effective financial criteria for integrated marketing

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  • 1. FINANCIAL MANAGEMENT OF INTEGRATED MARKETING PROGRAMS Jay Jaffe President Actuarial Enterprises, Ltd. Chicago, IL 312-397-0099 [email_address] September, 2009
  • 2. Integrated Marketing A marketing process which uses coordinated distribution channels, media and messages to improve profitability
  • 3. The 5 Risk Elements of any Insurance Marketing Program
    • Claims
    • Persistency
    • Administrative Expenses
    • Investment returns
    • Marketing costs
  • 4. The 5 Risk Elements of any Direct Marketing Program (in order)
    • Marketing costs
    • Persistency
    • Claims
    • Administrative Expenses
    • Investment returns
  • 5. The Primary Risk Element of any Direct Marketing Program MARKETING COSTS
  • 6. Why Marketing Costs are the #1 RISK ELEMENT
  • 7. 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
  • 8.
  • 9. Integrated Marketing Introduces Complications as a Result of Multiple Distribution Channels, Media and Messages
  • 10. (Internet) (Agents) (Worksite) (Telemarketing)
  • 11. (Radio) (PDA) (TV) (Mail)
  • 12. (Fear) (Free) (Family) (Action)
  • 13. Weve Created the Classic .
  • 14. &
  • 15. And, We Tend to Create a Mentality at Our Companies
  • 16.
  • 17. The Odd Couple Jack Klugman (Oscar) and Tony Randall (Felix)
  • 18. 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
  • 19. The result is that very few insurers have a recognizable and consistent message --- which may mean they dont have a picture of where they are going.
  • 20.
  • 21. The Secret to Financially Managing Integrated Marketing is ????
  • 22. The Answer: Integrating Marketing
  • 23.
  • 24. 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
  • 25. Lead Cost: An Example of Non-Integrated Marketing in an Integrated Marketing Program
  • 26. 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?
  • 27. 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?
  • 28. #1 LEAD SELECTION CRITERIA (theoretically) The leads that produce the lowest cost per paid policy!
  • 29. But What About?
    • The cost of leads given to agents who dont 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?
  • 30. AND OTHER QUESTIONS
  • 31. Modeling Integrated Marketing Activities is Very Complicated (Live Oak Tree)
  • 32. 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
  • 33. 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
  • 34. The Team
    • Multiple marketing types
    • Underwriters
    • Actuaries
    • Lawyers
    • IT people
    • Claim processors
    • Etc.
  • 35. REMEMBER RULER #1: IF YOU CANT MEASURE IT, DONT DO IT.
  • 36. SET TARGETS
  • 37. EXAMPLES OF TARGETS
    • Profit
    • Claims (mortality, morbidity, etc.)
    • Lapses
    • Conversion rates
    • Expenses:
      • Marketing
      • Administrative