1. Competing With The Directs
Field Sales Resource Center
JD Powers Customer Insights
Version 1.1 (July 2007)

2. Competing With Directs Based on Customer Insights
Despite The Agressive Marketing Push By Directs. Agents Can WIN!
According to JD Power customers want: more than price
Excellent Service
Proactive Contact
Coverage Counseling
Value!
Agents Can Compete With The Directs By:
Proactive Contact (Using Travelers Tools)
Proactive Annual Coverage Reviews (Using Travelers Tools)
Building Relationships
Balance The Playing Field With Help From The Travelers
Marketing Campaigns Using InSync Tools

3. Market Situation – Mature Slow Growth Trends
Organic Growth Limited Can’t Build Demand “One Home/One Car = One Policy”
Drivers & Households Grow at 1% Annually
* AM Best,Bureau of Transportation Statistics, US Census Data

4. Market Situation – Increased Advertising Spending
Competition Aggressively Using Media Advertising To Reach Your Customers
DOUBLED
Progressive
Allstate
If we go back to 2003, we can see that that the top players in the insurance category spent about $700 in total.
Fast forward to 2006 and we can see the GEICO alone spent $xx while Progressive spent $xx.
The advertising category itself is extremely dynamic… advertising spending in the auto/home insurance category increased almost 20% last year, while general insurance advertising only increased by x%.
ANDREW… what are some other interesting soundbites re: the advertising category?
SHARON – see AM Best data to quote market share of these players….answer re: Allstate spending as they pay commission as well
We can see that our competitors are significantly spending to go after our customers in the advertising arena, let’s take a look at direct mail…
State Farm
Geico
Source: Competitive Media Reporting 2006

5. Market Situation - Insurance Direct Mail Trends
Competition Using Targeted Direct Mail To Reach Your Customers
Direct Mail Volume 4% per year to more than 765 Million
Company
2005
GEICO
State Farm
Allstate
Progressive
Total
589 87 43 46
765 Million
Here we can see that our top competitors are sending almost 800 million pieces of mail a year – that’s over two direct solicitations a year to our customers, and probably more with targeted modeling..
Consider this: the total volume of first class mail is actually down a couple points from 2000 to 2004…
While the volume of Insurance direct mail solicitations is UP 4%
Tremendously competitive marketplace!
YOUR Customers will receive 8+ pieces of INSURANCE direct mail each year – From the COMPETITION!

6. What do consumers have to say?
Can independent agents compete with these Players?
What do consumers have to say?
So, how are we feeling? Tough business we are in…
Slow/no growth category – can’t create demand – people don’t even like to buy it nor have a need to buy extra product
Distribution channel that’s being outspent every day from the big guys – and we are all going after the same consumers
What are we to do? Do we give up? Can we compete against these big players?
Let’s touch base with consumers first… one shared attribute of many successful companies is that they have their fingers on the pulse of their customers – what’s important to them, what drives their shopping/sales behavior, what drives their retention, what drives referrals, re-purchase and advocacy
In order to get underneath these types of question, we purchased JD Power data last year and I selected a few slides to share with you from their studies, along with a couple from some customer research that we’ve conducted at Travelers. Although JD Power data relates to customer satisfaction for insurance carriers, some of the consumer insights are quite applicable to IAs because YOU control much of the customer interaction and YOU create much of the customer satisfaction…

7. Why Do Customers Leave. Price is Important, But NOT Everything
Why Do Customers Leave? Price is Important, But NOT Everything! Service Is The Real Reason Why Most Leave.....
In the absence of value customers will shop for price!
We just saw some information on how our competitors are soliciting our customers… every day in almost every media…. This must mean that if we were to ask customers why they left, it was largely due to solicitations from other companies…
Let’s see…. When JD Power asked customers who shopped last year to list the reasons why….being solicited came up as the 6th most often mentioned reason (Although the reference may understate the actual impact of it… they may not remember the ad, its not top of mind… its not necessarily driving folks to leave…when shopping they find that they may have a good thing going.. But when they decide to cancel, it’s almost always based on service or something within agents control. You control how many customers shop and choose to leave.
What’s another reason why people shop? Anyone? Price – YES. Let’s see where that one came up… #5. Interesting… although price is critically important, it’s not everything
What do we think the number one reason is that consumers mentioned most often as a reason to shop their insurance… Service! #2 – Lack of account rounding…#3 – Life events – which create shopping triggers and #4 – recommendations… which relates to service – good service = recommendations
So, this is interesting, but why should we care about what JD Power has to say…..
Source: J.D. Power and Associates 2006 Insurance Study

8. In The Absence of Value, Customers Will Shop For Price Agent Interaction & Relationship Building Creates Value, Loyalty & Satisfaction!
% of Shoppers
Overall CSI 1 2 3
1”Serial Shoppers” shopped in the past 12 months and intended on shopping again
2”Recent Shoppers” shopped in the past 12 months but do not intend on shopping again
3”Non-Recent Shoppers” shopped more than 12 months ago

9. Time Since Customer Was Contacted Auto Policy Review
Proactive Agent Contact Drives Customer Satisfaction When you don’t interact -- satisfaction & value will suffer over time!
Time Since Customer Was Contacted Auto Policy Review
Source: J.D. Power and Associates 2006 Insurance Study

