International Expansion in the Midst of a Country with Economic, Social and Political Chaos
Prudential Seguros was established in 1998 in Argentina. It is a subsidiary of Prudential Financial. It provides protection-based insurance and financial products to businesses and individuals. When the company began it only hired sales people and managers who had no previous insurance sales experience.
In 2001, after a strong, record-breaking start (revenue grew from zero to over 5,000,000) one of the deepest of the Argentine financial crises occurred. The government defaulted on its foreign debt and the currency, which had been pegged with the dollar, lost most of its value. The customers were frightened and the employees were paralyzed. Morale suffered and sales fell dramatically. The customer acquisition rate was negative as more customers were cancelling their contracts than were purchasing them. New sales were virtually non-existent. Competitors left the country.
As Chief Marketing Officer of the company and Vice President of International Insurance, Barbara Fowler, now a Chief Outsider, was charged with developing marketing strategies that succeeded in this difficult environment, rebuilding company morale and retaining the existing customers.
Fowler, along with the rest of the executive team, needed to reassure the employees first. Daily briefings about the political and economic situation occurred. Regaining trust with employees and customers was key. Plans were made based on many contingencies since no one knew exactly what laws the government would implement. Customer out-reach calls were made to all existing clients. Compensation plans were quickly adjusted to retain the sales and sales management people. Computer programs were updated. New marketing strategies were developed, focusing on businesses and individual prospects. New sales training to respond to new customer objections and concerns commenced. As Theodore Roosevelt once said, “Do what you can, with what you have, at the time.”
Strategic actions required
- The entire company participated in developing solutions and reaching out to existing customers.
- Products were adjusted to provide additional flexibility in required payments.
- Compensation programs were redesigned, focusing on retention and customer service.
- Additional training to help employees deal with the new reality was launched.
- Employee engagement programs commenced.
- Volunteer programs to assist those needing help in Argentina increased.
- Prudential Seguros initially lost approximately 20% of its customers while other companies lost more than 50%. By the end of the first year, Prudential had recovered and had slightly more customers than before the crisis.
- Additionally, a majority of those customers increased contributions to their programs by more than 30%.
- Sales agents and managers income in local currency increased due to the flexibility and care provided to the customers.
- The company was named one of the most admired companies in the country by Apertura magazine, a prestigious Argentine business publication.
- New products in local currency helped customers keep their insurance during the crisis.
- The crisis situation lasted two years before productivity returned to pre-crisis level. During those two years, the organization developed a stronger team spirit and higher employee engagement.