Direct mail for insurance leads proves stronger with credit data

By Premier Advantage Marketing

Premier Advantage Marketing

Direct mail may not be the latest, greatest and shiniest marketing tactic, but it is the proven workhorse that delivers measurable results.

"Marketing Mavens," a book that analyzes innovative companies, explains the reason credit scores and insurance marketing got together in a very progressive concept.

In 1989, Progressive’s core business model was threatened by government regulation in California, which was a top market share for the company. The regulation required Progressive to reduce their insurance rates by 20 percent, making it tough to survive with drastically smaller profit margins. Dave Pratt, the company’s general manager, called for analysis of customers between their credit scores and their driving records.

Noel Capon, author of "Marketing Mavens," described the move to their marketing strategy: “When Progressive analyzed its customers closely, it found that although they were all relatively high risk, they were by no means all the same size, shape and cost to serve. In particular, Progressive discovered that although all high-risk drivers tended to get into accidents, high-risk customers with good credit ratings had fewer accidents than high-risk customers with poor credit ratings.”

By using Progressive’s strategic thinking, insurance companies have saved money and sold more policies.

In a direct mail campaign, there are three types of data lists to use when targeting insurance prospects. You can mail to a consolidated demographic and property attributes list, pre-screened prospects based on a true tri-bureau credit screening, or you can use what is called credit proxy data.

To ensure the maximum efficiency of an insurance direct mail campaign, it makes sense to use credit proxy data. Two major benefits of credit proxy data are cost savings and fast, easy access. This type of data is significantly cheaper on a cost per thousand basis than pre-screen credit data. If an 80 percent accuracy rate can provide you with a near assessment of a consumer's credit score, then why not save the money?

These are models that are built at a zip +4 level using credit data to create the model. While it is not nearly as accurate as an individual’s credit information, it can at least give you a snapshot of a neighborhood’s credit-worthiness. By leveraging the knowledge and experience with pre-screen data, an experienced direct marketing company can provide you with information to make your direct mail more effective.

According to the Direct Marketing Association, studies have shown that the average cost per lead generated by direct mail is around $47, where email delivers a slightly higher cost per lead at $53.85. The average lead generated from paid search campaigns can cost $99.47. Direct mail may not be the latest, greatest and shiniest marketing tactic, but it is the proven workhorse that delivers measurable results.