Saga cuts marketing spend by £4m amid ‘cost-efficient’ push

Saga has pledged to invest in “cost-efficient marketing”, as its insurance business faces challenges in a turbulent market.

This efficiency push is designed to “stabilise” the company’s existing business and help it to “acquire new business more efficiently”. Saga decreased its marketing spend in the year by £4.2m. Th company paused some specific insurance marketing activity and cut spend in response to pressure on its margins.

With inflation forcing the price of insurance policies up, volumes sold fell during Saga’s most recent financial year ending 31 January 2024. The number of total policies in force at 31 January 2024 was 1.5 million, 9% behind the prior year. To address this challenge, Saga is investing in the price competitiveness of its policies.

Overall, revenue grew 12% to £741m in the year, which reflected an “outstanding” year for its cruise business in particular. Pre-tax profit more than doubled to £38.2m.

Why Saga believes expanding its media business will help it reach ‘superbrand’ status

The strength of Saga’s brand and its ability to reach an older consumer was identified as a key virtue of the business. The business did, however, note a decline in its own brand tracking. Saga’s transactional net promoter score (tNPS) declined by two points to 59, with increases in cruising and money offset by decreases in insurance. The company blamed the drop in the insurance tNPS score on “market-wide increases to pricing, alongside some resultant contact centre pressure from increased call volumes”.

YouGov’s BrandIndex platform tracks brands in their specific sectors, meaning Saga scores differently as a hotel and cruise business than it does as an insurance brand. According to BrandIndex, Saga’s hotel and cruises index score, which is an overall measure of brand health, has stayed constant versus last year at 4.9.

However, the company’s score as a general insurance brand decreased from 4.7 last year to 3.7 this year, according to BrandIndex.

‘Deepening’ customer relationships

Saga has sought to “deepen” its relationship with its target older consumer by interacting with them more frequently. The business told investors today (17 April) its customer database continues to be one of its “core assets”.

Holding the details of 9.6 million people over the age of 50 in the UK, over the past year Saga has “actively sought” to gather consent from more of this group to contact them about range of products.

“We continue to develop our 9.6 million strong customer database and explore ways in which we can deepen our relationship with those customers,” CEO Mike Hazell said.

As of 31 January 2024, Saga had consent to contact 7.2 million of these individuals, up from 6.8 million the prior year.

Looking to the future, the business said its long-term growth would be based on the “fundamentals” of its marketing reach across older consumers, as well as its understanding of the over 50s demographic.