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Financial Services

State Farm's DR Driver

1 Aug, 2011 By: Thomas Haire Response

Isn't most messaging today about getting a response?" asks Tim Van Hoof, director of marketing communications for Bloomington, Ill.-based State Farm®, the largest insurer of cars and homes in the United States. "That stigma about direct response is attached to the old — and annoying — very direct ‘buy now’ messaging. But when we think about ‘direct response’ more broadly, it allows us to expand what we can say to our consumer. We see what we do as a ‘branding call-to-action’ communication."


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Isn’t most messaging today about getting a response?” asks Tim Van Hoof, director of marketing communications for Bloomington, Ill.-based State Farm®, the largest insurer of cars and homes in the United States. “That stigma about direct response is attached to the old — and annoying — very direct ‘buy now’ messaging. But when we think about ‘direct response’ more broadly, it allows us to expand what we can say to our consumer. We see what we do as a ‘branding call-to-action’ communication.”

Van Hoof joined State Farm 10 years ago and has served the company in a variety of roles before taking on his current leadership position — something he says helped him grasp the different levels of communication that would be necessary to serve the company’s nearly 18,000 agents and millions of consumers. At the same time, he calls his background prior to State Farm “an interesting journey.”

“In each role, you always need to look at your target audience and figure out how to drive their response,” he adds. “I definitely leverage each stint of my career in this role, and — of course — it always helps if you’ve had to consume the very thing you’re marketing.”

Van Hoof says State Farm’s marketing programs incorporate direct response facets across all media — from old school direct mail to the most recent and relevant applications of mobile and social media. He also says that marketing to the insurer’s current customers through these methods is as important — if not more so — than marketing to new prospects.

Of course, with more than 81 million active policies and accounts — including 78 million auto, fire, life and health policies in the U.S. and Canada — State Farm’s current customer base is massive.

“Most of the channels we use are a little traditional, but we’re not only using them to drive a new response to purchase a policy, but also to get our current customers to respond in other ways. Some are about a response to a poll or question, or a drive to contact an agent about another topic — it’s about keeping our customer connected to our brand, invested in our brand. Paying attention to responses to our direct mail or E-mail campaigns in these areas drives the best consumer research for us. Then you look at newer technologies and how they work for us as well. For instance, text may not work so well as a ‘buy now’ driver, but more as an invitation to get involved with State Farm’s brand. I call it direct invitation marketing.”

From Family Business to Fortune 500

While Van Hoof spent time with Research Products Corp. and Koppers Industries in sales and marketing roles, he points all the way back to his childhood when discussing his business beliefs. “I grew up in a family business,” says the now-married father of three daughters. “I am wired as a small-business person.”

While that may sound a little odd coming from a marketing executive at a corporation with 65,000 employees that ranks No. 37 in the Fortune 500, Van Hoof makes it clear that he relies heavily on those initial business experiences at Van Hoof Service when dealing with his current duties and while building his current marketing team at State Farm.

“After college, I moved into sales management, working a Midwestern territory that included three to four states,” Van Hoof says of his time at Research Products Corp. “Then when I moved to Koppers, a utility supplier, there was much more of a business-to-business and marketing aspect to what I did. I had to learn manufacturing, logistics and how to sell to large utility companies. I learned about supply chain management and how to provide maximum value at minimum cost to the consumer.”

He calls his transition to State Farm “a big switch,” saying he had missed the consumer marketing aspect during his stint at Koppers. However, he credits his background as a key shaper of the unique perspective he brings to his role at State Farm.

“I was in a variety of roles here, too, before becoming director,” Van Hoof says. “I was a zone marketing manager and even operated out of an agent’s office using some of the marketing tools we build. That really helps with oversight of internal communications, as well as with external marketing, creative and sponsorships.”

Van Hoof, whose personal passions include missionary work and Harley-Davidson motorcycles, says it’s the varied nature of this professional background that helps him and his team be circumspect in the marketing programs they create. “A small business start, then sales, then B2B marketing and now consumer marketing — it’s been quite a ride.”

Driving the Conversation

Van Hoof’s ride has continued to turn up successes for State Farm’s marketing programs — and he credits DR for much of that success.

“We’ve long thought that DR is a great mechanism for encouraging customers to interact or for making an offer to act now or buy now. We use long-form DRTV and direct mail still as core parts of our DR efforts,” he contends. “But how we really look at it is driving response is the core to our success no matter the medium. There are now many different mediums where consumers feel compelled to respond — E-mail, text, DRTV, social media, addressable TV. For instance, though we’re not quite sure how it works as a sales-specific tool, we’ve found social media prompts our consumers to respond all the time.”

 

State Farm
State Farm’s website, www.statefarm.com, is a treasure trove of information for consumers, as well as offering customers an opportunity to interact regularly with the company. This interaction helps the insurer’s DR marketing programs come to life.

Van Hoof says the company is digging to find ways to “meaningfully” engage and drive results in new marketing areas like social media and mobile. At the same time, he says, State Farm has spent a lot of its time of late “working with current customers” via direct response mechanisms. “They show us more immediate value and response to expanded direct mail, E-mail and E-newsletter marketing,” Van Hoof says. “Creating that ongoing conversation with customers really allows us to understand where we can create new value for them with our products and services.”

