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From Resource, April 2008
Beyond the
Boomers
Forward-thinking life
insurance companies aren’t just targeting affluent Baby Boomers any more.
Who’s doing what—and why?
By Jennifer C. Rankin
Move over, Baby Boomers.
You’ve been the center of attention since 1946. Believe it or not, it’s not
all about you any more. This year, the first wave of Boomers started to retire
and the recent media build up has been hard to miss. Who knew tie-dye, the
Volkswagen bug, and Dennis Hopper would make such a comeback?
The
good news? Consumer product manufacturers and financial services companies are
still lining up to woo us with the images and sounds of our youth and to cater
to our every need, real and imagined. The bad news? We’re being edged out by
our children, emerging ethnic and cultural groups, and lower-income Americans.
A huge
driver is demographics. Sometime between 2020 and 2025, the foreign-born will
account for 15 percent of the American population, or more than one in seven
residents, according to the
Pew
Research
Center
. The nonpartisan research group also predicts that in 2050, 19 percent of
Americans will be foreign-born; the Hispanic population will more than double to
29 percent; and the proportion of Asians will almost double to nine percent. The
share of African Americans in the population will hold steady at about 13
percent, but the proportion of non-Hispanic whites will drop to 47 percent, or
less than half of the population.
Hispanics
are now the largest multicultural segment in the
United States
, accounting for about 14 percent of the population, according to the U.S.
Census Bureau. The Hispanic population continues to grow at five times the rate
of the total population. In the past decade, their buying power has increased by
260 percent; the buying power of Asian Americans, who now make up about five
percent of the population, has increased by 252 percent.
This
places insurance companies in the position of figuring out how best to meet the
needs of an array of cultures and ethnic groups.
Habla Espanol?
An obvious start is translating
marketing materials into different languages and selecting images from a
cross-section of cultures.
According
to research conducted by LIMRA, the importance of in-language representation
among both Spanish-dominant and bilingual Hispanics is very high, with 94
percent of Spanish-dominant and 75 percent of bilingual respondents feeling it
was important to have a Spanish-speaking representative to discuss their
insurance needs. The same report, published in 2007 and titled Targeting the
U.S. Hispanic Market, said that regardless of their language use, Hispanics want
bilingual printed material for financial products in order to better understand
the products and to share the materials with family and friends
In
addition to in-language marketing collateral, it is vital to build multicultural
sales and service teams as well as to develop an understanding of different
cultures and their sub-cultures. Consumers in the Hispanic market, for example,
may come from
Central America
,
Cuba
,
Mexico
, Puerto Rico, South America, or
Spain
. Some are foreign born, others are native. Some are bilingual, others speak
only Spanish or English. There are similar nuances in the Asian market, which is
further complicated by wide dialectical differences.
Let’s
take a closer at the Hispanic market.
The
Hispanic population is not only growing, but also is technology savvy. That’s
why multicultural marketers are leveraging digital media—that is, company Web
sites, online ads, e-mail marketing, search-engine marketing and optimization,
mobile technologies, and blogs and social networks.
In
particular, they are ahead of the curve with respect to mobile marketing and
social networks. The Association of National Advertisers (ANA) recently surveyed
its members and found 38 percent of multicultural marketers are using mobile
marketing, compared with just 28 percent of general-market advertisers. While
respondents in the general market and those working in multicultural areas both
use social networks (20 and 16 percent, respectively), twice as many
multicultural marketers (36 percent) say they plan to start using social
networking for the first time next year, compared with 19 percent in the general
market.
Hispanics
are heavy technology users. According to a recent Forrester Research phone
survey of 3,000 Hispanic adults, Hispanics are more likely than non-Hispanics to
have cell phones with cameras (65 versus 48 percent), video (41 versus 17
percent), music (42 versus 15 percent), and Internet access (57 versus 39
percent).
In
response, a number of general-market sites have added Spanish-language pages,
such as MySpace Latino, which has some nine million Hispanic profiles, and
LinkedIn is now bilingual.
And if a growing population
that’s tapped in electronically wasn’t tantalizing enough, there’s lots of
room to maneuver in the financial services arena.
According
to the U.S. Diversity Markets Report, which research company Synovate released
in February, just 77 percent of Hispanic adults have any kind of bank account,
compared to 90 percent of African-Americans and 98 percent of general-market
consumers. Synovate also found that only 61 percent of Hispanics have a savings
account; 32 percent have a retirement account; and 18 percent have invested in
stocks or bonds. In other financial services, just 51 percent of Hispanics use
credit cards; 40 percent buy life insurance; and 26 percent have a mortgage.
