Driving Information: Safeway Direct Insurance Learns About Its Market As It Goes

What’s a direct marketer to do when data about a target audience isn’t available? Safeway Direct Insurance faced this barrier when it began using direct mail to target the Hispanic market in Chicago late last year. Before that, outreach efforts were done through independent sales agents.

The company knew that, culturally, more than 90% of the 1.3 million Hispanic market in Chicago is Mexican, according to Michael Mulligan, general manager of Safeway. Unfortunately, there are few data sources that will accurately convey whether a target is first-, second- or third-generation, and not knowing this can preclude basic marketing decisions, such as whether solicitations should be sent in Spanish or English.

Granted, the company wasn’t entirely without insights into how to approach the market. According to findings from Vertis Communication’s Customer Focus Opiniones, a study that offers marketers insight into the Hispanic community, 70% of consumers who speak Spanish at home, and 60% who speak English, have responded to a direct mail solicitation within the past 30 days.

Fuse msc, the agency Safeway used, designed pieces in Spanish and translated them into English. “There are nuances in the language that are best handled in Spanish,” says Gus Kostakis, Fuse’s managing director, who adds — partly tongue in cheek — that concepts which in English can be expressed in five words can take three times that in Spanish.

Missing Link

There was another missing piece of information, at least as far as offering financial products: This target group is underrepresented in the credit market, which means that a major data component for determining a target’s credit-worthiness is often absent.

For Safeway, this made a hard offer, with cash on the barrelhead to start coverage, an attractive tactic. (The company has inked an agreement with Western Union, through which it collects premiums.) But it also potentially meant that the hard offer would scare off some potential customers.

To circumvent this, Safeway turned to another finding from the Focus Opiniones data: Among Hispanic adults who read direct mail, 43% respond to solicitations that offer a gift-with-purchase incentive.

One of the most effective campaigns featured Cuauhtémoc Blanco, an extremely popular Mexican football player, and offered a variety of premiums, including replica team jerseys, calling cards and a chance to win tickets to the World Cup in South Africa.

The company tracks responses through its various mail campaigns through dedicated toll-free numbers. At any given time, it follows between 40 and 50 variations that are based off more than 40,000 solicitations every month.

Safeway is constantly learning from the responses to its efforts. Initially, efforts were sent out only at the beginning of each month, timed to coincide with the first-of-the-month paycheck. The company is testing mid-month mailings, when second paychecks come in.

“This is a considered purchase,” says Kostakis, in talking about the need to coordinate mailings with times when families are flush. “It’s not a $19.95 buy. It’s a large part of a family’s budget.” Safeway coordinates radio ads urging consumers to check their mailboxes for its offers.

Premium Plans

A year in, direct mail is working for Safeway. “We are renewing at or above what we sell through our agent business,” Mulligan says. And it will likely be modifying its premium mix: While recent offers of jerseys and autographed pictures of Blanco have done well, phone cards have generated the lowest response and poorest conversion rates.

The company is also taking advantage of high word-of-mouth recommendation levels within the community: Referrals, says Mulligan, make up 12% of sales, with an inquiry-to-close rate of 50%. The company is modifying its referrals program based on its lucrativeness: a $20 gas card premium may be bumped up to a $50 Visa card.

And the company will be modifying its direct mail messages as its most receptive audiences reveal themselves. Asked about its findings, Mulligan noted that respondents from Mexican households have skewed younger, with a surprising level coming from the 18 to 24 age group.