Personal Lines Broker of the Year

Faced with a challenging market, Kwik-Fit Financial Services took bold steps to boost its business. Andrew Tjaardstra finds out how its targeted marketing campaign reaped rewards

Kwik-Fit Financial Services - To boldly go.

At the beginning of 2005, Kwik-Fit Financial Services found itself faced with a challenge: marketing spend in the UK motor insurance sector had increased 45% over 2004 to £160m; and the broker's management accounts team discovered the cost of its new motor policy acquisitions had increased by £15 per policy between 2003 and 2004. The broker responded with more tailored insurance offerings, enabling it to deliver high-quality service and growth during this challenging period, proving itself a worthy winner of the Personal Lines Broker of the Year Award 2006.

After experiencing impressive growth in premium income and brokerage between 2002 and 2004, an increasingly competitive climate led Kwik-Fit's management to undertake a radical rethink of its growth strategy. It identified two courses of action: to chase smaller amounts of new business at a higher cost of acquisition; or to adopt a highly targeted marketing approach, identifying those customers who were most likely to make a purchase.

The second option won out and a strategic plan was drawn up to target specific areas of the market with specific products. The broker's heads of department were asked to put together 'tactical' plans, which were presented at an 'away day' in January 2005. A detailed analysis of the returns from marketing was undertaken, leading to the number of Kwik-Fit's direct mailshots being reduced from two million to one million. It pulled out of 25% of advertising in directories, such as the Yellow Pages.

The company also reviewed results from its outbound call centre. More than two million quotations and 300,000 sales were analysed. A Kwik-Fit spokesman said: "We now only phone customers where we know we have a high chance of winning the business - the result being a much better experience for both customers and our people."

The approach resulted in a huge reduction in call volumes. Calls to Kwik-Fit Autocentre customers decreased by two-thirds in 2005; inbound motor quotes were cut by half; while outbound motor quotes reduced by about 300,000.

In addition, sales people were reassigned to make better use of their expertise. Outsourced arrangements with UK outbound telemarketing agencies were cancelled and an outsourcing contract in India was discontinued.

As a result of the reduced call volume, it was necessary to make staff cutbacks. However, remaining staff were given increased training to capitalise on cross-selling opportunities. These changes included the inbound sales department being combined with its customer care offering.

The results were impressive - the inbound conversion rates improved by 11% in 2005; while the outbound conversion improved by 7% in the same year.

By the end of 2005, Kwik-Fit's household book increased by 25%, a further 10,000 policies. Products such as life assurance and critical illness were added to its insurance portfolio, which already included motor, pet, van, home and travel insurances. It also started selling gas and electricity.

Overall, pre-tax profit increased 40% from £5.5m in 2004 to £7.7m in 2005. Operating profit ratio increased to 17% from 13% in 2004.

Bold decisions

The British Insurance Awards judges felt this strategy was a dramatic step but one that, ultimately, paid off: "At the end of 2004, Kwik-Fit recognised the growing threat to its business of softening rates in the motor market. It took a number of very bold decisions during 2005 to re-engineer its business model in the strong belief that chasing the market down would be both harmful and unproductive. Despite the risks attached to this strategy, it has clearly been successful with overall growth in policies being achieved with substantial improvements to both the pre-tax profit and the operating profit ratio."

Kwik-Fit is hoping to improve on last year's performance in 2006. A Kwik-Fit spokesman said: "As long as the cycle continues to be soft it is imperative that the effectiveness of the targeting initiative continues to improve. We will be extending the range of questions we ask our customers following their visit to a Kwik-Fit Autocentre in order for us to pinpoint our most profitable customers."

WINNING WORDS

Third-time lucky winner Kwik-Fit is pleased its efforts to create a 'bigger bang' succeeded, says managing director Martin Oliver.

After collecting the Personal Lines Broker of the Year Award, Martin Oliver, managing director of Glasgow-based Kwik-Fit Financial Services, took it back to his deserving team. He said: "This is fantastic. This is the third time we have been shortlisted, which shows how competitive it is - the quality of entries has been impressive - but our time has come."

Mr Oliver praised the awards, saying: "This is the premier event of the insurance awards. We are in great surroundings and anyone who is anyone is here. It is always a good night at the awards."

Mr Oliver collected the award to the Star Wars soundtrack, expertly played by the Royal Philharmonic, and continued: "All of the Kwik-Fit management team are here sharing in this success. We managed to create a more effective spend and improved the targeting of labour and staff, altogether achieving a bigger bang for our buck. We have clearly impressed the judges. The biggest departments who produced this change were the IT and finance teams - not traditional people."

Kwik-Fit has already embarked on its plans for future growth, as Mr Oliver explained: "We are now spending more on developing the internet since it is the distribution channel of the future. We will be there as a major player."

Sponsored by Lloyds TSB Insurance

Finalists 2006

- Footman James

- Insure & Go Insurance Services

- Kwik-Fit Financial Services

- Thomas, Carroll (Brokers).

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