Line advertising, including advertising decay. This data was immediately
available on Direct Line’s sophisticated MIS system.
Direct Line backed its advertising by the aggressive use of public rela-
tions with a view to seeking editorial coverage. Commenting on Direct
Line’s approach to home insurance for example, Mr Wood noted that,
having introduced home insurance in 1987:
We decided that 1990 was to see a major thrust from the company to
acquire more household business.We launched a forceful press and TV cam-
paign in early June aimed at challenging the dominant position held by build-
ing societies in the home insurance market. At the same time we made a
formal submission to the Office of Fair Trading asking them to consider
whether the customer really has a free choice in the selection of his house-
hold insurer. Our initiative gained widespread, quality coverage on TV and in
the press and has prompted a growing number of consumers to direct their
own complaints to the Office of Fair Trading.In its advertising Direct Line guaranteed to cut household insurance costs to
new policy holders provided houses were purchased during the previous
five years via mortgages from 17 of the 20 leading building societies and had
been continuously insured through them. The campaign and the related
press coverage prompted a defensive response from many of the leading
building societies which had previously actively promoted household insur-
ance through themselves to mortgagors and on which they received com-
missions of some 30 per cent from the insurance companies. As a result, the
number of quotations and acceptances of household insurance via Direct
Line increased dramatically. Commenting, Mr Wood added, ‘While the
objective of all this activity was to increase our sales we, nevertheless, believe
in a fair deal for the consumer and in the consumer’s right to choose the
product which best meets his or her requirements at the right price.’
The provision of personal service
Mr Wood believed that much of Direct Line’s success could be attributed
to the company’s focus on high quality customer service. Unlike traditional
insurers, who had little or no direct contact with policy holders, Direct Line
encouraged customers to talk to them by telephone. During the financial
year to 30 September 1990, Direct Line received 1.7 million telephone calls.
By 1992 this number had grown to 4.4 million. Not only had the company
attracted many new policy holders but the customer retention rate was
substantially higher than most other major insurers.
Customers seeking a quotation were greeted by a telephone system
which could prioritize incoming calls, direct them to a free operator and
The customer market domain: Managing relationships with buyers 121