Will RSA get lucky by offering more?

Traditionally, the main criterion when choosing insurance is price, but Royal & SunAlliance wants to change that by offering more than insurance under new brand More Than. It’s banking on this to build brand loyalty.

Royal & SunAlliance (RSA) – formed in 1996 by the merger of Royal Insurance and Sun Alliance – has turned to illegal flyposting for the launch of its direct selling arm More Than. This newly created brand aims to repackage all the RSA’s insurance, investment and savings products under one name, as well as bolster its position in the UK financial services market.

The &£20m ad campaign by Ogilvy & Mather, which breaks this week, trumpets the repackaged offer and centres on the exploits of lost dog Lucky and his owners’ search for him.

As a teaser to the launch RSA asked members of staff to place “Where’s Lucky the Dog?” postcards and posters in newsagent windows and other prominent places.

Westminster Council has been irked by the posters, which have appeared illegally on walls and lamp posts around Soho. It says it will tell the “beneficiaries” of the campaign – RSA in this case – to take them down within 48 hours or face prosecution.

RSA says these law-breaking tactics are harmless fun – and who would begrudge them a little entertainment in the dull world of insurance?

However, the company’s marketing director Mike Tildesley says he will comply with any request to remove the posters.

More Than offers RSA’s car, home and pet insurance, as well as savings and investment products, such as ISAs, via the Internet and telephone. The Lucky campaign seeks to promote RSA’s pet insurance, and other such services, re-branded under the More Than tag.

The use of flyposting underscores the lengths to which brands will go to stand out from their rivals. In financial services some &£900m a year is spent on advertising and RSA has to work hard to make its budget connect with customers.

But branding works in a peculiar way in the domestic insurance market, and some say it is little more than name recognition driven by the lowest prices.

Insurance is one of the most cut-throat sectors in UK industry, with companies only too keen to undercut their rivals, and as a consequence, there is massive switching of customers. Brands such as Direct Line appear to be little more than recognition points for customers to phone around for the cheapest deals.

But Tildesley believes the new brand – which will involve shifting 2 million existing RSA customers over to More Than – will change some of this behaviour and help establish RSA as one of the strongest players in the market. In particular, he sees it as a way to enable stronger cross-selling of products, the Holy Grail of the financial services sector, so often dreamt about yet so rarely achieved.

Tildesley says financial services providers sell an average of 1.2 products to each customer, but through More Than, RSA hopes to increase this to three products per customer by 2005. It also hopes to attract 400,000 new customers every year from its rivals.

He says: “The rationale is to bring together all the business under a single brand to offer a wide range of products. RSA’s consumer research showed the customer was looking for a one-stop service with the backing of a safe existing brand. Previously it was selling products in silos, but they have never come together before.”

More Than will also offer new products, such as a service where, for a single monthly payment, More Than will provide a new car with all the extras, including car insurance, tax, and breakdown cover. Another service will supply customers with legal papers giving advice on issues such as will writing or complaining about noisy neighbours.

But according to Oliver Small Partnership consultant Malcolm Oliver, RSA had a good brand in the direct field with “Connections”, which was phased out some time ago.

He says: “That was a brand name that connected with direct customers. The issue with the relaunch is whether it is going to be doing something better than that. I’ve got a nagging feeling there’s too much focus on launching the brand rather than on what it can offer.”

Oliver believes the problem faced by the insurance industry is that players focus too much on poaching other people’s customers and not enough on retaining their own.

He says: “Its business model says it can afford a &£100 spend to acquire customers, but only &£10 to retain them. There is zippo loyalty in the insurance market. The insurers have brought this on themselves because they never offer the customer a reason to stay with them.”

According to Direct Line group marketing director Jim Wallace, the news earlier this summer that motor insurance premiums are set to rise by up to 25 per cent will only encourage customers to shop around further.

He adds: “Direct Line’s premiums haven’t gone up as much as others because its expense ratio is lower as it has efficient systems, and having a strong brand means the acquisition costs are less.”

While Direct Line created the direct insurance market with its launch in 1985, many feel it has lost some of its brand essence. It no longer just promotes convenience – as this exclusive positioning has been copied by brands such as Churchill – it now projects images of trust in its advertising.

Wallace points out that while many people have home insurance tied to their mortgage, there is a lot of inertia in this market. Even so, home premiums will go up in some areas after the flooding of last autumn and this could lead to more shopping around.

But with car insurance, annual renewal means people will usually ring round to find the cheapest quote. With transferable no claims bonuses, there is little to keep them loyal to one provider.

More Than managing director Adrian Brown claims the message “came through loud and clear” from RSA’s research, which found that customers wanted a one-stop approach from a company they trusted.

He says: “Put simply, it’s an offering that makes their lives easier.”

But it seems unlikely anyone would want to stick with a brand, even if it does offer to “help individuals get the most out of life” by giving advice on choosing the right breed of dog or special recipes for fussy children.

People buy insurance – particularly car insurance – on price, not additional consultancy services on dog breeding. If More Than can change that, and retain customers because of the excellence of its service or the brilliance of its advice in related areas, it would be as revolutionary as the launch of Direct Line 16 years ago.

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