The financial world used to be straightforward for consumers. They knew where to go and who to ask for the financial products they needed. In recent years, however, the market for financial services has changed almost beyond recognition. Today thousands of types of financial services’ products are available from a growing number of organisations. Consumers may have to assess many different products and suppliers before they can make the right choices for their own personal circumstances. Consumers have far more choice. Ten years ago, who would have imagined that major supermarket chains could become involved in banking and other financial services? Or that many people would choose to administer their finances by telephone or the internet?
Consumers also expect more. Higher education standards and greater mobility have made consumers more knowledgeable and demanding about the nature and type of products they purchase. They want to feel that products are tailored especially for their needs, to be treated as individuals and to feel valued as customers. As a result, organisations are using different tactics to get their products recognised and to develop their reputation and image.
Insurance is an important part of every adult’s life, helping them to make provision for losses or bad luck that might affect them. Established in 1904, Independent Insurance has a reputation for being one of the most innovative and professional companies within the insurance industry. The Company employs 1,600 people in 16 locations and was floated on the London Stock Exchange in 1993. It also has operations in France, Spain, Malta and Ireland.
Independent Insurance only sells its products through carefully selected insurance brokers who share the Company’s philosophy of professionalism and true three way partnerships with policyholders. It only sells its products through brokers and does not deal directly with the public. About 1,000 of the UK’s insurance brokers work with Independent, representing around 10 per cent of the country’s brokers. As well as providing commercial insurance to businesses, the organisation aims to be the UK’s leading provider of household and motor cover to wealthy individuals.
Independent recognises that everybody’s insurance needs are different. It practices an approach called customisation. This recognises that individuals have special needs that can only be met by tailored products. Clients are given a personal assessment of their home and contents. This assessment is called a risk management appraisal. From this, a plan is formulated and action taken to ensure the individual’s home meets the Company’s security requirements, e.g. alarm systems, safety of valuables etc. Few other insurance companies adopt this approach to protecting their clients’ risks.
Portfolio of products
It is within this high value insurance niche that Independent has developed a ‘high value’ portfolio of insurance products that includes cover for houses and contents, fine art and antiques, all of which are designed to protect their clients against virtually every type of loss or damage. Independent Insurance is therefore in the premium sector of the home/motor insurance market, offering top quality products backed by a personal approach to protecting a policyholder’s home and contents on a longer term basis.
A major issue of high net worth contents insurance is under-insurance. It is estimated that 85 per cent of all high net worth customers are under-insured, which means if they make a claim they may not get the true value of their stolen/damaged item back. Insuring antiques and works of art is a specialist task, requiring extensive knowledge of precious items, their importance and their market value. By providing policyholders with expert valuations and publishing guides on the subject, Independent is able to protect its clients to ensure they have the right level of cover in the event of a claim.
This case study focuses upon the way in which Independent Insurance has used sponsorship to create a key partnership with The Grosvenor House Art & Antiques Fair to enhance the Company’s reputation as an insurer of high value homes and their contents.
Sponsorship
To promote products to niche markets, organisations have to develop strategies that meet the needs of smaller market segments within a larger market. Products have to be delivered in a flexible way that closely meets the needs of each customer. To appeal to a target audience within a niche market, an organisation needs a communication strategy that will help it to achieve its marketing objectives. The target audience may be existing customers or those who make or influence buying decisions.
Sponsorship is the financial or material support of an event or activity by a donor or an unrelated organisation. It associates an image, type of product or brand with a particular function. Sponsorship is all around us and relates to all kinds of activities from music to sport. It is part of the sponsoring company’s below the line marketing budget.
Sponsorship is one type of public relations activity. The purpose of public relations and publicity is to create a favourable image of the organisation to the outside world. In recent years sponsorship has grown in importance. On the one hand it has enabled organisations to communicate with highly specialised target audiences, while on the other hand it has provided valuable support for events. Independent recognised that sponsorship would help the business to be taken seriously by its target market.
Sponsorship of the Grosvenor House Art & Antiques Fair
The Grosvenor House Art & Antiques Fair is one of the highlights of the year for people interested in art and antiques. Each year items worth in the region of £300 million are displayed by top dealers to many of the UK’s most discerning collectors. The Fair appeals to different people – from private collectors, buyers and interior designers, to museum curators and socialites. Prices for the items on sale range from £200 to more than £5 million.
The first year of sponsorship was 1999. As part of the sponsorship package, Independent was able to entertain invited brokers in a hospitality room so they could see first hand the Company’s commitment to the high net worth insurance sector. It also helped strengthen relationships.
Members of the public could also come along to discuss their individual requirements and how to contact a broker who could arrange cover for their home and possessions. A press briefing helped to publicise the details of Independent’s products. Independent’s sponsorship for the 2000 Fair aimed to improve:
- Name awareness – Independent would be known as the sponsor of the Fair (instead of “supporter” in 1999) in all documentation, press releases, advertising, posters and leaflets. There would be a further increase in branding and greater visibility during the Fair.
- Broker relationships/Account Development – In 2000, the 4 winners of a brokers’ competition were invited to join the Company on its stand for a day each. The other benefits were hospitality for their clients and branded literature.
- Access to the public – Lead generation, i.e. business contacts. Independent would have a stand in the Fair with an antique doll’s house as a backdrop to attract people. Independent would also gain access to the Fair’s prize draw mailing lists. Consequently, it generated more direct contacts with the public for referral to brokers as the Company does not deal direct.
Benefits of sponsorship
One of the benefits of sponsorship is that it can help build and improve relationships with both employees and other organisations. Brokers who attended the event sent letters to show their appreciation of the corporate hospitality.
Sponsorship of this type of event is more than a ‘one-off’ exercise. It offers long-term benefits through improved awareness of the company name in this niche market, the chance to offer corporate hospitality and the ability to reach out and become closer to existing and potential clients. Independent has built upon the foundations of the 1999 Fair and sponsored the 2000 Fair.
There was on-site branding at the Fair. In addition, Independent received advertising for its brand through the internet, magazines, posters, leaflets and the Fair handbook. Branding helps to make a company’s products distinct from those of other sellers. It was also thanked on the press day, gala dinner and was included in publicity photographs. By becoming the sponsor for the event and also sponsoring the charity gala evening, Independent met a range of marketing objectives.
Improving customer relationships
It is the fine detail of an organisation’s relationship with its customers that helps to form lasting impressions. For Independent Insurance, customer relationships involve a triangle between the Company, its brokers and its customers. Good relationships through this distribution network help to convert one-off purchasers into regular customers and finally into advocates, or committed supporters, of the organisation.
Attracting new customers has been the traditional focus of companies’ marketing budgets. However, numerous studies have shown that this is very expensive compared to the cost of retaining existing customers. More and more customers are concentrating budgets on retention of customers. This requires research into customer satisfaction and involves talking to customers to see if their expectations of a particular good, service or product have been met.
Inviting brokers who specialise in high net worth insurance to the Fair allowed Independent to reinforce its relationships with them. It also provided cross selling opportunities.
Conclusion
Building up good relationships with both brokers and customers has helped Independent Insurance to develop a strong corporate image in a niche market. Ongoing sponsorship of the Fair will continue to link Independent Insurance very closely with this market.
Sponsoring the Fair also reinforces Independent’s relationship with its brokers by helping them attract new clients and retain existing ones. This demonstrates the Company’s long term commitment to its customers.