No nonsense are two words that spring to mind when meeting Mike Tildesley, marketing director at Direct Line. A South London boy, he is clearly at ease in Croydon, home to the motor insurance provider's offices. He claims he comes from the "School of Wisott - what it says on the tin."
Tildesley is celebrating a year on the job at Direct Line, after five years at the helm of insurance company More Than, a business he built from scratch for its parent company Royal & SunAlliance. Compared with More Than, Direct Line is a mature company, founded in 1985 as the original "direct" brand that revolutionised the car insurance market by selling policies direct to the consumer. According to 2004 figures from research agency Mintel, it is one of the leading domestic motor insurance providers in the UK.
Flash forward 20 years and Direct Line finds itself in a market driven by price pressure, with an endless array of competitors jostling for share. Clearly, there's room for Tildesley to reinforce the brand's innovative roots, and it's a challenge he is likely to relish.
Tildesley is a direct marketer at heart (although he dislikes the term), but he very nearly wasn't a marketer at all. After two years as a medical student at St Thomas' Hospital in London in the 1970s, Tildesley turned his back on a career in medicine and became an insurance underwriter for Clerical Medical. After at stint at the Halifax, he was headhunted by Prudential in 1989.
Spotting an opportunity to sell products direct to consumers, he set up Prudential's first DM division in the early 1990s, while completing the Institute of Direct Marketing's Diploma. He then joined CGU in 1998, but left after its merger with Norwich Union two years later, moving to Royal & SunAlliance.
Direct Line, which is now part of the Royal Bank of Scotland (RBS) Group, was the first UK motor insurer to use the telephone as its main channel of communication. Rapid growth ensued as a result of low premiums and heavy advertising featuring the iconic red phone on wheels.
The influence of Direct Line is underlined by the fact that numerous copy-cat companies were launched in its wake and today all the major general insurers in the market have a direct operation. Directline.com was launched at the end of 1999 to supplement the telephone-based sales channel. Car insurance is its main product line, but today the business has expanded to include home, travel, pet and life insurance as well as breakdown cover, mortgages, loans, savings and critical illness cover.
So what does Tildesley feel he brings to the table? There's little doubt that in 13 months he has already made his mark on the business. This has involved masterminding pitches for both the above- and below-the-line accounts, restructuring the marketing department and overseeing a rebrand, unveiled in January 2006. Integrated agency Geronimo, which had previously done DM work on a project-by-project basis for Direct Line, won the below-the-line account, worth about £6.2m, in a pitch earlier this year. Meanwhile, M&C Saatchi took control of the £20m advertising account, previously shared with CHI.
"There was no strategic below-the-line agency relationship and I thought it necessary to have one," says Tildesley. "If you are using direct marketing to sell a service to consumers, you have to have a strong brand to create cut-through - this is what I attempted at More Than. Direct marketing is often seen as separate from brand marketing, but it needs to be equally involved in building the brand. Geronimo produced the best out of four good pieces of work, with good insight into the market. Choice is also down to the chemistry."
In Marketing Direct's Top 100 Mailers Report 2006, Direct Line ranked number 30, compared with 53 the previous year, with a spend of £5.9m on direct mail alone. Figures from Nielsen Research show a total media spend of £38.7m. According to Tildesley, 40 per cent of its marketing budget is spent on brand campaigns and 60 per cent on below-the-line activity. There are about six million customers on Direct Line's database, and an even bigger prospect base, with three million customers accounting for car insurance alone.
"We don't blitz consumers with our direct mail. We would prefer to be a little more targeted and our database and data analysis is critically important to us," says Tildesley.
About 50 per cent of Direct Line's car insurance business comes from the web. But with car insurance now a commoditised market, and most people searching for deals through aggregates such as MoneySupermarket.com and Confused.com, does Tildesley believe Direct Line can achieve brand buy-in online?
"Car insurance is a very competitive market, with a lot of people advertising," he says. "But we have market-leading retention rates because we price fairly and deliver the right service. If there are hikes in prices, people will go elsewhere, but if you are sensible about how customers are managed, they will stay with you."
With Direct Line offering such a diverse product range, is Tildesley convinced that the brand can continue to grow its customer base and increase loyalty levels? And what of the claim that the battle for new customers has led to motor insurance policies being sold at a loss? "Loss-leaders are a waste of time - no one is in business to not make money," says Tildesley. "We reward loyal customers - if they buy several products from us, we give them more."