This
low penetration represents a big opportunity for financial services players such
as insurers, especially those willing to take a relationship-building—as
opposed to a transactional—approach, because conventional wisdom holds that
Hispanics expect to form a relationship with those with whom they conduct
business.
If
cultural markets are the wave of the future, which financial services companies
are leveraging them?
New York Life was one of the
first insurance companies to grasp—and act on—the changing complexion of
American demographics.
New
York Life’s cultural markets division was formed in 1996, when the company
began to look at better targeting its communications to the Asian Indian and
Chinese communities. Today, the insurer also has targeted initiatives for the
African-American, Korean, Vietnamese and Hispanic populations as well as women.
It has a separate Web site for each group. The Chinese, Korean, Vietnamese and
Hispanic sites are in-language sites. Bilingual employees answer the toll-free
phone line and bilingual agents sell products.
New
York Life recognizes that today’s niche market may be tomorrow’s biggest
opportunity. Consequently, it has a strong commitment to diversity in the work
place and to providing funding and employee volunteers for projects in diverse
communities. The company also forges partnerships that support diversity;
examples include its close ties to the Committee for Hispanic Women and Families
and the New York State Federation of Hispanic Chambers of Commerce. Both
Hispanic magazine and Latina Style magazine have honored New York Life as one of
the best companies in
America
for Hispanics.
Another
insurer that’s mining the potential of cultural markets in the
United States
is ING Group.
In
February, ING introduced a Spanish-language option for customers calling into
the service centers for its U.S. Insurance division. Customers with individual
life insurance and group life, group disability and other workplace-based
insurance policies now have the option to speak to dedicated bilingual call
center representatives who can service their account in either Spanish or
English.
“This
is another step in our efforts to meet the needs of the rapidly growing U.S.
Hispanic population,” says Catherine Smith, CEO of U.S. Insurance for ING.
“The Hispanic market in the
United States
is diverse in terms of acculturation, language preference and country of
origin. To serve it effectively, you need more than just in-language brochures.
You need distribution and servicing representatives who understand the different
cultures of these customers, and of course, speak their language.”
ING’s
involvement with the Hispanic community includes supporting programs locally and
nationally. For the past several years, ING has sponsored the Juntos en
Concierto concert series, most recently starring Jennifer Lopez and Marc
Anthony. Proceeds from the series benefited the ING Run For Something Better, a
kids’ fitness program created by ING that aims to reduce childhood obesity by
introducing kids to the benefits of running, physical fitness, and healthy
lifestyle choices. In
Miami
, ING is the title sponsor of the ING Miami Celebrity Domino Night. In addition,
the ING Foundation sponsors the Hispanic Scholarship Fund’s Steps for Success
Saturday program, which offers educational sessions for students and their
parents about the importance of college and how to navigate the college and
financial aid application process.
MetLife
is yet another example.
In
August 2005, it launched a Chinese-American Web site that provides in-language
information about financial and insurance products and services.
Shortly
thereafter (March 2006), MetLife launched its first Spanish in-language Web site
in the
U.S.
The site provides product information, agency locations, Life Advice®
brochures, and career opportunities, as well as a phone number for its
Spanish-speaking customer service line. In addition, the site offers information
regarding MetLife Auto & Home’s products and services.
According
to MetLife market research, Spanish-speaking consumers, though relatively new to
the online community are already highly engaged in Web activities. As a result,
Spanish-language sites are the preferred channels among Hispanic online users.
Sixty-nine percent of Spanish-speakers visit sites in Spanish to buy and
research products and 49 percent are more likely to buy from a Spanish-language
site when shopping online.
In the
past, MetLife focused on multicultural marketing through advertising, consumer
education programs, and event sponsorship. The new additions to its Web site
affirm its dedication to the Hispanic community.
Prudential
Financial, which has long felt that a critical component of its success is its
ability to value and leverage diversity, also is working to meet the needs of
different cultural markets.
Prudential’s
senior leadership team has formed a Diversity Council, which works closely with
the company’s chief diversity officer, who heads up the Equal Opportunity
organization.
