The five Deadly Mistakes of Insurance Direct Mail Lead Generation
Over the last 20 years, I’ve done my fair share of direct mail lead generation for the insurance industry.
Most of those mailings were dropped year round to keep the internal telemarketing groups and field agents busy.
There are five major mistakes that most insurance companies make that severely reduce response rates.
1. Insurance companies do not test a large enough variety of lists to win long term.
Once a few lists are found that work, the insurance companies mail only to these names with the mailing going to the same names over and over again. They wear out these names and experience diminishing returns.
Test compiled lists based on customer profiling to refresh your list. Also test response files and aggregated lists to uncover new list categories. Find a good list broker who works with several large insurance company clients to help you find those new names.
If you need large rollout quantities, be sure to test marginal lists that have large rollout potential. After running your merge/purges prior to each mailing, be sure to focus on lists that have a high match rate with your present customer list. Those are the lists that will most likely get your highest response rates.
What other list issues have helped or hurt your program?
2. Companies do not prepare the sales force for the calls.
Provide the call center with your samples several days before each drop and share the lead generation strategy with your field agents.
This exposure assures buy in from both your internal as well as external sales representatives.
How do you prepare your call center for the calls brought in by mail?
3. Some insurance companies let the lawyers take over the marketing program.
Insurance companies sell policies and policyholders buy claim payment protection.
The creative work provides coverage features, but often fails to sell the company and the claims service experience. The risk of high claims and litigation for insurance companies will never go away. As insurance companies attempt to reduce risks, they have unwittingly allowed their lawyers to emasculate their lead generation programs.
Use testimonials liberally to reinforce positive claims experiences.
Negotiate hard with your legal team to make your mail more responsive to customer needs.
4. Most direct mail formats mailed by health insurance companies are not designed for maximum response.
The format of choice for most insurance companies is the self-mailer.
After hundreds of tests in this industry and others, I have yet to beat the classic envelope containing a letter, response device, and product brochure when tested against a self-mailer or oversized postcard.
What formats have you tested? What format works best for you?
5. The insurance industry is notorious for lack of imagination in testing offers.
You would think that in spite of the state-by-state regulatory environment, insurance companies could find a way to reward respondents who bother to respond.
But frankly, the industry needs to do a better job of offer development.
Except for the list and the product itself, nothing will impact response rates more than the offer.
Have you tested various offers? If so, what offers got the best response in your situation?
Ted Grigg
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Reader Comments (6)
Ted,
You are exactly right with this post -- especially on #2. I used to train inside sales tactics to AFLAC reps, and my training included (believe it or not) direct mail lead gen.
More often than not, this was a first for these reps.
Go figure.
Harry Joiner
You have a wonderfully varied marketing background. I bet that this marketing experience makes you particularly effective in your marketing recruiting.
Thanks for the comment. Ted
Ted,
I have created new controls by testing and -- self mailers -- have typically beat traditional packages for individual health plans. I have done so for four major blue plans. I have to disagree with your comment about packages.
Grant A. Johnson
www.johnsondirect.com
I have done several hundred direct mail tests in the insurance business both for sales lead generation and selling insurance products off the page. Self-mailers typically loose when tested against classic packages. But for sales lead generation, I have seen rare occasions when the self-mailer performs on par with the classic package on a cost per lead basis.
Some insurance companies strongly believe in the self-mailer because it works well enough for them and they never bother to test the format. And non-direct marketing agencies like them because they're cool, give them more design latitude and contain less copy. They are also cheaper (usually) and easier to produce.
There are always exceptions in this business. So I would love to review your packages and look at the testing methodology. Maybe I would learn something.
Did the classic package contain a well written letter? Did it have the same selling proposition and offer? What was the test quantity? Was it a true A/B split? Did it use the same creative concept?
Some "classic packages" I have seen were envelopes containing a self-mailer or brochure with no other elements. They did not meet the criteria for the successful, classic direct mail package.
I have beaten 9 out of 10 self-mailers with classic packages based on a cost per lead analysis.
In his book entitled "Secrets of Successful Direct Mail," Richard Benson who was one of the best direct response copywriters in this business, says this in his first chapter "Benson's Rules of Thumb" on point #9.
"Self-mailers almost never work."
The point is not that it never works, only that when it does, it is an exception rather than a common occurrence.
If you are so inclined, please send me the test data and samples. And if you another example that shows similar results, please send that as well. I will write a fair and impartial analysis of my findings for the blog without mentioning any client names.
In any case, thank you for the different perspective.
Hi Ted,
Example One: 6 x 9 package 1.13% response
Self-Mailer 2.37%
Conversion to App and App to insured virtually identical in both formats. I will forward you the case study in another email.
As for well written letters, my firm has dozens of controls -- both packages and self mailers and I'm always happy to test against anyone who wants to get better results.
One recent insurance test just beat the control by ...19%! This, from a mailer who mails 10s of millions of pieces.
Our client list also includes GMAC, AAA Life, AIG, NML,CUNA, Humana and so on. I also own www.insurancedirectmarketing.com
Thanks for a great blog.
Grant
Great information Grant.
Not only did the self-mailer win based on what you said, but it doubled the response rate. I must confess that I have never seen this kind of response rate spread based on a format change alone. Quite a testimony to the importance of testing.