HOW JEFFERSON NATIONAL REVAMPED A PRODUCT AND MARKET
To differentiate an insurance product from the competition and upgrade its reception in the market
Change variable annuity product from commission- to fee-based, and target unbiased financial advisers as resellers
$750 million in new product sold in four years
Sometimes you have to break the mold to create something new and more competitive. That was the course taken by Jefferson National Life Insurance Co., which four years ago began to radically alter its traditional approach to selling variable annuity insurance and, in the process, entirely revamped its own variable annuity product.
“Traditionally, selling variable annuities has been a case of face-to-face sales, with wholesalers speaking to commission-based reps and selling through them,” said Jefferson National COO David Lau, who handles the company's marketing efforts. “We took a radically different approach.”
According to Lau, an immediate challenge was to differentiate the company's tax-deferred insurance product from the competition's. The selling of variable annuities, which can offer a variety of financial benefits besides retirement income, had become, he said, an “arms race,” with companies offering more and more complex riders, benefits and guarantees.
The product had, in effect, become commoditized, Lau said, with features that were confusing to all concerned. Further complicating the issue were the expensive commissions end-users traditionally paid to insurance brokers and representatives, which could be as much as 8% of the premium upfront and more over several years.
Jefferson National decided to revamp its variable annuity, offering it for a flat fee of $20 a month regardless of the size of the account. Accompanying that was the decision to approach financial advisers—compensated by fees, not commissions, and viewed as unbiased—as its main conduit to the end-user instead of commissioned agents.
“Fee-based financial advisers have typically avoided variable annuities like the plague,” Lau said. “This is a category that avenue really hates. It's like trying to sell them their least favorite food. Frankly, that had been our biggest challenge.”
Together with its agency, Big Honkin' Ideas, Santa Monica, Calif., the company tagged its campaign “Flat Is Beautiful.” From that concept, a direct mail and e-mail campaign was developed using the image of a steamroller to reinforce the flat-fee concept.
One piece of creative even took the steamroller into outer space. It featured an image of an astronaut floating weightlessly; reflected in his helmet visor was the steamroller. The headline was a play on the old “Star Trek” theme: “Bolding going where no variable annuity has gone before.”
Even with its fun approach, the direct marketing campaign featuring lots of information about the new product was appropriate to the market, Lau said. Also useful to financial advisers was Jefferson National's online calculator, using data from investment research company Morningstar Inc., that allowed comparisons of the Jefferson National product with other offerings.
“What really stands out about Jefferson National is their incorporation of value-added content,” said Neil O'Keefe, VP-multichannel segments at the Direct Marketing Association. “So much of this business is how to add more value to the business to keep customers coming back.”
“We think fee-based advisers like being provided with objective information rather than our taking them out to lunch or a ballgame,” Lau said.
In addition to the postal and e-mail efforts, ads were placed in such trade magazines as Financial Adviser, Financial Planning
, as well as through various industry groups like the National Association of Personal Financial Advisers.
“The ROI has been tremendous,” Lau said. “Starting from scratch, with no annuity product available to the fee-based adviser, we've sold about $750 million of the product over the past four years.”
The Jefferson National variable annuity product has been the No. 1 annuity sold by financial advisers for three straight years, Lau said.
For its “Flat Is Beautiful” campaign, revamped variable annuity product and innovative outreach to new b-to-b targets, Jefferson National Life Insurance Co. was honored last month as Financial Services Company of the Year by the Direct Marketing Association at the association's annual conference and exposition in San Francisco.
Also honored at DMA's annual conference was Karin Giffney, VP-products and benefits marketing for Discover Financial Services, who was named Financial Services Direct Marketer of the Year. Savings Bank Life Insurance of Massachusetts was tapped as insurance company of the year; and Savings Bank's VP-director of marketing, Rose Cahill, took home the Insurance Direct Marketer of the Year award.
“It's been a very competitive space for credit card companies this past year,” Giffney said. “We had to be smarter and not waver.” Giffney said Discover campaigns integrated direct mail with outbound and inbound telemarketing, as well as online programs.
In naming Giffney its top financial services marketer of the year, DMA also cited her voluntary humanitarian work helping with orphaned children in South Africa who are infected with the HIV virus.
“Karin stood out in integrating Discover's marketing with new media, and really taking it a step further,” said Neil O'Keefe, VP-multichannel segments at the Direct Marketing Association. “We also were impressed with her team developing work-life initiatives.” —C.H.