Prudential also encourages
employees to participate in Business Resource Groups (BRGs), which address
topics of interest to African-Americans, Asians and Pacific-Americans,
Hispanics, sexual minority groups and individuals with disabilities. BRG members
not only participate in educational programs that foster understanding of
differences, but also assist with marketing programs aimed at targeted
communities and participate in philanthropic outreach activities.
An enthusiastic supporter of
the diverse communities in which it does business, Prudential spends tens of
millions of dollars annually on a wide array of initiatives and community
projects.
Prudential
also has a business diversity outreach program. Its Horizon Initiative builds
strong relationships between the company and diverse organizations and community
groups through event sponsorship and participation activities (about 100 per
year).
Let’s
look at a few concrete examples of how all this plays out for a specific
group—the Hispanic community.
Prudential
has forged partnerships with several professional organizations, including
Hispanic CPAs and the National Society of Hispanic MBAs. It also sponsors the
American Latino Media Arts (ALMA) Awards and works closely with the National
Hispanic Foundation of the Arts and the U.S. Hispanic Chamber of Commerce. Its
high profile in the Hispanic community has earned Prudential many
kudos—Hispanic magazine has named it a Top 100 employer for Hispanics and
Latina Style magazine has named it a Top 50 company for Hispanic working
women—and lots of new customers.
And
the list goes on:
A
little over a year ago, Old Mutual Financial Network (the marketing name for the
U.S.
life insurance and annuity operations of London-based Old Mutual plc) launched
OMFN En Espanol, a Hispanic brand for OMFN life products and services. OMFN En
Espanol includes all the necessary capabilities and infrastructures to meet the
needs of the Hispanic market, including a dynamic Web site, updated marketing
materials and a proficient bilingual sales and customer services staff.
CIGNA
now offers virtually all of its group insurance benefit materials—including
insurance applications, enrollment packets, and beneficiary designation
forms—in Spanish.
Western
& Southern Life now has a Spanish-language Web site, a toll-free phone line
dedicated to Spanish-speaking customers, and Spanish-English marketing
brochures.
Middle Class
Life insurers not only are
considering the potential of cultural markets, but also are taking another look
at the so-called middle market. Just what is the middle market and what
opportunities and challenges does it pose?
Although
there is no universal definition, most financial services companies use the term
middle market to refer to households with an annual income between US$25,000 and
US$ 99,000. According to 2006 data from the U.S. Census Bureau, 56.8 percent of
Americans fall in this range. About one quarter of households (25.3 percent)
have an annual income of less than US$25,000, while 17.9 percent—the so-called
mass affluent—have an annual income greater than US$100,000.
The
middle market is not homogenous. Those in the lower income range may have
little, if any, disposable income; those in the higher range are more likely to
be able to afford insurance, but also may have competing expenses such as
mortgages and college tuition. Almost everyone in the middle market struggles
financially due to stagnant wages, rising prices, and growing credit card debt.
When
it comes to life insurance, the middle market has a low penetration rate.
According to a study by LIMRA, 26 percent of
U.S.
households with less than $75,000 of household income have no life insurance
coverage at all. That figure rises to almost 50 percent for households that make
less than $35,000.
LIMRA
research also shows that many middle market consumers do not have insurance
agents or financial advisors. Four in 10 households with incomes below US$
50,000 and three in 10 households with incomes in the high middle market range
make financial decisions on their own. While not all middle market consumers are
online, most are—more specifically, 80 percent of those with incomes between
US$ 30,000 and US$ 50,000 and 86 percent of those with incomes between US$
50,000 and US$ 75,000.
While
a cadre of mid-tier and smaller insurance companies has long served the middle
market, larger companies traditionally have found it difficult to earn a viable
return on investment. The Internet and new distribution partners, especially
banks, are making it easier and much more cost effective to reach the middle
market and many insurers are making a concerted effort to do just that.
Insurance
brokers were quick to realize the appeal term life and other simple insurance
products, price transparency, and the ability to comparison shop might have for
the middle market. Powered by the Internet, online brokers like Insure.Com,
SelectQuote, IntelliQuote, and AccuQuote also offer an alternative distribution
channel for insurance manufacturers with traditional agency systems. And
Insure.Com now offers a choice of applying online or talking with a licensed
agent.
More
recently, insurance manufacturers have begun to realize that simple products,
issued at warp speed, would not only appeal to the six in 10 middle-income
American families, but also be a way to grow organically and establish new
customer relationships. As a result, many are promoting their term life
products, significantly reducing the price of those products, and adding
appealing features such as return of premium.
