Speech copywriting - GAN
We've been writing 'pep talks to the troops' for almost 20 years now, often covering fairly techy ground to audiences primarily made up of hungry, hard-bitten salesmen. The tone is all-important: educating without condescending; inspiring and enthusing without inviting cynicism.
Helping Marketing achieve corporate objectives
Sales, of course, is key. If you don't generate enough sales, you won't reach the critical mass of revenues necessary to cover your expenses. But it's not just about the sheer volume of sales; you also have to consider the mix of sales. You need to consider factors such as price-sensitivity and margins. You have to take into account age distribution - particularly with certain types of protection business. And you have to consider average size of policy. Analysis of these and similar factors enables you to check whether your pricing assumptions were valid, and to assess the accuracy of your embedded value estimates. Ultimately, whether or not you're profitable.
Persistency is, of course, another key variable. How long do policies stay in force? Are the periods the same for all distribution channels, and within a distribution channel for all segments? If you discover a particular segment with a particularly bad lapse rate in the early months, are you looking just at a blip - a one-off, about which you can do nothing but shrug your shoulders? Or is there some serious, underlying problem, which will continue to cause you grief over time unless you take some kind of action?
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Then, of course, you have to look at the numbers on mortality/morbidity. You have to compare them against national statistics, and ask yourself various questions. If trends are improving, should you reduce rates, given that some existing policyholders are also new policyholders? For example, we recently decided to upgrade the definitions for critical illness - on existing policies, and without charge - to encourage those policyholders to stick with their existing policies rather than cancel them in favour of a new policy offering better terms.
And underlying all these sorts of considerations, there's also one basic factor: all existing policyholders have a vested interest in the continuing financial health of the organisation. Existing traditional policies - particularly ones with a large cash value - have a large stake in protecting the value of that investment, and should therefore be willing to contribute to maintaining the underlying corporate financial position which underpins that investment.
SLIDE 7 - with top and bottom highlighted
This brings us onto another crucial area - that of costs.
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It is vital that we understand more fully what actually drives our cost base. It's a tricky business, in our industry. Again, for the widget manufacturer or the corner shop, keeping tabs on costs is fairly straightforward. But in our business, it can be quite hard to work out exactly where your money's actually going.
We're beginning to get to grips with - for example - gaining a better understanding of the unit costs on various types of existing business. We're discovering quite wide variations in the ongoing maintenance costs for different types of long-term policies. Old-style, inflexible, policies are relatively cheap to maintain; newer, more adaptable policies tend to mean a higher cost-base. And, again, underlying it all, there's an ongoing benefit in ensuring persistency. If that means loyalty bonuses, so be it. Policies that lapse can do horrible things to your embedded value assumptions.
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Until recently, we used the same sort of horizontal/vertical analysis for expenses as any other business. But the problem with this approach is that it's not a very powerful tool for getting to the real understanding you need about what drives your costs.
•What are the inputs? From whom?
•What are the outputs? And to whom?
The limitations of this vertical/horizontal model are driving us towards a fundamentally new analytical tool: the horizontal cost relationship. This takes us away from a fragmented, departmentalised, 'who does what? Where do they do it?' perspective, towards a more 'holistic' approach, as you might call it, which attempts to look at 'what we do to deliver x' across the organisation.
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Ie, we're trying to analyse the total costs of a given business process, rather than the individual costs of particular activities. We're at the relatively early stages in carrying out this kind of analysis, and certainly we're not yet at the point where we can calculate with total accuracy. But as in most of life, it's better to be approximately right than precisely wrong.
Ok. So far so good, I hope.
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