He points to teen driver safety as an issue that’s come up within these communication vehicles. “The opportunity to ask our customers to respond to polls or other response mechanisms and tell us what they need is huge for us,” Van Hoof says. “If we know what is valuable in our communication with them, we can understand the kind of products they need down the line.”

He calls this kind of marketing and interaction with current customers “branding DR,” in that it’s not a “buy now” driver, but rather a way for State Farm to gain customer insight and information while driving an improved brand relationship.

But when it comes to bringing in new customers, Van Hoof says, “In the past year, we’ve had a lot of emphasis on DRTV and, digitally, on display banner advertising on carefully selected websites. Our call and click volumes are up — it’s been a significant effort, and it’s yielding great results. As we continue to grow, we will continue to turn up the volume on DR.”

He also adds that using DR so extensively has allowed his team to learn where and how DR campaigns work — and where and how they don’t. “If we know our target audience, have a distinct goal in mind, and stay true to our brand, it works. If we fall short in any of those areas — especially staying true to State Farm as a brand — campaign results typically fall short.”

Van Hoof points to a specific direct mail campaign that recently exemplified that issue. “We over-engineered a direct mail piece we sent out,” he says. “It’s tough because you see a lot of really cool and amazing direct mail pieces hit your own mailbox — there’s something tactile, something stimulating that makes you want to open it. We tried to create something along those lines, but we forgot what our brand is — we forgot what we’re selling. One of our slogans is ‘The right coverage for you — no more, no less.’ For us to send a piece of mail that gives an image of expense or being over-the-top is ineffective. It ended up with high costs, lower response rates and — therefore — diminished ROI.”

A Big Team

Van Hoof calls this mistake “NST” or “new shiny thing” syndrome. But, with how his internal team and State Farm’s external agency partners work together, it’s a syndrome that rarely strikes in Bloomington.

“In many companies’ marketing departments, I think the question ‘Who owns DR?’ creates problems. Here, we don’t speak that way,” Van Hoof says. “We all own all facets of our marketing — it’s a real team with diverse backgrounds. Our analytics people focus on response and campaign optimization — and so do our tech experts, creatives and everyone else. Our group has a singular vision and works toward it daily. This collaborative effort was designed from inception.”

Of course, with nearly 18,000 agents selling State Farm products and services, there is much external feedback for Van Hoof’s group to take into account. “Our agents have done their own marketing — especially direct mail — for years,” he says. “Our job is to give them better tools through maximizing our technology and analytics. We can aggregate information and create better efficiencies for their programs and our national-level programs. Reaching out to those agents and creating good relationships is crucial to build the right tools that allow them to engage their customers.”

Like many large insurance companies, how State Farm markets has evolved over the years from the most effective ways its agents reached local consumers. “In the past, agents and multi-agent co-ops built great programs and pooled their own dollars to connect with local consumers,” Van Hoof says. “They still do and our job is to help those agents strive for success. It’s all about alignment — aligning our marketing team’s goals with those of our agents, as well with the core of the State Farm brand. Our message is that we’re there for people, offering the best price for the best coverage a person needs. Whatever products that consumer needs, our job as marketers — from the agency to our team and all the way up to how I think — is providing solutions based on doing right for the customer.”

Tim Van Hoof

Van Hoof believes that customer-focus is a lifelong goal for the State Farm marketing team. He says that the relationship with the company’s agents requires him to use some of his B2B marketing experience to create the best possible relationship and synergy between State Farm’s corporate marketing team and the agents who are most connected to the company’s customer base.

 

State Farm
State Farm’s E-mail marketing campaigns often offer current customers upsells or cross-sells into other policies offered by the insurance leader.

“We’re a multi-line offerer — as a customer goes through life, we offer products and services that are always there as you transition. State Farm’s products can help customers realize their dreams,” Van Hoof contends. “So our job here is to develop a national plan with input from each zone and each agent. The idea is to create the tools to win at national level, with agents’ thoughts and ideas built in so they can use them to win locally. Our relationship with our agents has to be more of a partnership than an arm’s length relationship.”

At the same time, Van Hoof says State Farm’s ad agency and service provider relationships are crucial to his team’s marketing success.

“Draft FCB has been a partner for a while and they give us great overall insight of what works. They have a great eye for analytics and data-driven decision making,” he says. “Meredith does a great job with our online and print magazines and newsletters for existing customers. They’ve done a great job helping us move into the digital space, as well as getting things like blow-ins in other magazines. They leverage content to trigger response well.”

OMD and Responsys have been helpful on the digital side, as well. “OMD has been our media agency, and they’ve done a great job in introducing us to new and non-traditional mediums,” Van Hoof says. “And Responsys has really been crucial in helping us understand what successful E-mail marketing looks like.”

In the end, the teamwork and focus fostered by Van Hoof has been a tremendous driver to State Farm’s DR marketing success. Still, though, he credits his team and the concepts behind direct response. “DR allows you to drive the consumer’s consideration and action,” Van Hoof says. “It works if you’re true to your brand — and it does it efficiently. For our team, we created a mind shift about what DR can be and we put the right minds on figuring out how it can work best for us. At State Farm, DR both creates and extends that customer relationship. Isn’t that what marketing is all about?”


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