Highmark Increases Mail Volume, Cuts Acquisition Costs

Thanks to shifting budget dollars away and reevaluating its media spend, Medicare insurance marketer Highmark was able to more than triple its direct mail volume and cut its acquisition costs by 63%.

Medicare marketing is a challenging prospect, notes Kristy Reed, director of direct marketing and campaign management for Highmark, an independent licensee of the Blue Cross Blue Shield Association. The company markets under four different brands and insures over 2.4 million seniors. But marketing in the space is heavily regulated: Enrollment is only 6 weeks each year, and products can only be marketed for three months annually. And then, there’s the 45-day cycle to get copy approved by the government.

This all means there isn’t room for mistakes Reed told attendees during a session at DMA:2010 on Monday. Highmark has been working with the Hacker Group on repositioning its marketing strategy for about three years.

A big “ah-ha” moment, said Tom Reid, chief strategist at Hacker’s HealthHG subsidiary, was reallocating the media spend. In DRTV, direct mail and FSIs, different touches, formats and media plans were tested. “Having a lot of variety in the market enabled a lot of testing,” he said, citing how elaborate DRTV creative needed to be and the number of pages in a direct mail packages as variables tested.

DRTV production costs were cut. Live actors are expensive to use, so Highmark moved away from live action spots, focusing more on spots utilizing still images that were solution centric, rather than product centric, said Reid, noting that in some markets seniors are faced with up to 50 different plans to choose from. “That’s daunting.”

This resulted in a 21% reduction in DRTV production costs. That budget was then channeled into increasing the number of spots running by 31% (11,100 spots per year versus 9,100 the prior year) to reach a wider audience. Sixty second spots were also utilized, as opposed to 90 second spots, which are sometimes difficult to place thanks to inventory availability during times like the holidays or election seasons.

Different FSI creatives were also tested. While some companies might consider pulling out of newspaper advertising, this market—seniors—is still print centric, he said. “They’re the ones keeping newspapers alive.”

And as for direct mail, over 250 different versions of various creative approaches were tested, allowing Highmark to identify three winning controls that each pull about a 1.4% response rate. Mail volume was increased by 190%, from 1.1 million to 3.2 million.

Creative approaches range from traditional looking #10 envelope packages to more elaborate mailings incorporating things like magnets imprinted with reminders about annual enrollment dates. Self mailers with pictures of smiling grandmas wearing funky sunglasses were also tested. While these types of packages are fun to create, they’re difficult to make work in this market, said Reid.