Some basic rules for the Direct Marketing of Recurring Premium Financial Services are:

(1)   First Finalise the Strategy and Plan, i.e. a basic rule is that the Payback from a few hours of effective strategy always significantly exceeds the Payback from what comes next.

(2)   Everything is measurable, but measuring everything is a waste of time.

(3)   Measurement + Corrective Action = Control, but Control without Strategy often results in Losses.

(4) Apply the 20/80 rule to a pre-determined Testing/Roll-out Strategy.

(5)   Traditionally, major analytical effort is directed at Controlling and Pricing the Risk, but, with direct marketing, profit is optimised only when one controls the Risk and the Acquisition Cost and the Persistency.

(6)   Since Acquisition Cost is a function of response rate and conversion rate and unit promotion cost and telesales cost, the way to reduce Acquisition Cost is to optimise response rate and conversion rate and unit promotion cost and telesales cost – where these are usually inter-related.

(7)   Work the Persistency. The Direct Marketing methods that got the customer through the door, work even better at keeping the customer (because, by then, you know more about the customer).

(8)   Segmentation works. In other word, because direct marketing can be costly, apply more effort to those segments and sectors where there is the highest chance of success, subject to cost-effectiveness constraints.

(9)   While Regression, CHAID, Cluster analysis and other professional statistical methods are theoretically ideal for direct marketing, financial services response rates are often so low that common sense, cross-tabulations and a matrix approach work best.

(10)   Direct Marketing scales new heights of profitability when you consider Lifetime Value, but do not consider this if you are not in it for the long haul and are not gearing up to drive the average number of policies per customer up to a realistic target.

If you wish to improve the profitability of your Direct Marketing through the practical application of profit- orientated analysis, we can help.  Contact us to see how.