Esurance’s advertising was not translating into buying customers, and Gary Tolman needed to know why.
“We could see through the actual purchase process and monitoring what goes on through our website that when we got to the end, and the people had to push the buy button, we weren’t getting the conversion rate,” says Tolman, who’s been president and CEO of Esurance Insurance Services Inc. since 1999.
When Esurance began selling its insurance products on the Internet, the company quickly developed a niche in the under-30 market, a group attracted to the low-cost and convenience of buying online. But as more insurance companies moved online, the company struggled to build the kind of brand recognition that stacked up to entrenched competitors such as Geico, Allstate, State Farm and Progressive, which spend hundreds of millions in advertising dollars each year.
“You’ve got the auto insurance industry spending $5 billion a year on ads,” Tolman says. “You turn the TV on and you’re going to see the [Geico] Gecko or [Progressive’s] Flo or Mayhem from Allstate.”
Tolman knew that rather than try to copy the model of companies with far more money and resources, Esurance needed to reposition itself to better reach the customers it could acquire and retain. That meant “aging up” its marketing to reach older, more mature and multicar drivers with higher lifetime value.
“Companies that are going to be successful over the next four to six years are going to be the companies who have the best marketing efficiency,” Tolman says.
“So you’ve got to be good at that to get to your customer at the right time during the buying process.”
Here’s how Tolman has repositioned the brand to attract this new market of customers.
Get some backup
The company designed its 2004 television advertising campaign, which is based on the concept of an animated, pink-haired secret agent named Erin Esurance, with goal of increasing its brand recognition. While it did just that, a competitive analysis showed that customers still didn’t rank Esurance as high in terms of trustworthiness and credibility, which older, established drivers looked for in an auto insurance company.
“We wanted to position Esurance differently than we had in the past,” Tolman says. “Under Erin, we were kind of looked at as the cartoon company.”
That’s where Allstate came in.
“We want to be known as a smart insurance company, one that’s providing a convenient way of providing the policy, one that’s going to provide a lot of information over time, one that’s going to provide great service,” Tolman says.
“I knew what we needed. We needed support in terms of brand.”
According to Tolman, the most important piece of building a successful brand is having the right parent company. While its parent company at the time — White Mountains Insurance Group —was a wonderful partner, it didn’t supply a strong brand name. So when Allstate inquired about purchasing the company in 2011, Tolman saw the perfect parent to give the 12-year-old Esurance more brand power. As an Allstate company, it gained the marketing advantage of a large, recognizable parent with a track record of creditability and trustworthiness.
“Our brand is recognized,” Tolman says. “We’re considered to be innovative and fun, but unfortunately in terms of trustworthiness, we don’t index that high.
“We needed someone like an Allstate, a Traveler’s or even a State Farm to really provide this halo to the Esurance brand.”
So in October 2011, Tolman sold the company to Allstate for an impressive $1 billion. When he’d sold it to White Mountains in 2000, it was for $9 million in cash.
Instead of spending a lot of money trying to build the brand on your own, Tolman suggests finding a partner with the resources and reputation to help you build it.
“You can spend a lot of money trying to build brand,” he says.
“Allstate brings brand, a brand that has a great deal of trustworthiness and credibility in the market. I think that’s going to be huge for us.”
In addition to the name, look for a parent that has products or expertise that can enhance your own offerings for customers. For example, having access to Allstate’s products and expertise now allows the company to move from a mono-lined insurance company to develop bundled insurance products. For customers who already trust Allstate with their home insurance, this is an opportunity to utilize the parent’s brand power once again to convert new customers.
“You need to have something that differentiates you in the market,” Tolman says. “If you have a bundled product, either auto/homeowner’s or auto/renter’s, that makes a big difference.”
Do something different
As an online insurance company, Esurance caters the do-it-yourself consumer, rather than someone who wants to work with an agent to buy insurance. While young people already tend to fit into this first group, Tolman knew that developing a brand message to reach a more stable, mature driver would take more than a new parent company.
“You look at the lifetime value that we would get from those particular segments, and then we realized that we need to move up age-wise and also in terms of getting more people with more cars and multi-drivers,” Tolman says.
“That requires us to shift our message. We don’t want to be known as the cartoon insurance company.”
It would take a new advertising strategy to get this group thinking about the company differently.
“We knew where we wanted to go over time,” Tolman says. “We wanted to age up with our in-force policy holder base. We wanted to acquire people that had multiple drivers, more cars and were married. So it’s positioning the advertising to get to that target market.”
After the acquisition, Tolman began shopping around for an advertising agency that could position Esurance as a professional insurance company, accounting for its new parent in Allstate. He helped whittle down the choices to three agencies before the company went with Leo Burnett from Chicago.