Evolving
technologies have made this possible. In the past, technology was too expensive
for all but the biggest companies and did not help the very slim profit margins
of term products. Today, very robust technologies are affordable for even small-
and medium-sized insurers and the Internet is a cost-effective marketing tool
and distribution channel. Newer technologies also speed up underwriting.
Insurance
companies also are launching consumer literacy initiatives (see “Money
Matters,” Resource,
August 2005), especially via corporate Web sites, many of which are chockfull of
information on everything from money management to retirement planning.
Finally,
insurers are enlisting new distribution partners, especially banks. One
surprising new partner is grocer Kroger, which has been quietly but steadily
expanding its financial services business. Kroger partnered with the Royal Bank
of
Scotland
for its personal finance launch. Three years ago, it launched a Kroger credit
card. Stores now market mortgages, home equity lines of credit and a
just-expanded set of a half-dozen insurance products ranging from identity theft
coverage to home and life policies. Kroger reaps fees for the services provided
by partnering with conventional banks and insurance companies. At the moment, it
is trying out Kroger-branded ATM machines for its stores, which would bring in
fees from customers who access their bank accounts in its stores.
The
grocery chain has been broadening its offerings at the same time as rival
Wal-Mart is expanding its financial services business. Stymied in its efforts to
secure a bank license last year, Wal-Mart has added a new prepaid Visa debit
card to its branded credit card and other money services. It also will increase
the number of MoneyCenter alcoves in its stores to 1,000 by the end of 2008. The
centers, which are geared toward customers who are outside mainstream banking,
offer money services such as check cashing, money orders, bill payment and money
transfers. If it intends to compete head-to-head with Kroger, insurance products
may be next.
Just
who is reaching out to the middle market and why?
SBLI
USA Mutual Life has built its business model around the middle market.
The
company does not use a traditional agency system to sell product. Its
distribution channels are banks, five walk-in retail stores, telesales, direct
mail and the Internet. About half of its policyholders are age 55 or older and
most have a household income of less than US$ 100,000. That demographic is
changing, however, and the company has seen a big up tick in the number of
Latino, African American, and female applicants, most of which are younger and
make far less money.
SBLI
USA
can process simple-issue applications in four days or less. Among its customer
service options are electronic payment, a bilingual (English and Spanish) call
center, and bilingual (again, English and Spanish) self service on the company
Web site.
The
company was founded on the belief that ordinary working people should have
access to affordable, quality life insurance. To deliver just that, SBLI
USA
embraces diversity and high technology. Its associates are 57 percent female
and 62 percent multicultural. And it just snagged a coveted Cisco award for its
state-of-the-art technology infrastructure. SBLI
USA
also has made a major commitment to public service. It supports more than 50
different community initiatives with both money and volunteers, who are
employees to which the company gives paid customer service days.
All of
these efforts have paid off in a big way. SBLI
USA
has enjoyed several years of double-digit sales growth since 1999 as well as
consistent customer satisfaction ratings of 97 percent—accomplishments that
top tier insurers would love to emulate.
Prudential
Financial is another example.
In
December 2007, Prudential introduced MyTerm, a simplified-issue term life
insurance policy that’s targeted to the middle market consumer. The product is
available over the Internet for customers of select banks. Through a completely
online and automated process that can be accessed from virtually anywhere,
MyTerm can deliver a policy in about 10 minutes to qualified customers that may
then be saved electronically or printed locally.
“We’ve
created this new access point for consumers who look to their financial
institution as their trusted advisor,” says Jim Avery, president of
Prudential’s Individual Life Insurance business. “MyTerm provides a fast,
easy and convenient way for many consumers to select a high-quality life
insurance product that fits within their budget.”
The
buying process and service of MyTerm is supported by state-of-the-art technology
operating in a real-time environment. From a secure Web site, customers choose
from a 10-, 20- or 30-year level term policy with face values between US$ 50,000
and 250,000.
The
ING Group is also going after the middle market in a big way.
Late
in 2005, ING announced that it was looking to significantly increase its term
life insurance business with more competitive pricing and the introduction of
new products. The company has since introduced new products, including
return-of-premium term life insurance, lowered its term life insurance rates
several times, expanded its distribution, and streamlined much of its term life
insurance underwriting processes.
The
ING life companies’ half-year term life insurance sales grew 232 percent from
2006 to 2007. According to sales numbers posted by LIMRA, total term sales grew
industry-wide by eight percent over the same period.
