Insurance and Sponsorship 2010 - Redmandarin

8/2/2019 Insurance and Sponsorship 2010 - Redmandarin

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insurance and

sponsorship

red mandarindefining sponsorship

red mandarin

strategic overview 2010


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contents

insurance and sponsorship 2010 3

red mandarin 4

the industry: structural change 5

the industry: changing customer relationships 6

roles or sponsorship 7 organisational 7

marcomms 8sales 9product 9

the sponsorship model 10structure 10media 11

some observations 12

sources & authors 13

Redmandarin Sector Sponsorship Strategy 2010

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red mandarindefning sponsorship

i n s u r a n c e a nd

s p o n s o r shi p


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insurance and sponsorship 2010

The insurance industry, in common with many others, aces thechallenge o change on many ronts.

Where then is the relevance o sponsorship?

Just as a website is always, ultimately, an online re ection o anorganisation, major sponsorships are or better or worse the real-world equivalent.

The choices major sponsorship imposes inevitably touch onstructure, on value proposition, on customer relationship, on brand,on per ormance - on every aspect o organisational behaviour.

This document there ore considers the opportunities andchallenges acing the industry and the role that sponsorshipmight play in re ecting a response to these.

Sources are the reports rom the Big Four Accountants, IBMs 2010Global CEO Study, our learnings rom projects within the fnancialservices sector, and conversations with industry experts.

The whole principle o mutuality has been lost and wereacing radical restructure to accommodate the total change

to traditional distribution channels.

Redmandarin client insurer, Netherlands


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s p o n s o r shi p

red mandarinDespite extensive experience in the fnancial services sector,Redmandarin, clearly, is no expert in selling insurance.

Our expertise is in the application o sponsorship to the needso business.

Our approach is unique.

We bring expertise rom management and brand consultancy; highlevel strategic communications and integrated planning; analyticsand consumer insight; organisational development and projectmanagement and apply them to sponsorship.

Far rom treating sponsorship as channel or discipline, we treatsponsorship as a model or integrated marketing communications.

The advantage o this approach is that is allows us to engineersolutions which are robust, measurable, and directly linked tobusiness plan objectives.

Redmandarin always punches way above its weight

Eelco van der Noll

Global Director, Sports & Entertainment AB InBev


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the industry: structural change

In 2008, Europe was the most important region or insurance anda single European Market or insurance will be brought a stepcloser by EU Solvency II, o ering enormous opportunity orpan-regional players

Emerging markets are expected to grow at twice the pace odeveloped markets, while still making a much less signifcant

contribution to overall per ormance - the potential value o BRICmarkets, is leading to a dual operating model or organisationsstraddling mature and emerging markets, to ensure control andscale alongside localised tailored approaches

The dual operating models present challenges to existingstructures and need to work towards regionally and globallyintegrated operations with stronger divisional and group/ corporate unctions;

In response to concerns over investor confdence, analysts

anticipate a shi t rom revenue growth and return on equity tobalance-sheet strength, robust risk management andoperational e fciency;

Whilst corporate ability to assess risk accurately is an operational

imperative, and actors such as e fcient back-o fce processingunctions become increasingly critical, the businesscustomer

relationship is central

The industry is littered with unconsummated M&A

Global general insurerDeloitte


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s p o n s o r shi p

the industry: changingcustomer relationships

Pressures or transparency are coming rom both regulatorybodies and consumers driven by the internets ability tohighlight individual customer experiences and generate negativereviews;

Financial institutional relationships are coming under increasingscrutiny, driven by events such as Lehman Brothers and thesub-prime crisis

Consolidation o ers insurers scale, synergies as well as newsources o revenue, although the emergence o global insurancebrands - with penetration into Europe by US insurers and intoLatAm and AsiaPac by European insurers presents challengesaround di erentiation and category perception, as domesticinsurers are replaced and rebranded

The dual business operating model required to compete inmature and emerging markets also requires a di erentiatedmodel or consumer relations

Proli eration o products and distribution channels, includingonline, retail sales o insurance policies through non-specialiststa , such as retail banks; and new channels, such assupermarkets and worksite marketing; all dilute therelationship between customer and insurer

With the added pressure o commoditisation arising rom onlineprice comparison sites, customer churn has increasedsignifcantly and the longer customer relationships enjoyed by theindustry in the past are under threat: customer activity in maturemarkets is likely to shi t to improving retention (persistency inli e companies)

Were just another fnancial product now and weve lost ourconnection to the customer.

