Taking Risks, Increasing Response
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.