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Square One Insurance co-founder, president and CEO Daniel Mirkovic

Kristina Wheeler


When Daniel Mirkovic and six co-founders started up Vancouver-based Square One Insurance Services Inc. in 2011, they drew on their past experiences working together in a large, well-established insurance firm to set what they thought was the right mix of spending on marketing.

"I was the vice-president of insurance and travel at my previous company," says Mr. Mirkovic, Square One's president and chief executive officer. "I had clear thoughts in terms of what the right marketing mix should be."

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However, he and his team didn't realize that the methods they had used to market their former – and much bigger – employer wouldn't necessarily work as well for their startup.

Indeed, Square One's initial marketing spending didn't yield the results they'd forecasted in their business plan. They knew they had to adjust it fast, and use their limited budget wisely, if their home-insurance business was to succeed.


Square One was launched in January, 2011, by Mr. Mirkovic, a classmate from the part-time MBA program at the Robert H. Lee Graduate School at the University of British Columbia's Sauder School of Business and five others. Most had previously worked for the British Columbia Automobile Association (BCAA) and knew they had the background necessary to sell home insurance.

Their big question was what proportion of their initial marketing spending should be allocated to traditional direct mail and what proportion to newer online initiatives.

Sticking with what had previously worked for them, they put 63 per cent of their first marketing budget of $625,000 toward direct mail, and 10 per cent toward online initiatives (paid search ads and search-engine optimization). The rest was splut up among mass media, such as print ads and billboards, giveaways, such as umbrellas, and quote or referral incentives.

Devoting the biggest proportion of spending to direct mail didn't pay off as it had at the previous company, however. There, it generated a 12-per-cent response rate. Square One's response rate was just 1.5 per cent.

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"When we looked at it from an average cost per insurance policy acquisition, direct mail accounted for 63 per cent of our marketing spend, but only generated 11 per cent of our sales," Mr. Mirkovic says.

When he tried to account for the difference in response, he suspected it was because the former company already had grown a captive audience that was receptive to direct mail. That wasn't the case at Square One, where Mr. Mirkovic was just starting to build a brand.


Taking a closer look at the statistics generated by their initial marketing, Mr. Mirkovic and his team "started to see that our online spend, which hadn't previously been on our radar, was generating higher and higher percentages of our insurance quotes and sales," he says.

Initially, he expected under 10 per cent of potential customers to get a quote online, and almost no one to buy insurance over the Internet.

What they found instead, however, was that 60 per cent of customers were actually getting a quote online – and 31 per cent followed up by buying insurance online.

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Mr. Mirkovic and his team decided to pay more attention to that finding. Last spring, the company hired Authentic Marketing Solutions, a digital marketing agency, to optimize Square One's website for search engines and help the firm set up online advertising campaigns.

They then adjusted Square One's marketing spending mix drastically: Direct mail spending was cut by more than half, to 28 per cent, while online spending was more than tripled, to 35 per cent.

Square One also refined its integrated insurance quote system to make it easier for customers to get an online quote – speeding up the process so that what used to take 60 minutes took just 10 minutes.

Customers who try to get an online quote can, at any time, ask for help from Square One via online chat, phone or in person. They'll receive immediate answers from Square One agents following their progress and compiling information on their quote.


Square One saw a payoff after adjusting its marketing mix for the last half of 2012. Not only did sales jump to $1.06-million in 2012 from $82,000 in 2011, but the company found that 47 per cent of last year's revenue resulted from online marketing versus just 13 per cent from direct mail.

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That made Mr. Mirkovic decide to make even more changes: He's now increasing the proportion of marketing spending for online initiatives to 71 per cent and cutting direct mail back to 6 per cent for this year.

"As we shifted from direct mail to the more cost-effective online channels, our acquisition cost per insurance policy dropped by an astonishing 83.4 per cent by the end of 2012," he says. He attributes this to having optimized Square One's website and online campaigns, which caused the cost of its online marketing initiatives to drop.

The cost savings in acquisitions of insurance policies have brought Square One valuable labour savings. While it originally expected to need 11 sales agents for 2012, the company hit targets with just five on board.

And its system is already bringing recognition: The company's website and online quote application system have been nominated for an technology award; it noted that "70 per cent of overall quoting activity is performed by customers online."

Mr. Mirkovic says the company's next steps include expanding its market reach beyond British Columbia and Alberta to serve customers across Canada.

Special to The Globe and Mail

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Jeff Kroeker is a lecturer in the accounting division at the Sauder School of Business at the University of British Columbia.

This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Report on Small Business website.

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