Redmandarin client insurer, UK


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roles for sponsorship

For some, the shi t o ocus to balance sheet strength andoperational e fciency is an argument not to sponsor. Our approach however involves consideration o how sponsorshipcontent, architecture and integration can support broader businessobjectives. The ollowing pages illustrate some o the roles thatsponsorship can potentially play.

organisational

de-siloing: sponsorship programmes can be used to acilitate cross-divisional and cross- unctional consolidation, and cement new operatingmodels - driven by the imperative o commitment to a partnership o publicnature; major programmes per se o er a common ramework to managediverse stakeholder groups and objectives

employee engagement: sponsorship has been proven to enhanceemployee engagement through a number o mechanisms:

pro essional development on high profle but non business-criticalprojects

personal a fnity with the sponsorship content

pride in an enhanced corporate sel -image providing a clearly identifable purpose beyond proft internal branding: sponsorship can provide a tangible vehicle to drive internal

values alignment, eg one company programmes, behavioural change andcustomer-centricity IBM identifes reinventing customer relationships asone o three key activities or CEOs

M&A integration: external partnerships and goals can generate support or acollective mission that is sometimes harder to achieve with corporateobjectives which, by nature, are constantly evolving and requently onlyrelevant to the most highly motivated cadre o employees

recruitment: demographic shi ts and accelerating globalisation aretrans orming the shape o the labour market: visible values-led sponsorshipshelp to communicate a di erentiated corporate culture and, although the 3Ps (package, perks and prospects) are paramount, can create an emotionalconnection

Sponsorship can mobilise companies that have di fcultyspanning organisational silos.

David Aaker, Chairman, Prophet


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marcomms brand metrics: regardless o the metrics used, sponsorship can be

shaped specifcally to support brand:

unnel metrics, including loyalty saliency and avourability values / attributes corporate reputation: corporate reputation is the traditional preserve o

community investment and CSR, but is inseparable rom sponsorship

customer experience: Ernst & Young argues that customer service isthe product or the insurance industry, but its a product which youonly experience a ter purchase sponsorship allows brands to demons-trate their values and how they treat customers

marketing e ectiveness: sustained product communications lose impact well engineered sponsorship can provide a consistent narrative withhigh emotional or social relevance, which can both reduce marketingcosts (esp advertising and rewards/benefts) and make marketingcommunications more impact ul

senior stakeholder access: sponsorships can acilitate in ormal dwelltime not just with major customers, but analysts, regulatory in uencersand senior governmental fgures; particularly in new and emerging mar-kets, sponsorship can enable accelerated contact with governmentaland senior industry fgures

group-brand-building: Sponsorship can be used to build group-brandrelevance to audiences without messaging con ict with sub-brands,either to increase customer understanding o the benefts o purchasing

rom group owned brands, or to prepare markets or re-brand multi-brand activations: With correct contractual structuring, spon-

sorship assets and relationships can be used across multiple brandsand territories, giving both economies o scale and creating additionalopportunities or cross-sell within the brand port olio.

Marketing was the least mature o our unctions and was organised on a countryby country basis. No segmentation and proposition strategies had been developed.

This was banking 15 years ago, but it was tackled by banks back then.It is still a big issue in insurance.

Global composite insurer, Deloitte


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sales

customer promotion and beneft: many subscription business models(payment services, telecoms etc) are using sponsorship to developongoing rewards and benefts or customers

data acquisition: most rights-holders will hold a membership databaseor control distribution channels which acilitate data acquisition;sponsorship channel approaches can urther support this

distributor motivation: the power o trade incentives is generallyunder-utilised, but given the global importance o the IFA/agent,

sponsorships ability to di erentiate and incentivise could be important

driving distribution: sponsorship can be used in various ways to supportdistribution helping to embed workplace insurance, bancassurance or

acilitate telemarketing

relationship-building: hospitality is an accepted component osponsorship, although brands are increasingly choosing to createtheir own value-added hospitality around bespoke initiatives

partner business development: in many sponsor consortiums, the

proximity to other large corporate partners o ers the opportunity tocreate proftable business relationships, which are o ten overlooked

sales incentives: although sales incentives per se tend to be productdriven, sponsorship can provide incentives which are aligned to brandmessaging

segment targeting: eg with Generation Y estimated to constitute over50% o Chinas work orce by 2013, sponsorship has a clear role to playin engaging this segment

supply: the supply rights value o many sponsorships is not publicised,but can be o a magnitude that repays the rights investment even atthe level o the Olympics

product

product and service development: whilst sportswear manu acturersexplicitly rame many athlete sponsorships around product develop-ment, other large B2B businesses such as Siemens and DB Schenkerhave developed new revenue streams as a direct consequence o theirsponsorships


