The Direct Line approach to insurance
The aim of Direct Line was to provide customers with high quality cover,
backed by high standards of personal service at low prices. The company’s
research showed that this proposition was the opposite to the perception
most people had of traditional insurance companies. Direct Line aimed to
achieve this lower price, higher quality service by operating at lower cost
not only eliminating the role of the broker, but by the innovative use of
technology.
The use of advertising
Direct Line reached its customers by the use of high profile advertising
coupled with extensive direct marketing. In its early years this was largely
via the use of national press advertising. In 1990, however, Direct Line
moved much of its advertising to television and introduced the little red
telephone on wheels responding to a number of motor and household
insurance situations. Conceived of by Mr Wood and his team, the TV cam-
paign was awarded the BDMA Royal Mail Direct Marketing Award for the
most innovative campaign of the year. Commenting on the success of the
campaign, the originating agency, David Wilkins Advertising, stated:
The lively use of the very simple device of the Red Phone has achieved a much
greater level of enquiries than press alone. It also had to persuade a broader
audience, which had perceived direct insurance operations as being ‘fly by
night’ or financially unsound. The Red Phone has achieved the added benefit
of making the method of response – the phone – virtually its own. It has
become an immediately recognisable and memorable symbol for Direct Line.As a result of the campaign, quotations from areas with TV support, com-
pared against those without, were dramatically higher. Moreover, tracking
data showed that awareness of Direct Line increased from 27 to 46 per cent,
while perceptions of Direct Line as a forward-looking company rose from
20 to 40 per cent, as a reputable company from 11 to 26 per cent and for
high quality service from 7 to 15 per cent. The judges of the BDMA award
described the results of the campaign as ‘fantastic’. The response rates to
Direct Line advertisements were carefully monitored to identify for man-
agement their economic effectiveness. All potential customers seeking quo-
tations were asked where they had heard of Direct Line. The number of
quotations per ad, whether TV or press, was thus monitored, as were con-
version rates from quotations to policies, although this latter figure was
also influenced by the telesales operators. Nevertheless, management was
confident that it had a reasonable view of economic effectiveness of Direct
120 Relationship Marketing