CASE STUDY 7
Re-intermediation
Tony Gauvin, 2006
Company 7
• Small niche-based insurance company
– Home insurance
– Very competitive
– Well-branded
• Goal – lower distribution costs
– Reduction in services
– Create broader market reach
• Marketing Theme
– Creating and delivering goods, services and
ideas.
Overview
• Traditional View
Company G
Sales Agent
– 3-level channel system
– Sales Agents
Service
• Sales
• Delivery
• Service
• Distribution Channels
Delivery
– Intermediaries
• Disintermediation
• Reintermediation
Customer
Electronic Distribution View
• Productivity gains
• Reduce costs $
• Redefinition (elimination) of
distribution channels
• Insurance company’s efforts to
implement
– Meet with intermediaries
Company G
Sales Agent
Customer
Service
Delivery
Intermediaries View
•
•
•
•
Company 7 is becoming a supplier and competitor
Electronic direct sales vs. Sales Agent
Loss of “face-to-face” interaction with customer
Contends that goal can be achieved without
disintermediation
– Reduction of costs
– Direct marketing
– Share Cost of marketing (Company 7 used to pay for all)
• Sponsor survey of Homeowners
– 3 objectives to measure
• Preferred method of service
• Preferred method of purchase
• Preferred method of delivery
Results of survey
• Equal distribution of sales channel preference
– Open-ended comments suggests that choice to buy online or not depends of complexity
• Same results for service channel
– Simple – online FAQs
– Complex – Agent
Preferred Method Of Buying
• Results for delivery
35%
Face to Face
35%
– varied
Online
Choice
• Customers want Choice!
• Marketing Mix transformation
30%
– 4 P’s enhanced by four C’s
Preference for Delivery
15%
30%
15%
Face to Face
Online
Choice
Mail
40%
Solution
• Reintermediation
• Strategies
– Deepen relationship with existing
intermediaries
– Develop relationships with new Intermediaries
– Provide technologies to improve productivity
for the intermediaries
• 2 Level distribution channel
Company G
Sales and delivery
Service
Customer
Stakeholders
• Suppliers
– Sales agents
– Became partners (Strategic alliance)
• Customers
– Existing
– Prospects
E-Commerce
• The delivery of the policy is selected
by the customer
• Online courses available to the
brokers, dealers and agents
– pay for courses through the web site
• Site maximizes security and
encryption software
– evaluating possible combined solutions
(e-commerce with CRM, ERP, SCM)
Business Intelligence
• Surveyed customers
• Attitudes toward SST (self service
technology)
• Met with intermediaries
• Discovery for company
• Solution
– re-intermediation
Customer Relationship
Management
• Two customer groups to focus on
– internal customers (brokers, dealers
and agents as external sales force)
– external customers (end-users; policy
holders)
• Case focuses on both
• Internal customers
– re-intermediation provided electronic
supplement to the brokers, dealers,
agents
Customer Relationship
Management
• Internal customers (cont.)
– Portal to conduct business
electronically
• External customers
– Customer communication focus on
the web site
– Almost 2100 links to the company’s
site
– Alliances with various groups leading
to a referral to broker, agent, dealer
Customer Relationship
Management
• Illustrates the Services Marketing
Pyramid (Case Study 6)
• firm to sales force (internal marketing)
– uses web site to recruit sales force
– online insurance training
• external sales to external customers
(Interactive marketing)
• firm to customers (external marketing)
using web site for information and
sales/lead generation to external sales force
Supply Chain Management
• Somewhat “blurred”
– External sales force is also distribution
channel
• Productivity gains
– reduced paperwork
– increased broker, dealer, agent
convenience for managing the process
(24/7 availability)
– created more time for sales force to
generate more business
Enterprise Resource Management
• Leveraged the external sales force
portal concept
• Created one for internal employees
• Reduced routine human resource
inquiries
– HR staff focused on more complex
issues
• SCM productivity gains lowered the
cost of doing business
Value Bubble
• Attract
– Use external sales force
– Use attractive design
– Technologies
•
•
•
•
JSP
Frames
CSS
PDF
• Reacted to 9/11 on 9/12
Engage
• Customer concentric based on
Intermediaries direction
• Enhancements and new offerings
• FAQs
• Ability to get quotes online
• Online calculators
• Technologies
– JSP
– JavaScript
– databases
Retain
• Upgrades and enhancements
• Stories on homeowners issues
• Technologies
– Random collection of photos
– Espanol/English Limitation
– One article
Learning
• Clickstreams log files & user input
– Not uniform
– Problems with links
• Merging of on-line on off-line
customer databases
– Study demographics
• Relate??
Value Bubble
• Evaluated the external marketing site
– Site was leveraged during September 11
tragedy
• External sales force site is in prototype
• Recognized as differentiator and leader
– reinforcing the brand among sales force
• Engage, Retain and Learn are key stages
– portal (internal marketing) and public site
(external marketing)
• Relate is for the future
Summary
• Success ??
–
–
–
–
likely
Good strategy & actualization
Some technology glitches ..easily overcome
Good example of reintermediation
• Marketing Theme
– Valuable exchange process
• Questions