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the sponsorship model :structure

Approaches to global sponsorship inevitably re ect the changes tobusiness operating models.

single bullet

Traditionally, sponsorship has re ected a centralised businessmodel, with a central property with global stature. Local abilityto leverage this property varies with relevance, and leveragingis requently achieved largely through global ATL templates andaccess to centralised assets.

map of parts

With growing recognition o regional autonomy, many multi-nationalbusinesses have avoured a multi-regional model, allowing eachregion to identi y themes and create a sponsorship architectureshaped by regional needs. Mutli-regional models ace similarchallenges to achieving multi-market relevance and arechallenged to support a global proposition.

framework

In response to the intrinsic weaknesses o the above, a hybridmodel is emerging which creates a propositional ramework orregions to work within.


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the sponsorship model :media

The ragmenting media landscape is polarising business reactionto sponsorship, although it would be incorrect to suggest this isa binary choice: the reality is a continuum, with businessaccommodating itsel to the new media reality in a way whichbest meets their needs and operational competences.

The changes to sponsorship investment and communication inmany ways re ect the shi t in channel mix and integrated planningin advertising.

broadcast

Major sporting events are recognised as one o the ew reliableaggregators o large broadcast audiences, which has become ade ault value driver or much sponsorship. The brand benefthere is largely exposure / awareness.

multi-cast

The ragmented media landscape and the shi t to digital mediaconsumption (PC and mobile), along with the societal impact o themost recent economic crisis, is leading many brands to a sharperappreciation o sponsorship as a driver o multi-cast,multi-touchpoint communications, with a shi t o priority

rom exposure to meaning ul messaging to their owncustomer base.


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some observations

Against the landscape or the global insurance industry, Redmanda-rin would anticipate the ollowing leadership traits to emerge withinthe next three years:

given the enormous reach o the sector and the diminishing contactbetween insurer and customer, sponsorship appears under-utilised bythe industry

the delivery o globally coherent messaging, both in terms o customercommunications and supporting the development o a globally cohesivebusiness model

while global properties are rare, more businesses are likely to adopt aramework approach, allowing regions and markets autonomy within

thematically defned parameters, to acknowledge global/local dynamicsand to address both mature and emerging markets

high profle sports sponsorships are likely to take a back seat in avouro more socially responsive activity, which meets customers andsocietal expectations around corporate responsibility (CR), withagent incentivisation thematically linked

CR and sponsorship activity will become more aligned under

corporate values, and major CR initiatives will emerge to replacesponsorship activity

sponsorship, or CR programmes used as brand plat orms, will be lever-aged to provide customer touch points and proo -points or servicelevels which might otherwise not be experienced, and used tostrengthen a weakened customer relationship

I you share our belie then we would be happy to meet with you anddiscuss urther, or i you have a contrary view to ours, wed like to hear it.


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sources

Deloitte Rethinking business operating models in insurance, 2009Ernst & Young Delivering World Class Service EYCII, 2009IBM Global CEO Study, 2010 Capitalizing on complexityKPMG Global insurance getting the balance rightPWC Insurance Digest 2008-10

authors

Shaun Whatling , CEO, combines experience rom the NGO sector withmedia and entertainment and brand consultancy (MA Oxon)

Chris Roe , Director, has 21 years management consultancy experience(BSc Manchester School o Management)

David Powell , Associate Director, brings extensive experience o quantita-tive and qualitative research techniques, fnancial and brand modelling (BAOxon)


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red mandarin

Redmandarin has been leading the world o sponsorship or over adecade now, by virtue o its uniquely ocused proposition: we bringexpertise rom a broad range o discipline, including management andbrand consultancy; high level strategic communications and integratedplanning; analytics and consumer insight; and project management,and apply to them to sponsorship.

Redmandarin o ers Board-level solutions to theundamental issues o sponsorship:

how to prove the business case or sponsorship?

how can sponsorship address marketing objectives?

how does sponsorship integrate into my overall brand plan?

how can spend be optimised?

what does e ective governance look like?

how to demonstrate value to shareholders?

how to model sponsorship best practice

Red mandarin31 Clerkenwell Close

LondonEC1R 0AT

t: +44 207 566 9410e: [email protected]

w: www.redmandarin.com

Insurance and Sponsorship 2010 - Redmandarin

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