very quick to have the people inside his organization pull together that information. When the data came back to us after a few weeks of time with the modeling firms, Steve was quick to get on the phone and have a call with Laurie and Rachel and decide what to do. He gave us directions immediately to put those lists and creative into tests. It all happened so quickly because Steve was responsive and took action.”

Assurity tested the new lists in a mailing for its whole life product, using the old creative as a control. The new lists resulted in an 11 percent increase in response rate.

The Communication Equation

Getting creative professionals, list brokers, modeling firms, and print and mail houses all on the same page in a project requires open communication. “Our list providers are constantly talking with IT, and IT is talking with consultants and list providers,” says Hawkins. “It was what we’d wanted to do for a long time, but our prior consultant didn’t allow that. It was turnkey, and he controlled all the vendors.” Hennerberg didn’t require that all the players—who he calls his “dream team”—funnel through him. “Steve knows who everyone is on the team,” he says. “There are no hidden players, and we talk to each other quite often.”

Good communication can keep all parties in the loop and erase any potential confusion. “We’ve put an emphasis on making everything transparent to all the parties on what we’re doing,” says ALC’s Cole. “One of the unique aspects of our relationship is that it’s an ongoing collaborative effort with daily communication about lists and selects. They understand exactly what we’re doing for them—we’ve gotten rid of the mystery of the data we’re acquiring. The collaborative effort between Gary Hennerberg, ALC and Assurity is very healthy, and has allowed us to move forward and see some great results.”

Less Is More

In 2005, Assurity Direct cut back its mailings by about 45 percent compared to 2003 so it could focus on getting its response rates back up, and in 2006 the company didn’t increase the mailings substantially over 2005. “This was due to the fact that we could generate additional premiums by the improvement in response rates,” says Hawkins. “The modeling will also allow us to continue to improve the response rates.”

So far, cutting back on mailings has resulted in a savings of more than $3 million. “On the term offer, even though we mailed only 75 percent in 2005 in comparison to 2004, we produced 10 percent more premium dollars in 2005,” says Hawkins. “So in addition to the dollars saved on this program, we were still able to generate around $200,000 in additional premiums.”

What the Future Holds

Now that the new direct mail package and prospecting program have proven to be a hit, Assurity Direct will look into ways to save money while preserving its high response rate. “Right now we’re testing a lower-production cost version of this package, which has the potential to save a fairly substantial amount of money,” says Hennerberg. “If we’re able to keep the response rate, we’ll achieve a major milestone.” Hennerberg put “everything possible” into the package, and will now try taking things out and gauge the response. For example, the four-page letter will become a two-page letter. A certificate that’s normally lasered with the name of the recipient will be included without the personalization. Assurity Direct will try using a flexo printing process in place of the more expensive litho process.

Another tactic will be to suppress certain ZIP codes. “We have some codes where we do no business at all, but we’ve been mailing there,” says Hawkins. “We found that most of our customer base is in areas outside of cities that aren’t densely populated. There are a number of larger cities where we don’t do much business, and we’ll try suppressing those ZIP codes.”

Risky Business

For a company that helps its customers mitigate risk, Assurity Direct certainly has done its share of risk-taking with its direct marketing. “Steve has taken many risks over the last year and a half,” says Hennerberg. “He took in someone from the outside to test a package, used a different list broker, let me use my own designer, and used a different printer and mailer. There were risks all over the place—and it made last year a banner year.” yy

Linda Formichelli is a freelance writer who has published articles in national business, consumer and trade magazines. She can be reached at linda-eric@lserv.com.

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Increasing Response”

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