Clientele is Strong On Strategy, Objectives [column]

IN TUESDAY's column I mentioned I had intended to write something more on Clientele 's marketing strategy, which is mainly based on direct-r esponse selling.

The strategy will be familiar to you. The suppliers of a product communicate directly to the consumer what the features of a product are and, if successful, elicit a purchase without the intervention of a middleman.

Businesses such as Verimark,  Glomail and Homemark, for example, feature their products on television and invite viewers to buy the products immediately by making a telephone call.

The strategy does not require the business to have physical outlets, but you will find stand-alone stores and also outlets in discount stores.

In the financial services market, Clientele is the market leader in the sale of life insurance by direct response. It offers simple packages and the products are supplied via its call centre - nothing unique in this and comparable, for example, to the sale of short-term insurance by Outsurance.

You may know too that Clientele has a close affinity to the Netherlands and that the Enthoven family, who have a substantial holding in Clientele, is of Dutch origin.

The company I managed in the Netherlands offered, among other products, two simple products that could be marketed successfully by direct response. One was a simple package, mainly long-term investment with small life cover. It had a tax advantage and was targeted to the mass market. The other was the Dutch equivalent of our own retirement annuity. Its market was higher-income individuals, and it also offered a tax incentive.

When the company was started, we had to decide whether the business should be a direct sales operation, employing its own sales force, or should woo established brokers who were, with few exceptions, short-term insurance brokers. With no brand recognition, it seemed to our management team that it would be an expensive, and possibly futile, exercise to battle against the entrenched direct life insurers. There were too many negatives allied to building a force of representatives. Instead, we employed in-house consultants to canvass and support the brokers and wean them to life insurance.

It did not take long before several of these realised that, given the generous commissions they had earned, they could sell our products by direct response, especially as we could give their products their own label.

When Clientele (then only Clientele Life) went into the market, it did not have to compete with direct life insurers. It had, indeed, to spend money to establish brand recognition but this could be, and was, achieved when advertising its products.

Clientele's operation is not exclusively direct selling. It is supported by independent field advertisers and it has its own independent field advertiser brokerage in the Nigerian (now mainly cellphone insurance) operation. The company has, in just two years, become one of the market leaders in legal insurance and is successfully selling its Hospital Cash product.

Exploiting its marketing strategy, it is in a joint-venture loan business with Direct Axis.

This all has little to do with the Private Investor portfolio, but it has much to do with companies which, such as Clientele, have defined strategies and implement them by managing to achieve their objectives.