Seattle-based Safeco Insurance Companies has decided sell products via the Internet to supplement its existing and preferred sale channel of independent agents. The company began exploring this new distribution strategy in March, and based on feedback it received from agents, it believes online sales will help it reach a new customer segment that prefers purchasing insurance on the Web without an agent’s assistance.
According to Michael LaRocco, president and COO, Safeco believes it can expand its reach to new customers while maintaining its primary focus on the independent agent channel. “Our desire is to grow as a company and become a better partner for you,” he told agents. “Extending our distribution reach in non-traditional ways will help us strengthen our brand recognition and improve our knowledge of the marketplace in ways that will benefit Safeco and you.”
Safeco plans to conservatively market to two groups:
*Auto consumers who prefer buying online from a company Web site.
*Auto consumers who prefer to buy directly from an insurance company by phone.
A small call center of licensed sales professionals has been established to support consumers who wish to buy over the phone from Safeco. Direct marketing mailings will suggest consumers either click Safeco.com or call 1-800-4Safeco.
Meanwhile, the company hopes to better leverage Safeco.com using Internet advertising, direct marketing and other promotions to reach consumers who want to buy policies online from an insurance company Web site. Those consumers will be given an opportunity to close the sale themselves at Safeco.com without being assigned to an independent agent. However, agents will be featured on Safeco.com, giving consumers the choice in how they want to do business with Safeco, LaRocco said.
According to LaRocco, the company incorporated much of the feedback it received from agents since March, when it announced it was exploring the new distribution strategy. Based on that information, Safeco has developed five principles to direct the supplemental distribution strategy:
*All consumers should have the opportunity to purchase a Safeco policy according to their buying preferences.
*The company will continue supporting and appointing independent agents because many consumers value the choice and consultation independent agents offer.
*The company will resolve distribution channel conflicts in favor of customer choice first, the agent second and Safeco third.
*The company will continue to manage each segment of its business to profitability over the long term.
*The company will give consumers the option of choosing an independent agent whenever they like.
“Every decision we make regarding product distribution will be informed by these five guiding principles, which are designed to benefit consumers, agents and investors,” LaRocco said. “No one should expect a $600 million advertising campaign or a Hollywood spokesperson.”
Safeco also said it has attempted to integrate agents into the online sales process through its Virtual Producer program, and plans to increase efforts to support agents in their online efforts. Business written through agency web site links to Safeco.com will pay full commission on sales and renewals, LaRocco said.
He noted the Virtual Producer Select program will be discontinued as of June 1, 2006, and the 120 agents participating in that program will be notified soon.
Overall, LaRocco said the company believes the supplemental channel will add value for its core agency partners. “Safeco has enjoyed a long and successful history selling our products through independent agents and brokers. That won’t change,” he said. “With a creative, collaborative approach, we both can win in the entire consumer marketplace.”
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