ING
TermSmart and ING TermSmart*NY, are offered at 10-, 15-, 20- and 30-year terms.
The product can be converted to select cash-value policies issued by a member of
the ING family of companies without evidence of insurability.
ING is
determined to meet the financial needs of what it dubs
Main
Street,
USA
, especially through its online bank, which operates under the name ING DIRECT.
ING
DIRECT offers Electric Orange, an easy-to-use paperless checking account that
pays a high interest rate, and the Orange Savings Account, which has no fees, no
minimums, and also pays a high interest rate. The Orange Mortgage has no
application fee, a simple application, and a low interest rate, as does Orange
Home Equity. For further savings, consumers can purchase Orange CDs and no-load
mutual funds. ING DIRECT recently purchased ShareBuilder,
a low-cost provider that lets investors buy fractional shares of stocks
and exchange-traded funds (ETFs) with no account minimum. And its innovative ING
DIRECT Cafés, which are located in
Wilmington
,
Philadelphia
,
New York
City and
Los Angeles
, are a big hit with consumers. Decorated in ING’s signature color (orange),
they offer café seminars and Web seminars on a wide variety of insurance,
investing and money management topics. To date, ING Direct has more than 4.5
million customers.
Another
insurer targeting the middle market is AXA Equitable.
About
a year ago, AXA Equitable introduced a new series of term life insurance
products. The five-product Term Seriessm includes redesigned 10-, 20- and
30-year level-term products, a new 15-year level-term product, and a redesigned
annual renewable term (ART) product. With the product suite, AXA Equitable hopes
to reach consumers who don’t have the money to purchase more expensive whole
life products. It built longer-than-average conversion periods into each product
to give consumers more time to save for whole life insurance, to which the
company makes it easy to convert.
It
also is encouraging consumers to take a “laddering” approach to term life to
accommodate a variety of life events. For example, a couple both 40 years old
with children ages 11 and 14 might both purchase US$ 250,000 10-year level term
policies. At the same time, they might purchase a US$ 500,000 20-year level term
policy for the husband and a US$ 250,000 20-year level term policy for the wife.
Then, when their oldest child is 21 and self-supporting, they might drop the
10-year policies.
More
and more insurers are following the lead of SBLI USA Mutual Life, Prudential
Financial, ING
U.S.
and AXA Equitable to meet the needs of the middle market. In doing so, they are
extending the reach of their brand, which will be upper most those consumers’
minds as their financial resources grow, making them logical customers for other
products such a whole life insurance and annuities. It’s a smart strategy that
enables a company retain a consumer’s assets over time.
New Generation
In addition to mining cultural,
ethnic and middle-income markets, insurance and financial services companies are
embracing generational marketing.
Defining
the generations is not an exact science. The breakdowns are subjective and
generalized. Nevertheless, there is solid evidence of generational differences,
according to Neil Howe, a renowned authority on generations in
America
, who has coached everyone from Merrill Lynch to Ford Motor. And there are
dozens of research and trend tracking groups that agree.
The
first wave of Baby Boomers, who were born between 1946 and 1964, retires this
year, as anyone who watches television knows. During the past couple of years,
insurance and financial services companies have saturated the market with iconic
Boomer images and music in highly targeted marketing campaigns (see “Forever
Young” Resource, April 2006). They are going after the Boomers in a big way
with products designed to turn their assets into an income stream.
But
the Boomers aren’t going to be around forever, even if it seems that way.
Nipping
at their heels are Generations X, Y and Z, who are ready for their moment in the
sun. Generally speaking, they are wired to max, with iPod buds in their ears,
cell phones and digital cameras in their pockets, and laptop computers within
reach. It is impossible for most Boomers to fully understand how fluent, fast
and flexible today’s young people are with technology, which is an extension
of their senses and intuitive to them. They are major multitaskers, who work and
play simultaneously.
In
fact, the 2007 book Connecting to the Net.Generation points to a recent survey
of 7,705 college students that found 97 percent own a computer, 94 percent own a
cell phone, 76 percent use instant messaging (15 percent of which are logged on
24/7), 34 percent use Web sites as their primary source of news, 28 percent own
a blog and 44 percent read blogs, 49 percent download music using peer-to-peer
file sharing, 75 percent have a Facebook account, and 60 percent own some type
of portable music and/or video devie such as an iPod.
