Meloche Monnex

Company Background
 Founded in Montréal in 1949 by Jean Meloche
 Over time, the company turned from a broker into a producer and direct marketer of “P&C” (property and
casualty, i.e., home and car) insurance policies, mostly targeting affinity groups (professional associations
and the alumni associations of Canadian universities)
 Over time, Meloche Monnex expanded its offices across Canada, including Toronto, Calgary, Edmonton,
Halifax, and Vancouver, branding itself as “Monnex”
 In 1992, the company was renamed Meloche Monnex Inc. It was acquired in 1997 by the Canada Trust
Company
 Meloche Monnex was often mentioned as one of TD Bank’s fastest-growing subsidiaries
 The insurance market could be divided into “life” and “nonlife”
 Meloche Monnex was ranked ninth in P&C lines
 In 2002, Meloche Monnex was experiencing a growth rate of 25%
 Meloche Monnex distinguished itself by its marketing approach
 Meloche Monnex concentrated its efforts on affinity groups and relied on direct-marketing techniques
 The Affinity Niche
 The insurance market was generally assumed to be a commodity market, very fragmented, and differences
in terms of product and service levels
 One advantage of focusing on affinity groups was that members of the targeted groups often shared a
relatively more predictable risk profile due to the relative homogeneity
 While the industry allowed companies like Meloche Monnex to build exclusive relationships with groups,
there existed regulations
 Meloche Monnex specialized in a relatively affluent group
 The average yearly auto insurance premium at Meloche Monnex was about 10%–20% higher than the
industry average
 As a result profit was affected, and expense ratio was 30%, loss ratio was 70%
 The working hypothesis at Meloche Monnex was that the company could expect a loss ratio 3%–4% below
the industry average and an expense ratio converging to 20%.
Outbound Campaigns
 3 sources of new customers
 50% spontaneous inbound calls due to print, word of mouth, flyers
 40% proactive outbound calls
 10% Internet
 2 stage process of telemarketing, 1 st call to get information on the client such as expiry date of the client’s
current policy, 2nd call six weeks before expiry to propose a price and switch to a Meloche Monnex policy
 7 Stage Campaign
 Stage 1: Annual Planning – the team defined the extent of the campaign and allocation of effort across affinity
groups
 Stage 2: List acquisition – the team dedicatedly worked on obtaining a reliable database from each affinity
partner
 Stage 3: Campaign preparation – Before the direct-marketing campaign a print ad was released and databases
were merged and purged appropriately to create the final mailing lists
 Stage 4: Direct Mail – Fliers were sent by mail, endorsing the affinity group by including the logo, also offered the
consumer 2 week opportunity to unsubscribe to company mails and calls
 Stage 5: Telemarketing – Next step was to call prospects in order to obtain expiry dates using a prewritten
flexible script designed to be adjustable based on respondent’s reaction
 Stage 6: Campaign analysis – Results were analysed with particular attention given to trend performance of each
affinity group
 Stage 7 Follow-up and sales – Using a predictive-dialing telemarketing device, prospects were called 45 days
prior to expiry in order to give a competitive quote
Relationships with Affinity Partners
 MM had 177 affinity partners, consisting of professional and alumni associations with which
it worked as provider of personal insurance products
 The company usually had 100% year-to-year retention of these groups
 Across all affinity groups, total potential client base was about 3.5 million people
 Alumni associations which were created to nurture their members’ sense of belonging in
order to encourage donations and to maintain relevance by providing members with a range
of services were the centre of attention for MM and accounted for 40% of the affinity
partners
 A VIP unit of mature analysts handled key players in the association and interacted with
clients who needed special attention
 These alumni associations had to approve every aspect of the marketing campaign involving
their members'’ names hence resulting in the need for MM to carry its telemarketing
operations in-house
 Penetration in alumni associations was usually below 10%, but MM penetration in
professional groups was much higher than the industry penetration rate at 60%
 Customer retention at MM was 93% against the industry’s 80% due to the [personalized
service, good name of the brand, a decreasing deductible and the ability of the company to
offer competitive rates
 Evaluating three changes
Email
 Research found that replacing
stage 4 of the outbound
campaign should be replaced
by email message
 Present cost of email was
high at $0.60 due to setup
costs but was expected to
decrease sharply in the
future
Car Prize
 Last two campaigns included
an insert announcing a
chance to win a luxury car
 Policy holders were
automatically entered and
new prospects count enter
the contest by providing their
expiry date
Price competitiveness
● 2002 campaign carried the slogan
“Enjoy preferred group rates …
and individual care”
● MM made its price
competitiveness very prominent
motivated by the realization that
consumers placed price as the top
choice criteria
 Direct Mail Vs. Email

  Direct Mail % Email %

Total Mails sent 10183 100% 3397 100%
Remaining Members for Telephonic Conversation 7932 78% 3097 91%
Successful Contacts 108 16% 781 23%
TM Dates Obatined 2999 29% 1468 43%
 
Cost Per Mail ($) 1.5 0.6
Members reached out 5000 5000
TM dates obtained (23%) 790 1150
Accounts converted (Average conversion rate 22.5%) 177.75 258.75
Premium charged(assuming $100) 17775 25875
Total cost of mailing 7500 3000
Cost per Account converted ($) 42.19 11.59

Cost of Email seems to be more reasonable than the Direct mail.

Thank You