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Aetna finds the small-business needle in a consumer haystack

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HOW AETNA BETTER TARGETED SMALL-BUSINESS OWNERS Objective: Target small-business owners in need of better health insurance coverage. Strategy: Employ analytics to separate small-business owners from a large database of those with consumer-buying characteristics. Results: Cost-per-acquisition dropped by 10% to 25%; savings of more than $1 million were realized. Marketing to the smallest of businesses can be dicey. Entrepreneurs tend to make business purchases the same way consumers do, which can hinder the crafting of messages to them. Even getting true addresses for such enterprises can be tough, since many small-business owners operate from home or conduct business there despite having an office location. That was the challenge facing health insurance company Aetna Inc. in trying to target small-business owners in need of health coverage for themselves and their employees. Because of the difficulty in distinguishing them apart from consumers, campaigns often resulted in redundant delivery of multiple direct mail pieces to the same location at the same time. Apurva Varma, strategic marketing head at Aetna, wanted to better target sole proprietorships with one to four employees, as well as small office/home office (SOHO) businesses, with employees often from a single family. “The big challenge—to identify who does not have insurance coverage—is actually not objectively possible within the small-business owner space,” Varma said. “So we've been targeting all micro-business owners.” Varma wrestled with another issue: Aetna's prospect lists typically are sorted by Standard Industrial Classification (SIC) or years in business, but as these contacts get marketed to over and over again by many companies, saturation rises and profits drop. Varma figured he could do better. In 2009, Aetna turned to database marketing agency Merkle, which cleansed and standardized basic data supplied by Dun & Bradstreet as well as new list sources, teasing out business owners from the bulk of consumerlike prospects. The company did this by accounting for variations in addresses, as well as using an “analytically based fuzzy logic attribution,” examining possible links between homes and nearby businesses, said Sandeep Kharidhi, VP- analytics practice leader for Merkle's insurance and wealth management practice. ”Out of 10 million to 15 million contacts as a consideration set, we may have a base of 5 million businesses, based on performance, a statistical propensity model and historical campaign performance,” Kharidhi said. Merkle removed duplications and those records projected to produce low value, and returned the records to Aetna to better identify those micro-businesses that would best respond and convert. For its campaign last spring, the company relied primarily on direct mail, augmented by search keyword buys and online display ads via a handful of ad networks. The creative stressed affordability and financial security, historically important triggers for health insurance buyers. Aetna's creative agency was TDO, Irvington, N.Y. No special small-business branding was employed. “The broad Aetna corporate brand was emphasized, not a separate line of messages associated with this campaign,” Varma said. He said the appropriate insurance product, whether individual or group, was recommended after a prospect contacted the company. The program's ROI was strong. The available universe of prospects was nearly doubled, even as the targeting became more selective and saturation decreased. Aetna estimated that its more-careful targeting resulted in savings of more than $1 million annually, while cost-per-acquisition was lowered by 10% to 25% across campaigns. In December, Aetna and Merkle were named top b-to-b award winners at the annual expo and conference of the National Center for Database Marketing managed by the Direct Marketing Association. The pair were cited for their “innovative method of combining business and consumer data sources.” “We're proud to be associated with Aetna in helping them solve the difficult challenge in identifying small-business owners separately from individuals,” said Owen McCorry, VP-business development at Merkle, who accepted the award. “It's a challenge faced by most organizations that market to both consumers and companies.” For the future, Varma said analytical tools such as those employed by Merkle could have benefits in other areas of the company, such as customer engagement, wellness programs and the company's pharmacy delivery business. And now, with a better handle on who is a small-business owner and who isn't, he hopes to craft a future campaign focused strictly on group health insurance policies.
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