10. Customer Satisfaction Drives Business Results More likely to Recommend, Renew, & Remain Loyal
Referrals
I’ll tell you why, because, according to this JDPower study, customer satisfaction drives business results… it has a bottom line impact….
JD Power takes the top carriers (anyone with over 1% share) surveys 500 of their customers, asking them questions to ultimately prescribe a satisfaction index to each carrier based on five components. 2/3 mail and 1/3 internet, Spring each year, incented $2-5 as part of a panel. They then cross tab the satisfaction index to consumers propensity to renew, switch carriers and recommend to others.
So, I bucketed the carriers into three tiers with Tier One having high satisfaction, tier two being medium and tier three being below average.
Take a look at the first metric, % that would definitely renew…tier one companies have a x% higher incidence of customers that would definitely renew
Now let’s look at the difference in the % of consumers that said they would not switch among top tier companies, vs. the lower tier companies.
Finally what’s the number one source of new business – referrals right? That’s a bottom line number right? Let’s look at the % of customers that would definitely recommend among Tier 1 carriers…. So this is your best kind of virul marketing…. No cost… getting one customer getting to recommend you personally to their friends may be more effective than spending millions to bring in more customers..
High satisfaction carriers enjoy an advantage
across all of these measurements.
Source: J.D. Power and Associates 2006 Insurance Study

11. Customers Want Coverage Counseling
Customer Coverage Counseling Can Even Mitigate Price Increases!
% of Total Customers
Index Scores
Premium Change in the Last 12 Mths
**Key Performance Indicator

12. IMPLICATIONS Customer Satisfaction Drives Business Results
Agents Drive Customer Satisfaction Through Service & Interaction
Customers Want Interaction
Coverage Counseling
Expertise
Proactive Added Value Options

13. Travelers Provided Tools To Compete (Customers Want Proactive Contact, Coverage Counseling, and Value)
Recommended Tools (One2One Program):
One2One Retention – Proactive Timed Customer Contacts
One2One Rounding – Coverage Counseling
One2One Specialized Mailings – Relationship & Value Building Communications
Recommended Tools (In-Sync Tools):
In-Sync Marketing Program Examples

14. The One2One Advantage How One2One Creates An Agent Advantage
Supports Business Imperatives
Keeps an ongoing dialogue in highly competitive market place
Increases Retention & Builds Customer Loyalty/Relationships
Generate Revenue From Account Rounding & Cross Selling OPL’s
Re-engage lost customers with Win Back communications
Differentiate your agency from competition
Unique program developed with Agents in mind
Strategically timed mailings, segmented based on your book of business
Promotes value of using an Independent Agent
Coverage counseling, experience, individualized attention
Have your own marketing department
Turnkey communication solutions lets you focus on running your business

15. Proactive Value Building Customer Contacts
The One2One Retention Program
Proactive Value Building Customer Contacts
Strategically Timed Communication
Brand Promise Welcome Kit
Re-affirms Purchase Decision
Share of Customer Building
Relationship Forming Questionnaire
2-way Dialogue
Potential Sales Opportunity
Mitigate Unhappy Customers
Value Added Postcards
Thoughtful Driven Contacts
Pre-Renewal Consultation
Evaluate Needs
“Sales” Opportunity

16. Value Building Coverage Counseling
The One2One Rounding Program
Value Building Coverage Counseling
Maximizing Relationships Through Communication
Account Rounding Coverage Counseling
Provides Value To Customers
Auto To Home Savings
Home To Auto Savings
Provides Best Coverage Counseling
For Non-Travelers As Well
Offers Electronic Communication
Customer Preferred Contact
De-Mystify Insurance
Customer Friendly Communications

17. Relationship Building Coverage Counseling Communications
The One2One Specialized Mailing Program
Relationship Building Coverage Counseling Communications
Customer Specific Revenue Generating Mailings:
Meet The Unique Needs of Customers
Boat Insurance
Flood Insurance
Valuable Items Coverage
Umbrella Coverage

19. Targeted Direct Mail Communications
Use The Travelers Value Pack Insert Template To Get Your Own Ad Into The Hands of Customers & Prospects
Available To You Through In-Sync Tools & AgentHQ

20. Leverage Your Local Presence To Drive Business
Customize & Use The Travelers Door Hangers
Target Condo & New Home Developments
Local Students Can Do The Leg Work -- At A Low Cost.
Sales Opportunities Abound
Renters
Home/Auto Rounding
Endorsement (Water Back Up)
Available Through In-Sync Tools & AgentHQ

21. Leverage Your Local Presence To Drive Business
Use Customized Travelers Tent Cards
Partner With Local Real Estate Offices, Auto Dealerships, Home Shows, Wedding Shows, etc.
Sponsor local events where tent cards can be displayed.
Sales Opportunities Abound
New Movers & Renters
Home/Auto Rounding
Wedding & Valuables
Available Through In-Sync Tools & AgentHQ

22. Four Simple Easy To Use Steps
Beat The Directs With FREE Communications
Use The FREE Travelers Option.
Stay connected to customers and communicate to them instantaneously.
Available Through In-Sync Tools For up to 5 & One2One for a larger lists
Four Simple Easy To Use Steps
Need up to date….notify agents re: one to one annual reviews are good E&O protection…