You probably don't realise it, but marketing departments at financial services companies drool over you. Around 15 million of us are on their hit list. First Direct, Direct Line, Virgin Direct, Barclays' b2 and the supermarket banks are already running big operations aimed at the young market and well-off older people (whoopies).
Now Prudential, the UK's biggest life company, is muscling in as well. Its new brand, called "egg", opens for business today and sells savings, loans and mortgages over the telephone and internet. Current accounts, investments and credit cards will follow.
Mike Harris, managing director of egg, led pre-launch research among 5,000 potential customers: "They want good rates, but they also want to be seen as an individual, with products tailored to them. Great service. No pressure to buy. And they don't like the person they are being asked to trust being paid commission."
Doing business by phone, net and fax is called e-commerce, and the Pru says early American evidence suggests it can cost as little as one-tenth as much as traditional financial services business, sold face-to-face. Therefore, that should lead to better deals for us.
Around 15 per cent of financial products were bought over the phone last year. Research from the Henley Centre suggests that in 15 years the direct market will account for two out of every three sales, and many will be over the net.
egg is also an admission by the Pru that its core business has a limited appeal and life span. Prudential's commission-laden pensions and investments are sold by a salesman, face-to-face. Few of these customers will be attracted by egg; thus acknowledging a division between more expensive products sold by salesmen to older, poorer people, and the better deals for people who buy over the telephone or the internet.
Martin Campbell, at Virgin Direct, a competitor, thinks egg is a cynical response to the damage done by the pensions mis-selling scandal: "For a company like the Prudential, the biggest name in life and pensions, to hide behind a new name shows how badly it is perceived."
Whatever their thoughts about the recent dents to the Pru's reputation, many people will be attracted to egg for one reason: the country's best instant access savings account rate. egg offers 8 per cent gross paid on pounds 1 upwards, with a guarantee that rates will not fall below bank base rates.
Sir Peter Davis, the Pru's chief executive, admits the savings account won't make money: "It's a bit like asking a retailer if he will make money by only selling milk. If we only sell deposit accounts we won't make money - we'll attract them in and earn their confidence to buy other products."
Mindful of past scandals, the "clean" phone sales companies don't cold call. Instead, they concentrate on training call centre staff to be friendly and efficient. egg even gives each customer a named staff contact.
Rebranding does work. A year ago, the average Barclays Bank PEP customer was 64. After a bit of rebranding and a massive ad campaign, half of all b2-brand PEP customers, who buy over the phone, are under 35. Now it is gearing up to offer individual savings accounts from next April, and believes it will win huge volumes of business by earning Government endorsements, or CAT-marks, showing that its funds offer a fair deal to investors.
egg is not offering any investment products at launch, so there is no way to compare them directly with the offerings from Prudential and its more upmarket Scottish Amicable brand, sold by independent financial advisers. But the Pru already runs a bank, aimed at customers who buy face-to-face from the company sales force. And it gives them a much worse deal.
The Pru's bank's instant access account pays 4.40 per cent gross on pounds 100 invested (egg: 8 per cent), and its mortgage business charges standard variable rates of 8.95 per cent (egg: 7.99 per cent).
Prudential Banking was supposed to be a telephone sales operation as well as a tool for its sales force. That aim has been scrapped. Maybe it was just too close to the Prudential's own name.
who sells what?
b2: PEPs, 0800 626262
Direct Line: savings accounts, 0181-667 1121; home insurance, 0181-686 8877; motor, 0181-686 2468; travel insurance, 0181-680 2121; life insurance and pensions, 0181-681 8414; loans, 0181- 680 9966; PEPs, 0181-253 7737; mortgages, 0181-649 9090
egg: savings, loans, mortgages, 08450 399 399 or www.egg.com
First Direct: phone-based current accounts and full range of banking services, 0800 242424
Sainsbury: savings, 0500 405060; mortgages, 0500 700 600
Tesco: savings, credit cards, home and travel insurance, pensions, loans, 08457 104010
Virgin: PEPs, life insurance, pensions, 0345 900 900; mortgages, 0845 600 0001Reuse content