Working at a fast pace is a key Tildesley philosophy, and one he quickly put into practice at Direct Line. "One of our differentiators is speed, and we've experienced a rapid turnaround. By January this year, we had a new brand positioning, and put together a new team. We felt the market was solely price-focused, but consumers have grown up from this. Price cannot be a differentiating factor. You have to differentiate through your product and your messaging, combined with price," says Tildesley.
Integrated Approach
It's no surprise that the digital space is an area of serious investment for Direct Line and one where it feels it can steal a march on the competition. The company has a sizeable team as well as a research and development operation specifically looking at digital opportunities, which Tildesley is keeping close to his chest. There are big plans afoot - Direct Line's digital work, previously handled in-house, was awarded to Geronimo in August without a pitch.
"Much of our energy and effort is going into search, and creating a good online customer journey," he says. "People who call themselves serious marketers, but who don't understand the intricacies of e-marketing had better go out there and learn it."
Tildesley is a great supporter of integration, and says that the days when ad agencies stuck to above-the-line, and DM to below-the-line activities, are long gone. "Most ad agencies are getting proficient at direct marketing and e-marketing. All the past barriers are breaking down. We have done brand response television ads and DRTV, but in reality, they are all doing the same job - everything needs to be integrated," he says.
When Tildesley established More Than, he was instrumental in helping Royal & SunAlliance get a foothold in the direct insurance market and create a large brand that is now a household name. He might not have quite the same brief at Direct Line, but the challenge, not to mention the competition, is certainly keeping him on his toes.
TILDESLEY'S VISION
On contact centres ... "Consumer experience of contact centres have not been great and it's their views that count. It doesn't matter where our contact centres are located, as long as we communicate with consumers effectively."
On the pitch process ... "I'm not greatly in favour of big pitches - I don't like the idea of putting agencies through major amounts of work. What is important is that all the agencies we work with, from above- and below-the line to media planning and PR, operate together. I don't believe in the concept of a lead agency."
On financial services DM ... "Direct Line is part of Royal Bank of Scotland, so the scrutiny on our marketing materials is intense. This creates a natural environment for us - regulation and compliance is part of our job. It used to be the case that agencies would do non-compliant work, but they are now highly conversant with the requirements of financial services marketing."
On education ... "When I started at Clerical Medical, there was no marketing around financial services products. The sector needs clever marketers and the Institute of Direct Marketing does a great job with its education programme. Some of the best UK marketers now work in financial services and the sector is attracting graduates from disciplines such as mathematics."
POWER POINTS
- Direct Line, a pioneer of direct-to-consumer selling, is now a mature brand in a crowded market
- Geronimo has been hired as Direct Line's first strategic DM agency. It also handles digital
- Search is a key focus for Direct Line
DIRECT LINE'S DM ACTIVITY
Integrated agency Geronimo's remit with Direct Line covers all below-the-line acquisition and customer development and retention activity. This includes direct mail, inserts, door drops, online banner advertising and search-engine optimisation.
It recently developed DM for a brand campaign entitled 'good deal better', with the aim of acquiring households that were reviewing their insurance needs. The campaign communicated the fact that while Direct Line offered a good deal on price, its service and cover was better than those of its competitors.
A series of mailings, inserts and door drops were developed, and the work was integrated with Direct Line's advertising campaign. The number of people opting for Direct Line's car insurance has increased by 20 per cent via the telephone and by 27 per cent through the website, compared with last year.
Geronimo has also been working to improve the effectiveness of Direct Line's website for both existing and new customers and has also been advising on planning and data strategies.
TOP MOTOR INSURANCE PROVIDERS
The RBS Group has emerged as the UK's leading provider of private motor insurance, owning several insurance providers alongside Direct Line, such as Churchill and Privilege. Mintel's latest report on the market, released in May 2006 (but based on 2004 figures), shows that RBS Group and Aviva are responsible for almost half (49.2 per cent) of all new private motor business. RBS had a market share of 33.9 per cent, with gross written premiums (GWP) totalling almost £3bn, while Aviva's GWP totalled £1.3bn in 2004, equating to a 15.3 per cent market share.
Royal & SunAlliance lost motor insurance market share between 2003-2004, accounting for 5 per cent of GWP in 2004. More Than is its main personal insurance brand.
Source: Mintel.
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