Market Vision

Added value increases market viabilityThe body Guard concept has market viability because it (i) offers the insurance company the ability to add value through a related, relevant and practical product, (ii) enhances communications with its customers and prospects, (iii) differentiates the...

Added value increases market viability

The body Guard concept has market viability because it (i) offers the insurance company the ability to add value through a related, relevant and practical product, (ii) enhances communications with its customers and prospects, (iii) differentiates the insurer from other life companies and bank offers, and, moreover, (iv) encourages policyholders to initiate contact with the company.

The level of consumer acceptance and the likelihood that it will help the insurance company solve its problems is described in the following 10 points.

1. Correct identification of challenge

There are two challenges facing this life insurance company:

- to stop the erosion of its traditional customer base to competitors who are seen as going a little bit further.

- to increase share by winning former clients back or adding new clients to its roster.

2. Builds differentiation between life insurance companies

Across all socio-economic strata, Canadians see little difference in the products and services offered by the various life insurance companies (see Fig. 1, page 30.)

As a new service to customers, Body Guard is different from the types of new products typically offered by life companies (e.g., variations on universal and term policies.)

3. Travel patterns well-established

Statistics Canada confirms the highest per capita international travellers (including u.s. travel) are 55-64 year olds, followed by the 35-44 segment.

By capitalizing on this leisure travel trend among its target audience, Body Guard represents a relevant offer.

Moreover, enhancing the relationship between the company and the customer during these positive vacation experiences may further predispose these customers to an annuity insurance upgrade.

4. Safety concerns well-documented

Consumer acceptance of the Body Guard concept is predicated on their likelihood of travel and their concerns for safety and security.

Fig. 2 (page 30) indicates this concern is indeed on the consumers’ personal agenda – even among rural households.

5. Combats increased competition from banks

With its lower distribution costs, the entry of banks into the insurance business threatens all insurance companies.

After probable revisions to the Bank Act in 1997, retail banking insurance will likely be a reality. Frequent access to retail banks is contrasted with irregular contact with insurance agents.

This lack of on-going contact is largely an economic factor, as most of an agent’s time is spent prospecting, and there are only a limited number of times within a person’s life cycle when he or she becomes receptive to new insurance products or policy upgrades.

Moreover, a recent Marketing Solutions study indicated that at least one in 10 life insurance holders would transfer their policy to their bank, even without a financial incentive to do so.

Body Guard promotes increased consumer contact with the insurer or agent – critical for building stronger relationships between the company and its customers.

6. Lead generation

According to Managers Magazine, opportunities to buy life insurance through direct response offers have doubled since 1982 – decreasing the impact of agent-direct sales visits.

Over the past decade, the growth in the number of agents selling life insurance has lagged 10 points behind household growth in Canada.

Shaping Body Guard into a lead-generation prospecting tool could add value and productivity to the insurance company’s agents and brokers.

7. Immediate required changes to concept

The Body Guard’s ‘Lifestyle Profile’ makes reference to gaining access to information contained in customers’ confidential insurance questionnaires.

Use of this information by the insurer or a third party would contravene the bond of trust between the insurer and the customer.

8. Immediate required changes to its administration

As half the target market is ‘retired,’ this segment is the least responsive to new technologies such as ivr (interactive voice response.)

Consequently, an alternative such as operator-assisted interaction would be required.

9. Cost/benefit analysis must be performed

Without primary research to determine likely consumer uptake of this offer, the cost of running this program is vague.

Moreover, consumer testing of this concept (e.g., survey research) would yield a reliable model of customer acceptance of Body Guard.

Through analysis, the marketing team will know the product features most important to include in the program and to communicate through its agents and advertising vehicles.

10. Attacking the real problem?

While primary research is required to reliably project consumer acceptance of Body Guard, it is clear this concept is strategically sound.

Yet, with the insurance industry plagued by productivity problems and multi-channel competition, this insurer will require more than a Body Guard to protect its share.

Greg White is president and David Saffer is executive vice-president at Market Vision, a Toronto-based strategic consulting and market research firm.

Fig. 1

Perceived Product Differentiation Between Companies

Scale (1-7)

Industry Mean Score

Airlines 3.67

Banks 3.61

Life Insurance Companies 3.61

Trust Companies 3.58

Oil and Gas Companies 3.13

Source: Market Vision 2000

1 = no differences, 4 = mid-point, 7 = large differences.

Fig. 2

Personal Importance of Issue

Scale (1-7)

Issue Mean Rating

Job creation 6.40

Crime/personal security 6.30

Accessible healthcare 6.22

Environmental clean-up 6.16

Fighting abuse of women 6.11

Source: Market Vision 2000

1 = low importance, 4 = mid-point, 7 = great importance.