They
also are much more diverse racially, culturally and ethnically than previous
generations. Community service has been built into their school curricula,
giving millions of them an opportunity to engage society at large in highly
meaningful ways in their home towns and abroad. Large numbers are
environmentalists, organic food fans, and, dare we say it in these conservative
times, Democrats.
Just
how are insurers, banks and brokerage houses positioning themselves for this
brave new world?
For
starters, they’re getting the word out about the billions of dollars and
thousands of volunteers they commit every year to causes ranging from Habitat
for Humanity to inner city cooperative gardens. Insurance companies have long
been some of the most quietly involved and generous corporate citizens in
America
. At the moment, environmentalism is hot.
Allstate,
for instance, has launched Allstate Green, an innovative eco-friendly insurance
option that helps offset auto emissions by funding reforestation and clean
energy projects in the
United States
. The insurer also intends to significantly advance its environmental
leadership, starting with investing US$ 200 million over the next three years in
wind, hydro and geothermal energy projects.
Intent
on becoming entirely carbon neutral through the reduction and/or compensation of
all its global carbon emissions that result from energy usage and travel, the
ING Group has just purchased wind energy credits to offset 100 percent of the
electricity used by its
U.S.
operations. Its commitment has earned ING a spot in the Environmental
Protection Agency’s Green Power Partnership 100 Percent Club. Now ING is
beaming in on increasing energy efficiency, buying more green energy, and
offsetting all remaining CO2 emissions through reforestation projects. Its most
visible commitment to environmental responsibility in the
U.S.
is a 500,000-square-foot, eco-friendly office building, which it just finished
building in
Windsor
,
Conn.
Other
insurers embracing the green movement are MetLife, which has reduced its energy
consumption by 15 percent and carbon dioxide emissions by 17 percent since 2005;
Prudential Financial, which has invested a half a billion dollars in wind energy
projects and reduced its net greenhouse emissions by 33 percent over the past
decade; and Travelers, which has pledged to reduce its total U.S. greenhouse gas
emissions by seven percent by 2011.
Life
insurers also are making socially responsible investment choices and offering
so-called social mutual funds as an investment choice in variable life insurance
and annuity products as well as in 401(k) and other retirement products.
Brokerage houses offer dozens of mutual funds from which they can choose.
Discount brokers are also in the game.
Simple,
cost effective insurance and financial service products are ideal for
Generations X and Y, who will have more college debt—and minimal, if any,
employee benefits to ameliorate the cost of health care or eventual
retirement—than any previous generation.
Recognizing
this, Charles Schwab launched a Generation X initiative in late 2007 to create
products and services that will attract younger investors. The company revamped
its processes to create what it calls a 15-minute individual retirement account,
which allows investors to open an account online quickly. It also introduced
linked checking and brokerage accounts that require no minimum balances. The
free checking account pays a high interest rate and has no monthly service
charges or fees for ATM use or bill paying. On the investment side, Schwab
lowered the minimum investment for Schwab funds to US$ 100; originally the
minimum investment ranged from US$ 1,000 to US$ 2,500. It also lowered its
account opening minimum to US$ 1,000 from US$ 2,500 for brokerage accounts, IRAs
and educational savings accounts.
Fidelity
has launched an online tool that helps young investors develop a simple
financial plan and now offers a SimpleStart IRA that helps them start saving
with as little as US$ 200. American Century has rolled out an inexpensive
program for younger clients called the My Whatever Plan.
Younger
investors also seem to be fueling the popularity of target date funds. In June
2007, Edward D. Jones & Company commissioned a study that found younger
workers are ahead of other generations when it comes to saving for retirement.
Sixty-eight percent of workers between the ages of 25 and 34 have already begun
to save for retirement. Only 34 percent of those over 65 said they have begun
saving before they were 34.
Another important strategy for
insurance and financial services companies who want to capture the business of
post-Boomer generations is getting comfortable with newer technologies for
electronic education, sales and service.
Hitwise,
a compiler of Internet-usage data, says the top three financial Web destinations
for 18-to-34-year-olds are Forbes.com, ShareBuilder.com and Fidelity
Investments’ 401k.com. Portals like Yahoo! Finance and MSN Money also receive
substantial traffic from this age bracket. Financial news and advice video clips
are beginning to show up on YouTube and teen investing Web sites are
proliferating.
Which
companies are targeting generational markets effectively and how are they doing
it?
