Budget Direct’s Strategy: Nail Product and Price, “Welcome Everybody Else’s Customers”

Insurance business Budget Direct has grown its market share by getting its product and pricing right, remaining creatively consistent, and being ready to “welcome everybody else’s customers” as competitors increase their premiums during a cost of living crisis.

​Jonathan Kerr, the chief growth officer at Budget Direct’s parent company, Auto & General, said the past few years have featured “a line-up of challenges for the insurance industry, and that meant there was an awful lot of cost going through the business.”

An escalation of natural disasters and extreme weather events in Australia, including floods, bushfires, and storms, has led to a spike in insurance claims. Claims connected to catastrophic events have skyrocketed by almost 50% in five years, natural disasters are expected to drive up claims by 5% each year, and the cost of repairing or rebuilding homes has surged post-pandemic.

As a result, many insurers have steeply increased their premiums, which “actually makes people think about their insurance a bit more than normal,” especially during a cost of living crisis. That has benefitted Budget Direct, whose brand platform, ‘Insurance Solved’, is paying off.

“Cometh the hour, cometh the brand. Budget Direct is out there to be the price leader,” Jonathan told LBB during a recent interview in his Brisbane office.

“We deliver on the highest level of award-winning activity in the market. And so we're the solution. Hence, 'Insurance Solved' to the problem more people face. Our job was to keep our heads down, do the best we could do on our pricing proposition, and stay consistent, then welcome everybody else's customers.

“We'd put a lot of compounding effort into the positioning over time. So this has really been a special time for us, because we've been able to really solve more insurance problems than ever before.”

The brand’s primary offering is car and home insurance, but its coverage stretches across travel, pet, motorcycle, and roadside. It also underwrites Virgin Money, Coles, and Qantas’ insurance products.

As a private company, Auto & General doesn’t disclose financial figures, but it insures millions of Australians, and Jonathan said, “more than 1 in 10 cars driving down the road is [insured by] Budget Direct.”

Remaining privately-owned means the business can prioritise customers versus shareholders, he argued. “We get out of bed every morning to charge the least we can to do well” and do “our level best to make a fair deal.”

“We'll stand by the product. We'll stand by you. We'll try and charge you a reasonable amount for that, but we're not trying to get the share price to go higher with a six month results announcement. We're trying to build the best insurer in Australia, and that's our primary purpose.”

He urged marketers hunting for growth to focus on the four Ps of marketing: promotion, price, product, and place. While promotion dominates the conversation, the product has to be right, and “incredibly easy to buy.”

“The key is: get your product right. I always say, you don't deserve to push unless you can convert. Sometimes people get that around the wrong way. Earn your stripes with the real product that's answering a real customer need. And then as a marketer, you get this incredible opportunity to tell that story, and hopefully better than anybody else.”

Budget Direct’s pricing strategy has become “even more interesting” as competitors’ pricing surges, but Jonathan noted, “the only thing budget about Budget Direct is the price.” The business hasn’t been cheap in investing in its brand -- including in distinctive brand assets like the recognisable audio sting -- and Jonathan said, “consistency is actually one of the secrets,” partly because of the category. “You want your insurer to be consistent.”

“You look at how everybody chops and changes, [and] you can almost tell that it's not working, and they're striving to find the next formula.”

‘Insurance Solved’ launched in 2018, featuring a cast of recurring characters: detectives Sarge and Jacs, and a dog called Chief. At last year’s Effies, it won Gold in the Long Term Effects and Brand Value categories.

The seven-year-old platform was created by 303 MullenLowe, with whom Budget Direct has shared a decade-long partnership, and this year is Jonathan’s 20th with Auto & General. Asked whether a platform stands the best chance of long-term existence and success if it’s matched by lengthy marketer and agency tenures, he said, “The number one reason a platform continues is because it works, and then the likelihood of a person staying in role is because of what they've helped to orchestrate works.

“There will be circumstances where that success is so incredible that the person leaves to go and do something bigger and better. But in most cases, they leave because it's not working.

"I'm supported by an incredible leadership group that is incredibly long-sighted ... I was lucky enough to find this company, and they have backed me 150% all the way. The grass is not always greener.”

One of the reasons the exec -- who also serves as a director on Auto & General’s board -- has stayed is because he’s had the chance to “build a world-class marketing department” of 80 people. His in-house team buys and negotiates all media, and houses digital and data experts.

Just as he praised the lengthy partnership with 303, Jonathan called out production partner Good Oil, director Hamish Rothwell, and photographer Matt Baker as among the “fantastic people” he regularly works with.

“It's quite something to walk on set. We shoot our big set almost every nine months,” he said. Approximately two thirds of those on set are returning Budget Direct partners, from the crew to the caterers.

“Everybody has worked on at least some of the campaign … everybody, is like, 'We're back', and you can see how much they care and they appreciate it. So a bit of loyalty goes a long way. Sometimes they think we might be loyal to them, but we think they're very loyal to us.”

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To read about what Jonathan would do if he started his own agency, read the first piece here.