Waiting for the Boom

Back in the day, people in their 50s and 60s often were resigned to the fact that they were about to enter their “golden years.” But folks who danced in the mud at Wood-stock aren’t mentally ready to think about bingo, retirement homes and anything else that screams “senior citizen” just yet. That’s a challenge for companies like Bankers Life and Casualty Co., which sells Medicare supplemental coverage, long-term-care policies, annuities, life insurance and other products to the over-50 market. Dan Veto, chief marketing officer of the Chicago firm, is helping Bankers and its Philadelphia-based direct marketing arm Colonial Penn find ways to generate new leads in a changing environment. Veto, who has been with Bankers for two years, oversees traditional corporate marketing, branding advertising, public relations, Web marketing, analytics and lead generation for the 125-year-old firm. He previously was with Bankers’ parent company Conseco in Indianapolis, doing strategic planning and running its e-business operation. Prior to that, he was with management consulting firm McKinsey & Co. for several years in its financial services practice. Direct talked recently with Veto about the coming of the boomers, lead management and the insurance sales process.

DIRECT: Bankers’ primary target audience is seniors. How has the aging of the baby boomers changed the profile of your target audience?

VETO: Part of what makes our future so rosy and bright is the fact that there are about 60 million marketable seniors in the United States today, [age] 50-plus. However, boomers aren’t quite old enough yet for the specific product set that we sell today. Our core market is still older than the boomer generation. For example, we’re the third-largest provider of Medicare supplemental insurance and you can’t even buy that until you’re 65. We’re also the third-largest writer of long-term care and while some companies have had some success selling it through the work[place], our agents are in the field. At the end of the day, most people who are 50 today unfortunately still aren’t thinking about long-term care.

We recognize it as an important challenge we are addressing. In the short term, it really won’t hit our business for another three years. I think it’s going to be a very interesting marketing challenge as [boomers] enter our core target market. How you speak to a boomer is very different from how you would speak to a 68-year-old couple today.

DIRECT: How many customers do you have?

VETO: Bankers has about a million and a half accounts, with around a million households. And Colonial Penn has about a million accounts with 600,000 households.

DIRECT: Do you see a demographic split between Bankers and Colonial customers?

VETO: It does differ a bit. Our direct responders through Colonial Penn tend to be a little lower income and more urban-based than our Bankers profile. That’s partially based on how we buy our media. Colonial Penn is a lead-generation TV effort. So if you buy in urban markets, you tend to have more urban customers.

DIRECT: Is your primary channel the local sales offices?

VETO: Yes. We have 150 branch offices throughout the United States and continental U.S., with the exception of New York. We’re not in New York yet, but we will be. We’re going to [open] another 20 [offices] this year. We’re very aggressively growing our national branch footprint.

DIRECT: Do you do sell via direct channels?

VETO: Some of our heritage is in direct sales of insurance. Our modern company father is John D. MacArthur. Many, many years ago he was a pioneer in the direct marketing of insurance. Today though, we really utilize our direct marketing skills at Bankers to generate leads. We don’t have a lot of product that is readily salable on a direct basis. There’s a lot of work to make the sale happen. However, we do generate the leads, which is the first step in the sales process, through direct mail and other direct means. On the Colonial Penn side, we sell some product direct through the Web. All of it is sold over the phone. The Web has some presence, but it’s not enormous. It’s less than 5% of our new sales. Insurance is an interesting product. You kind of have to talk people into wanting it. A person is typically far more effective than the Web, which is pretty passive.

DIRECT: Is direct mail an important part of your sales process?

VETO: It is. We will do tens of millions of pieces of mail this year. What’s important to us is [that] our agents pretty much rely on us. The company’s lead-generation efforts are on behalf of our branch offices. The way our agents get appointments is through our lead-generation programs. That’s a critical piece of getting in front of consumer prospects and making sales.

DIRECT: Do you do any retention direct mail or is it primarily for prospecting?

VETO: It’s very heavily weighted on the prospecting side. We find our retention rates are usually pretty good. We don’t have the need for a lot of retention marketing. Agents go back and touch base with customers, but [we don’t do] a lot through the mail. If you let [insurance] lapse, you have to go through the whole process again, draw blood and divulge your medical history and all this stuff and nobody likes to do that. Once you get it, you pretty much have it.

DIRECT: What’s your most effective way to generate leads?

VETO: We use a variety of approaches. By volume, we really are doing a lot more through direct mail than anything else, although we recognize the challenges associated with that. So we’re diversifying our lead generation from a very heavy preponderance on direct mail. We’re trying radio. Last year we did some experiments with DRTV, we’re revamping our phone program and we’re doing some seminar selling, [as well as] a couple of other things that are small but not yet successful.

DIRECT: What’s your lead-management strategy?

VETO: On the Bankers side, we used to be heavily home-office dependent, and it made for a lengthy, expensive process. We’ve done some work with ClickTactics to create an online Web interface that any of the 150 branch managers across the country can interact with directly on their terms. What it’s done basically is shorten up the total cycle time, decrease the cost and [allow for] good data-hygiene work, improving all the response rates. It’s [made] the decision-making power more local — where, frankly, it belongs — so a branch manager in Topeka can make different decisions than a branch manager in Miami.

DIRECT: How heavily do you rely on the Web to generate leads?

VETO: We don’t do a lot of banner advertising, but we do some modest search-engine optimization work on all the major search engines, like Overture. We think it’s important to have a presence. The Web is nice, and [online prospects] are typically very good responders — on a close-rate basis, we’re very happy with our Web-generated leads. But I’ll tell you, when you’re trying to generate hundreds of thousands of leads a year, the volume is not quite there yet.

DIRECT: Do you think that’s because of your older demographic target?

VETO: I think so, [but] that’s going to change. It will get better. It will definitely change when the boomers [need] the types of products we offer. However, there are some products that, at the end of the day, people really aren’t looking for. Unless you’re provoked into having a discussion about long-term care, its unlikely you’d voluntarily think, ‘Hmm, I’m going to go out and buy long-term care [insurance] today.’ It’s the type of product that will always lag. It’s [not a] consumer-type product where consumers will initiate the activity to go and search. There’s some segment of the population that does actively look for this type of coverage, but its nothing like buying a book or a CD.

DIRECT: What is Bankers’ average sales cycle?

VETO: Typically, we will have a conversation with a prospect on the phone, set an appointment, and then an agent will go out and make an hour, hour-plus visit with the client or prospect. Once the agent understands the client’s situation, we’ll often leave that appointment with a signed policy that has to be underwritten. It’s typically a one-visit sale, not a three- or four-step sale.

DIRECT: How’s your typical conversion rate?

VETO: It varies a lot by source. Arguably, the largest driver of that variability is the agents, whether they’re new, good or not very good. We’ll experience anything from 5% to 10%. It varies a lot.

DIRECT: What’s the next step in your marketing plan?

VETO: We’ve got some pretty aggressive growth goals. The insurance industry is not a gang-busters growth engine, but we intend to grow our new sales in the double digits and open up 20 new branch offices. That means we [need to] be in a position to cost-effectively generate an increasing number of leads that respond well and aren’t overly expensive. A lot of the work we’re doing is making sure we’re feeding the field [staff] with the sort of leads they need to do their job. We’re also making sure we’ve provided all the right coverage to our existing customers. If it’s tough to find new people, part of the response over the long term will be to market to our existing [base] to the fullest extent possible.