For any organization with a large customer base and a strong brand, extending and diversifying the products it offers is an increasingly successful way of building the business. Utility firms, for instance, have come to realize that their relationships with a huge number of consumers and the operational efficiency of systems that underpin their core business are strengths they can use to offer a range of additional services, including financial products.

Retail organizations, by comparison, have different opportunities and face other challenges. Historically, their customers walked into the store, shopped, and left virtually anonymously. However, with the advent of loyalty cards, retailers now know much more about their customers and can profile their buying habits with startling accuracy. Additionally, the arrival of Internet shopping has given retailers another new way of interacting with their customers, extending their brand beyond physical stores into a Web presence.

NETHERLANDS RETAILER, HEMA – CASE IN POINT

HEMA is an international department store based in the Netherlands, with more than 400 stores there and others in Belgium, Luxembourg and Germany. The retailer distinguishes itself from its competitors by developing and selling its own private-label brand of products, with an emphasis on domestic appliances, clothing and a limited range of food items. Its market positioning combines quality, low prices and unique design to offer exceptional value.

Building on its brand, HEMA decided to enter the financial services market in 2004 by offering its clients car and travel insurance, both in-store and online. The increasing commoditization of these types of insurance in recent years has made them easier to offer as packaged products to the mass market, where price has become the single most important criterion for buyers.

At the same time, the proliferation of traditional intermediaries, insurers and new market entrants has created a bewildering choice for consumers, many of whom may not be familiar with the individual players. HEMA believed its strong reputation for straightforward, high-quality products would be reassuring and attractive to its customers.

"When we set out to enter the market," says Andre Lucas, head of HEMA Financial Services, "our key concern was to ensure the services we offered supported and reinforced our brand. That meant we had to be offering HEMA-branded insurance, it had to be easy for the customer to purchase, and it had to deliver a high level of quality at an attractive price."

HEMA chose to partner with Aon's affinity practice in the Netherlands to develop the insurance offerings. Rob van der Zwan, director of operations at Aon Affinity Netherlands, and his team worked with HEMA, combining the organization's retailing and marketing skills with Aon's insurance strengths to develop the right range of products for HEMA's clients.

"To ensure that HEMA could always offer exceptional value," Aon's van der Zwan says, "we knew they would have to have the ability to switch insurers if needed, without having to rebrand or reposition their products. We provided the knowledge and relationships with underwriters that enable them to change insurers behind the scenes if needed, allowing them to focus on the marketing and retailing side of the business, where the company's strengths lie."

AON & HEMA: A SUCCESSFUL ALLIANCE

The combination of skills worked well, with HEMA selling more than 15,000 policies in the first year. The following year, HEMA successfully added house insurance and now offers its customers car, travel, homeowner's, legal, personal liability and funeral insurance—and the number of policies has grown substantially. Across the range, Aon is responsible for product development, purchasing and all aspects of administration. In 2007, this cooperation received several Dutch Consumer Board awards for best consumer insurances.

"We offer the insurance products through all our channels – in store, by phone and via our Internet site,"Lucas says. "Aon developed this part of the site for us, but it is positioned and branded as part of HEMA's main site. It has been our most successful channel, with the majority of policies being bought this way."