Early this year, the company rolled out a new national ad campaign centered on the tagline, “Insurance for the modern world,” using a series of television commercials narrated by “The Office” actor John Krasinski. In its first campaign since being acquired by Allstate last year, the company examines real-world problems and solutions for customers in a “modern” world, stressing buying factors such as trust, transparency, tools and mobility in choosing in insurance company. In one commercial the narrator asks, “What makes you trust a company? Wait — scratch that — what makes you trust a car insurance company? A talking animal? A talking celebrity? A talking celebrity animal?”
When you don’t have the resources of larger and longer standing companies in the marketplace, Tolman says your advertising needs to really convince your target customers why it makes sense for them to have your company’s products.
“We just didn’t want to go out and preach savings, savings, savings,” he says. “We wanted to say that there are different things you can do.”
Today, Esurance does business in 30 states, and with its new parent, Tolman expects that to increase that number to 40 over the next few years. But even as a big company with close to $1 billion in revenue, the company continues to think small and move quickly, especially when it comes to planning its brand and marketing strategies.
“We’re constantly tweaking where we’re spending our dollars,” Tolman says.
“We can be in a position where our online marketing is extremely effective for six months and then they’ll be some activity in the market where some companies get more aggressive, so that becomes less effective.”
While he is much more careful about taking risks when it comes to pricing or product design, Tolman says businesses must take risks in areas such as marketing where there is significant pay off. Being data-oriented allows you to see quickly what’s working and what isn’t so that you can take the right risks, which is why Esurance lets metrics drive many of its marketing decisions.
One of the company’s key metrics is customer conversion, so it spends a lot of time updating and tweaking its website to lead customers to the point where they purchase a product.
“You can do some marketing that drives a lot of traffic but has lower conversion rates,” Tolman says. “You can do other marketing that’s more expensive but it’s probably going to have higher conversion rates.
“We’re always looking at how we should change the website in terms of the questions asked. How should the page be displayed and what should be on the page?”
Tolman says in order to stay ahead of customer trends, businesses need to look beyond just what competitors are doing and see what successful businesses outside of their market are doing to build their brands. Also, think two of three years out so that you are continuing to be innovative in the type of marketing you use and the channels that are most effective. This is always changing.
In the case of the Erin Esurance campaign, the advertising met the needs of the brand at the time, but eventually the campaign was right for growth.
“Certainly with Erin, that was very effective in getting brand recognition,” Tolman says. “That was very different back then. Insurance companies were not using cartoon advertising. It was quick and it was flashy and it got to the market that we were targeting, which was more the younger, single insurance.”
The fact that people are now looking for information not just from sites, but through online reviews and social media channels, is what prompted the company to start a bigger dialogue with consumers through Facebook.
“We’ve changed how we’re positioning ourselves in social media,” Tolman says. “Now we certainly are pushing people to make comments about us on Facebook.”
Because the market is not stable, business leaders need to be aware that the things that work today may not work tomorrow. Remain flexible in your marketing just as in other areas of business. To get optimum value with your marketing dollars, Tolman suggests staying attuned to where you are getting most of your leads from — whether it’s in television, radio or online — while also being prepared to readjust spending.
“As a direct-to-consumer company you need to be nimble,” he says. “You need to move quickly as the market changes.
“We take some risks in areas and we launch new features in marketing and IT, but we look very quickly at whether they’re working or not. If they’re not working, we see if we can get them to work or if we just kill them.”
How to reach: Esurance Insurance Services Inc., (800) 378-7262 or www.esurance.com
1. Find parent companies that lend brand power.
2. Develop marketing and advertising that appeals to your audience.
3. Listen to the market to stay ahead of industry trends .
The Tolman File
President and CEO
Esurance Insurance Services, Inc.
Born: Keene, N.H.
Education: University of New Hampshire
What do you like most about your job?
What’s interesting about insurance, particularly auto insurance, is that people need it. It’s a product that people have to have. Certainly it’s a very competitive market, but it’s not something you buy when it’s nice, when you have some extra money around. You’re required in all states to have auto insurance. So even though it’s become more commodity-like over time, it’s something that people need. And you know they’ll be a market there. Also, generally competitors are responsible competitors.
Why Esurance chose online: We launched the company and we tried everything. We tried print ads. We tried TV ads, which I can tell you were terrible early on. We tried direct mail. We were unsuccessful. Then online is where we found our sweet spot.
On the decision to “age up” the company’s marketing: Over time, we could see what was happening in our particular market segment. You could look at the people who were 20 to 30 and see how long they were staying with us, how many people were on their policy, how many cars they had, and then you compare that to the people 30 to 40 and 40 to 50. You need to acquire the customers and then you need to retain them. If you have a lot of younger, single-car drivers, they tend to move quite a bit.