Lessons learned from outside the credit union industry:

How Does Financial Education Affect My Bottom Line? Financial education is an effective tool to generate NEW and stronger member relationships Financial education helps create new sales and service opportunities (deepen existing relationships) “An educated customer is our best customer” New York Life Case Study

NYL was founded in 1845, and over the past 163 years has established itself as the #1 provider of Life Insurance For decades the company has spent billions on building one of the nation’s largest and best trained salesforce Yet, in 1990s rapid growth of internet and new delivery channels threatened to make their core strength a liability

New York Life Case Study For NYL (like many entrenched industry leaders) the growth of the Internet was truly a defining (make or break) moment –How could NYL adjust its internet strategy to avoid the potential pitfalls of other “fallen giants”? –How could NYL adjust to changing consumer buying behavior (CDs vs. Tapes, Online vs. “in person”, etc.? –In short, NYL was facing a critical “inflection point” and had to decide what its online strategy be?

What is an inflection point?

New York Life Case Study NYL made a strategic decision to invest significant resources in developing its online website capabilities However, unlike many other competitors NYL made an equally important decision NOT to sell products / services online. “Say What. You want us to spend millions on the web and we won’t be selling products or services on line. Why?”.

New York Life Case Study As mutual company, NYL believed “an educated customer, is their best customer.” This defined who they are. They decided to embrace the web for the huge advantages it had in providing people with the educational information and resources. However, the website would not replace the dedicated sales professionals devoted to serving customer needs, instead it would support and expand the value-added service they provide. No products or services will be sold online..

New York Life Case Study “Our thought was to serve as an educational resource with the belief that if we provided the education, people would establish a bond with NYL and look to our agents when it came time to buy,” - Ken Hittel, VP of the company’s Internet department -

New York Life Case Study “The Website is often the first step in the relationship-building process with clients,” says VP Hittel. “If we can help with a customer’s financial education, then by the time they meet with an agent, they are much better prepared tohave a meaningful discussion, and equally important, much more aligned with the company.”

New York Life Case Study NYL has built a robust website with over 2000 educational articles, calculators and interactive tools Less then 10% of their site contains marketing / sales copy NYL actively engages users with hight quality information Provide unbiased 3 rd party content and tools Actively encourage people to meet with agent to learn more

NYL Results NYL is the #1 rated life insurance website by DALBAR for 5 th straight quarter (and top 5 for over 4 years) From 2003 thru 2008 NYL’s web traffic has grow by over 25% per year for five years straight Total new visitors (and amount of time per visit) to NYL’s website has increased by over 700,000 people since NYL core business has grown double-digits in each of the past 10 years. NYL is one of the most admired companies.

Results – Over $300M in sales The educational components of website are generating 3x the premium for income annuities then non-web efforts Close rates on web-leads are outstanding 12.2 to 14.4%

Secrets to Success Stay true your values. Listen to your customers. Do what you do best. Partner for success. Ask for the order. While NYL does not sell products or services online they DO ask for you to meet with an agent –This simple (but important) item has a HUGE impact Measure what matters. Customer satisfaction vs. customer complaints, web traffic > referrals > sales.

Case Study Starting in late 1980s Intuit (publisher of Quicken®, QuickBooks® and TurboTax®) began to dominate the personal finance software market (70%-80% market share) By the late 1990s, over 30 million American’s (over 10% of the US population) were using one of Intuit’s products While impressive, this means roughly 80% of Americans were NOT using their products. Furthermore, their own success had started to attract significant competition.

Case Study By the 1990s several VERY well-funded competitors such as Microsoft (Money®), H&R Block(TaxCut®) were investing millions and starting to “nibble” at Intuit’s market share Explosion of Internet, the evolution of the “Big Box Store” and growth in online financial service firms and services (such as online banking / bill pay) threatened core revenue streams) In short, many industry insiders feared the “perfect storm” was brewing which might implode Intuit’s dramatic success.

