Reaching Baby Boomers

Baby boomers began to turn 60 this year, bringing the cohort's more than 75 million members closer to retirement. The needs of this more economically active and longer-lived customer segment are diverse, and so are the ways of reaching them. But Jacksonville, Fla.-based LOTS Solutions has a product range and channel delivery capability to match that diversity.

Earlier generations tended to retire definitively and drop off the map as consumers, making them a difficult target market to reach. Boomers, by contrast, can be counted on to continue to work, purchase and accumulate debt until much later in life, says Bob Fullington, EVP, CIO Life of the South (LOTS; $300 million in annual net premium) and president of LOTS Solutions, which markets, manufactures and administers "financial accessory" products, such as debt protection and identity theft insurance, that complement financial institutions' core products.

"We find that the products and services we are offering to middle-aged people are fitting the baby boomers quite well," Fullington says. "Many have second homes and mortgages, so they are carrying a fair amount of debt and want to make sure that it is protected."

Not only are boomers' needs more favorable to insurers than those of previous retirees, Fullington observes, they also are easier to pitch. "In the past you only had two ways to reach retirees—direct mail or phone," he says. "Baby boomers are much more sophisticated with regard to technology and much more in the flow of younger-aged people. Boomers invented a lot of the online stuff and have continued to learn throughout their lives."

Three years ago LOTS Solutions completed an end-to-end insurance processing system that enables the company to market its financial accessory products. "It's basically a marketing system with a back-end administration system that allows us to handle enrollment through settlement, and to push information to our partners," Fullington says. "We have connectivity with just about every large financial institution in the country today."

LOTS Solutions' technology enables the company to make a product offering, deliver that offering and separate it from component parts originating from different manufacturers, Fullington explains. "A product offering might have two or three companies involved, but to the customer it is a single offering," he says. "We have the technology that will break all that apart and send all the appropriate parts to the companies on the back end."

MASS CUSTOMIZATION
In an approach the carrier calls "mass customization," Fullington says, "we take a retail model and build financial accessories around it." If a partnering bank sells a loan, for example, LOTS might offer a debt protection product. "We take the [product] parts that we think will resonate better with customers so that they don't all have to wear a 'size ten shoe'—you can custom build that 'shoe' for them."

The process begins when a financial institution notifies LOTS of a purchase event. LOTS then identifies the customer according to factors such as demographics and prior purchases, using SAS (Cary, N.C.) and SPSS (Chicago) analytical tools. "We segment people out and make an offering through the channel that they are most receptive to," Fullington says.

LOTS not only markets products it manufactures itself, but also those of other manufacturers, and in many cases it conducts marketing for its partner companies. Because of its relationships, it can simplify financial institutions' efforts to provide for their customers' needs. "A bank might otherwise have to deal with several vendors in order to market to its client base," Fullington says. "With us they have just one partner, and we can pretty well get whatever product they're interested in."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio