As discussed elsewhere, we’ve been pretty successful at targeting customers who have gone online to do a home insurance related search. We’re pretty comfortable with the acquisition cost of this channel, and these individuals really align well with our target demographic (and appreciate the effort we’ve put into our online quoting flow). Daniel has put together a really sophisticated Google Adwords/Bing paid search campaign that targets literally thousands of different home insurance related keyword phrases (we’ll try get into some detail on our online search campaigns in a future post). Currently, 3.5% of people searching for a home insurance related term (in an area we serve) ends up clicking on one of our ads on Google, Yahoo or Bing. We understand that this is much higher than industry average, but we’re always testing new ways to improve it.
The other way to capture some of this search traffic is to show up prominently in the “organic search” results. Dallas continues to research and write on a variety of topics including insurance, home and personal safety, homeowner, landlord and tenant topics. We’re also employing the services of an search engine optimization firm to help promote that content (as well as our various home insurance landing pages). The hope is that when people are searching for these topics, our pages come up first in the list of results. Frankly, it’s tough to compete with the big guys, or insurance agencies with a strong local presence. All things being equal, Google will rank webpages from long established companies, and companies physically located in the town the individual is searching higher.
So what’s a company like Square One to do to further tap in to the online search channel given that the volume of people searching for home insurance isn’t increasing much? One option would be to expand our product offering, so that we can target more search terms. There’s a lot of search traffic for auto insurance. But we’ve consciously decided not to pursue sell auto insurance at this stage. That’s because we don’t have the resources to be the experts at everything. The last thing we want to do is disappoint our customers, so if we’re going to launch a product we want it to be the best.
You will, however, likely find us expanding into other home insurance related niches, like course of construction insurance, and insurance for homes under renovation. The reason for this is two-fold: (1) to serve the needs of existing customers with a product that’s closely related to our main product offering; and, (2) it’s opportunistic as existing online offerings for course of construction insurance are weak to non-existent.
The second option is to geographically increase the size of our addressable market. We initially launched just in BC, since that was the market we already knew best. Within 6 months we expanded to Alberta, and then Saskatchewan. The launch we’ve been planning for, and anticipating for over a year however, has been Ontario.
Well we finally started selling in Ontario on Tuesday, Oct 22nd, and we’re happy to report that so far our expectations have been exceeded! In fact, in the first week we got more paid search traffic from users in Ontario than we did from BC for the entire month! The reason shouldn’t be a surprise to anyone: compared to BC, Ontario has a lot of people! We figure our addressable market in BC is around 1.6 million households, whereas in Ontario it’s a whopping 4.7 million! Even beyond those basic stats, we had a pretty good sense of what to expect based on research done with Google’s keyword planner tool, and the Google Trends site. The one thing we really weren’t sure about is how much we’d end up paying “per click” for Google Adwords traffic in Ontario.
The determination of what you pay is pretty complicated, but ultimately it’s an auction, so the more competition for the keyword, the more you pay. Given that Ontario is a very competitive market for insurance, we had feared we’d end up paying more “per click” there than we do in the other provinces we were already writing in. Well we’re breathing a big sigh of relief, because so far our “per click” cost in Ontario is averaging around $10 (versus $16 last month in BC).
So there you have it, with our recent launch in Ontario we’ve been able to boost our growth substantially, while sticking to our core competencies (and without breaking the bank). Thank you Internet!
About this blog
This blog is prepared by Square One's leadership team and is intended to give you a behind the scenes look at starting-up a new company in a very mature - and sometimes stodgy - industry. This isn't a blog about insurance, which would be pretty boring even for us insurance geeks.