Case Study Of particular concern, was how to compete with well-funded and well-positioned competitors like Microsoft / HR Block Microsoft was over 100 times the size of Intuit, had billions of dollars, extensive ownership in media properties (MSN.com, CNBC, etc..) and had far better reach into the Big Box stores. HR Block has 1000s of retail locations, huge marketing budget, strong partnership with media outlets (Kiplinger’s, Microsoft, CNBC). They also offered in person service.

Case Study There simply was NO way Intuit could compete head-to- head with such industry giants. How could they compete? In short, only 10 years into this company’s life cycle, Intuit was already facing a critical inflection point

What is an inflection point?

Case Study At this important inflection point, Intuit looked deep within itself and stayed true to its core values. First and foremost among them, was a passion to listen to their customers and respond to their needs. What were Intuit’s customers saying?

Average financial knowledge of employees is ___________? 55.7%

Why is Financial Education Important? (SIA Investor Survey 2005 and Plan Sponsor Survey 2003)

Case Study Intuit spent millions to improve their products and help evolve them to meet changing customer needs Quicken evolved out of the check printing business and began offering electronic bill payments & services Both Quicken and TurboTax began to offer more robust features to try to “differentiate” their products Yet, still not focusing on KEY challenge of how to “reach” people where competitors were not. Intuit kept at it…

Case Study Intuit knew it could not compete directly with Microsoft or H&R Block in terms of R&D, marketing budget or shelf-space They needed to find a way to take the battle out of the retail store and into new frontiers where their relatively small size would give it an advantage to out maneuver large competitors Intuit looked for ways to make their products more appealing with online and direct marketing channels. What sort of “message” could they take straight to prospective customers?

Survey Says: Average financial knowledge of employees is ___________? 55.7%

Why is Financial Education Important? (SIA Investor Survey 2005 and Plan Sponsor Survey 2003)

Case Study Intuit experimented with providing interactive educational tools, content and related services to engage customers Thru the bank / credit union channel the developed effective re-seller relationships offering content + discounts for their products and services to sell directly to new customers In the direct online, and direct mail channels Intuit realized they needed a compelling “premium” to encourage people to buy their products directly from them (vs. risk loosing out to better positioned competitors “in store”)

Case Study Intuit expanded on a successful direct marketing effort to offer compelling 3 rd party products to meet user needs First and foremost among those needs they saw their customers needed and wanted financial education Starting in 2001, Intuit began to bundle 3 rd party educational materials within their products (Quicken / TurboTax®) In 2003, they realized these services would be of MOST value to customers if offered as a FREE premium

Case Study Intuit’s direct marketing team had learned that compelling 3 rd party product premiums could lift response rates 2-3 times Initially, what do you think they found to be the most effective product premium?

Why is Financial Education Important? (SIA Investor Survey 2005 and Plan Sponsor Survey 2003)

Case Study From 2001 thru 2008, Intuit targeted tens of millions of prospects / customers thru extensive marketing programs They offer educational content, interactive guides and other FREE products to help attract new customers and deepen their relationship with new ones

Case Study

Successful product premiums offered have included: Most product premiums offered with price point between $34.95 and $54.90 (and actual cost of pennies on the dollar) Guide to Personal Finance Guide to Financial Planning Guide to Tax Planning Guide to Money & Finance Guide to Investing Financial Planning & Tax Toolkit Educated Investor WealthBuilder Financial Success Suite Work Less Live More Encyclopedia of Every Day Law

Results Since 1990s Quicken and TurboTax have not only maintained market share, they have grown market share! Direct marketing efforts including financial education as a promotional premium have helped generate over $100,000,000 in new sales (millions of customers) Direct marketing efforts leveraging educational content (portal) thru bank / credit union channel have also provided significant BOOST for Intuit’s bottom line

Secrets of Success Actively listen to your customers. Respond to their needs. Do what you do best. Partner for success. Measure what matters. Customer satisfaction vs. customer complaints. Measuring response rates = more sales! Financial education can be leveraged as a very successful direct marketing tactic. Be sure to place a VALUE on it!