No customers, no brand recognition and floods have not stopped the successful development of an insurance brand aimed at small businesses.
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Entrepreneur: Mike Hooton, General Manager
Company: ABBi - Australian Better Business Insurance
Business type: Small business insurance experts
Founded: 2001
Employees: 37 employees (Sydney head office: 12 marketing and support staff; Adelaide: 25 national operations staff)
Contact details: 1300 304 111
The ABBi Story
Mike Hooton arrived in Australia from Britain in October 2000. His mandate from Royal & SunAlliance insurance group was to research and develop a new business specialising in direct insurance cover for small commercial clients. The marketing strategy would focus on Australia’s 750,000 micro-businesses, typically with 0–5 employees, many of them home-based operations.
One year later, ABBi was launched with Hooton as general manager. His challenge: to create a business and develop a brand from scratch. Royal & SunAlliance wanted to capitalise on the success of its other direct businesses in Australia such as AAMI and Australian Pensioners Insurance.
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Key learning points:
- Business continuity - A tested business continuity plan is essential. A good plan will allow a business to quickly recover from a service interruption.
- Public relations - When developing a brand, do not underestimate the value of public relations in differentiating a company or organisation from its competitors.
- Business systems - Develop a stable business platform before widening a customer base. In any direct business, every touch point with the client needs to be well managed.
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The direct business model offers potential cost savings and a more responsive service for clients. Other types of commercial insurance cover can also be cross-sold to existing customers. Hooton says: “Small business insurance historically had been the bastion of insurance brokers. We saw opportunity in offering small businesses the chance to deal direct on their commercial insurance in the same way as they do with motor or household insurance. But I certainly underestimated how hard it is to actually build a brand. The time and investment needed is significant.
“We were building a business from nothing. We had zero customers. We had to build a new IT infrastructure, as well as a new rating engine. And we still have the challenge of building our brand awareness. We also had to get the right people in place and the right business systems so that as we grew, we didn’t fall over.”
The importance of a stable operational platform and a tested business continuity plan was brought home to Hooton over a couple of difficult days in late 2002. Floods cut the power to ABBi’s Adelaide operations centre. There was no back-up power supply. Fortunately, the outage only resulted in minor service delays. But Hooton says that anything more substantial could have damaged the company’s client relationships: “In any direct business, the inability for customers to contact you has a major impact, not only in terms of any business that you would generate, but also on your brand and your reputation.”
Creating and developing a new brand requires a well-researched marketing strategy. Hooton’s team spent considerable time analysing the purchasing patterns of small and medium-size businesses. To attract clients, ABBi had three main strategies: occupation-focused direct mail campaigns, alliances with prominent small business organisations, and extensive public relations activity. The latter includes participation in seminars and public speaking engagements.
Hooton says that providing practical risk-management tips to companies is crucial in positioning ABBi as a leading authority on small business issues. The company also relies heavily on word-of-mouth and referrals.
ABBi now has a core base of customers and will soon begin a widespread television and print advertising campaign. Hooton says: “We’ve waited until we tested our delivery model before embarking on that. If you don’t get your service right, you can get as many customers as you want but if it all falls over when they touch you, then you don’t have a brand, you don’t have a reputation at all.”
In 2003, Royal & SunAlliance in effect sold its Australian and New Zealand operations. ABBi, as a subsidiary of Australian Alliance Insurance, became part of Promina Group, which listed on the Australian and New Zealand Stock Exchanges on May 12. As part of Promina Group, ABBi benefits from cross-referrals and shared procurement systems.
However, the corporate change has produced fresh challenges such as outsourcing. As a fledgling business, ABBi required a big infrastructure to operate a national claims service. It decided to outsource the service to a centralised unit within the larger group. Hooton says that not being able to directly control the claims function within his own business is frustrating. He has established internal service agreements and strongly emphasises training for claims personnel.
Hooton says: “The larger challenge for us as we grow within Promina Group is to remain agile like the small businesses that we service. Our clients are innovative and entrepreneurial. We have to retain that ethos.”