One
leader is Ameriprise, which has spent nearly US$ 150 million courting Baby
Boomers since the fall of 2005 with a compelling—and highly
effective—marketing campaign featuring Dennis Hopper. The result? Brand
awareness has grown from zero to 56 percent, revenue has grown from US$ 6.8
billion to US$ 8.1 billion, and it is now the country’s largest financial
planningcompany.
In
September 2007, it turned its sights to Generation X with another wave of
targeted advertising. While the new campaign will span TV, radio and print,
Ameriprise will rely heavily on Web advertising. Ameriprise also has partnered
with National Geographic to produce a series of documentary Webisodes featuring
people who embody the idea of living out their dreams. One vignette is about a
Chicago
couple who start a green recording studio.
USAA
is another company that’s mining generational markets very effectively.
Based
in
San Antonio
,
Texas
, USAA holds an interesting—and greatly admired—place in the financial
services sector.
USAA
is unique in that membership is restricted to military officers, enlisted
personnel, and their children. In addition, it does not have a field
force—that is, traditional agencies or agents. Its very uniqueness, however,
made it an early champion of advanced technologies and how to use them for rapid
product development and deployment, for customer service, and for
customer-initiated transactions, such as checking account balances and paying
bills. How else could USAA meet the needs of military men and women, who were
constantly on the move and whom no one else would insure?
Decades
of serving a fluid and remote customer base have positioned USAA perfectly for
today’s market place and it is reaching out to post-Boomer generations as
well.
USAA’s
Web site houses a comprehensive mix of information on financial topics ranging
from setting goals to buying long-term care insurance. The information, which is
organized into five broad categories (vehicle, family, financial, insurance and
house), spins off specific actions such as going to college, buying a home and
coping with loss. The Web site is highly interactive, enabling customers to
deposit checks online, pay USAA and non-USAA bills, and update their personal
property policies. USAA also conducts regular Webinars and podcasts at the site.
A
major component of the Web site is its
Advice
Center
, which offers tips on everything from money management for young adults to
teaching kids the value of money.
USAA also publishes five print
magazines: USAA (for those of middle age and older), USAA.COM (for
thirtysomethings), U.25 (for twentysomethings), U-TURN (for teenagers) and U MAG
(for children aged eight to 12). Each features real-life financial and lifestyle
stories, financial primers, fun stuff that’s age appropriate (such as the
directions for making a duct tape wallet in U MAG), and more. Both the content
and design of these publications is top-drawer.
Complementing
the U-TURN magazine for teens are www.uturnpodcast.com and www.myspace.com/usaauturn.
USAA
provides competitive products and services for kids, teens and young adults
through the USAA First Start® Program, which consists of USAA First Start
Savings®, USAA Prepaid Card®, USAA Teen Checking, USAA First Start Growth Fund®,
and my.usaa.com, which lets teens view their accounts, transfer money and make
check deposits from home.
Other examples include ING and
Nationwide.
ING.
To reach out to elementary school children, ING created Planet Orange at
www.orangekids.com, where they meet guides Cedric and Amy, who take them to four
continents—the Republic of Saving, Moneyland, Investor Islands and South
Spending—to learn about earning, spending, saving and investing. Filled with
clever graphics and animation, the site is engaging, interactive and filled with
useful information. Planet
Orange
also features a
Teachers
Resource
Center
, which offers free, downloadable lesson plans, a teacher’s tutorial and a
curriculum matrix to help teachers learn how Planet Orange fits into the
financial education standards in their state.
To
teach children about the importance of financial management, Nationwide has
launched www.
nationwidekids.com.
As you
can see, many insurers active in the life, pension and annuity markets are
beginning to look beyond the Baby Boomers to grow business.
While
cultural, generational and middle markets are getting the most buzz, it’s
important to remember these markets are not silos. Forward-looking insurers are
drilling into and cutting across demographic data to pinpoint customer needs.
Recent immigrants may have different needs and a different perspective than
second- or third-generation immigrants. Generations X, Y and Z will move through
the same life stages previous generations have and as they do, their financial
needs will change. Women and African Americans—which some insurers segment and
others fold into the general population—may have unique needs. Even the middle
market is in flux, with some analysts saying it’s a prime segment for organic
growth and others saying it will disappear as America devolves into a country of
haves and have nots.
As
these new markets for insurance and financial services products evolve, Resource
will continue to keep you up to date.
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