EBS Segmentation Strategy Bernadette Hurley & Tara Grehan 18 November 2009

EBS Building Society  Member owned - founded in 1935 to provide much needed mortgages for teachers  Today, EBS is the fourth largest building society in the UK and Ireland  6th largest credit institution in Ireland with Group Assets of c. €21bn  EBS has a distinctive track record in the Irish marketplace as a mutual organisation  Irish population turning back towards mutuals as a ‘safe haven’  Strong national brand and Member engagement is an organisational priority  Today – 98 outlets across Ireland − 14 Branches − 42 Franchised Agents − 42 Agents − Direct Channel

Savings A5 brochures: Providing Mortgages, Savings, Investments and Insurance to over 500,000 members

EBS Direct Marketing - background  At EBS we have been running Direct Marketing campaigns to our members for many years − Originally by writing programs to extract data from ‘mainframe’ files − In recent years using the datawarehouse and dedicated reporting tools  We segmented on a primary data basis e.g. − ‘First time home buyers’ /’second time buyers’ − Products held − Age − Income where known

The ‘old’ Direct Marketing Process Data Warehouse Business Intelligence tool Excel Lead Lists Business Request Marketing Member Experience Sales Staff Letters to members

Why did we want to change approach?  Increase contact with our members  Through this increase sales of appropriate products to those members − less than one contact per member/per annum − Response to campaigns was inline with industry averages − Member insight was limited − Follow up on leads was low − Limited response measurement

Why did we want to change approach? (2)  To develop deeper insights into our member base − For campaigns: targeted marketing − For product development − For member engagement − For business planning

What did EBS need?  Sophisticated segmentation of member base  A Member contact plan  Higher level of member contact  Capability to measure campaign results  A dedicated campaign management system  ‘Buy-in’ from our sales staff to the new approach

How did EBS go about this? - and convince top management that this was the right approach

Let’s get straight to the point  Implementing change takes − Planning, lots of planning − Time and patience … but the return on our investment paid off!  It’s not rocket science, you’ll all have read this is any text book or journal on segmentation … we just put it into practice and are enjoying the benefits.  Journey time line Scoping requirements Project set up Analysis and research The PilotImplementationBusiness as usual Q – Q2 2008Q2 – Q3 2008Q1 2009Q2 2009

Segmentation Overview  Five key principles of segmentation modeling: 1.Highly differentiated 2.Homogenous 3.Identifiable 4.Clearly actionable 5.Stable  Rooted in our data  Benefits for the Member  Benefits for EBS

Where did we start?

And we’re off …  The data was audited to ensure we could segment and model it  Thumbs up … enough quality data to perform the models  Clustered the data based on relationship with the Society  No of accounts, tenure, value, account opening cycle  Iterations with the stakeholder group  15 segments … down to 9 … settled on 8  Made best sense, also within our capacity to work with

8 Seg 3 Seg 4 Seg 5 Seg The Segmentation Model

But we still did not know it all …  Market research was conducted with members in some of the segments to fill in some gaps  Telephone interviews to gain insight into: − Pen portrait − Financial relationships − Financial behaviour − Influencing factors − Satisfaction and image of financial providers − Relationship with EBS − Media

Key insights from the research  Starting from a strong base  Clarified some insight gaps  Direct mail and staff in the office were key sources of information when making an account opening decision  Strength of the relationship with office staff  We were not sending enough direct mail!

“… Postal correspondence and bank statement are not regularly sent to me. Interest rate is very less on current account. There is no follow up on investment queries. Please improve everything.” “I would like them to canvas/send out information to me on products and investment because when money comes into the house I would put it back, they could have it if they were good offers.” “EBS should advertise more and show their customers exactly what they have to offer.” Key insights from the research

The Creative Process  Know a lot more about our data and how it can be used  Market research built more insights … we’d a good idea of who we wanted to talk to, but how were we going to talk to them?  Develop a communication strategy to reach the eight segments and drive increased activity in the pilot offices.  Contact plan of activity  New creative was developed to reflect the insights we had gained from the data analysis and market research.

The Pilot  Segmented the members sourced to two pilot offices and prepared an Insight Pack to inform the office of the types of members they had.  A contact plan was developed for these offices: − 21 campaigns covering 5 products: − Savings Review, Personal Loan, Mortgage Top Up, First Time Buyer, Big Account  The pilot study tested  The role of the pilot offices

20 Contact Plan

21 Creative

The Results  The Pilot campaigns significantly out performed business-as-usual − Overall response rate was up 40% − The pilot campaigns were more effective at selling the product in focus  The Segmentation had proven itself as a powerful discriminator – response rate across the segments ranged from 1% to 22%!  Measuring the results enables us to refine next selection … continuously improving our campaigns!  The pilot method and results demonstrated that this was a more effective approach  On the basis of this, Senior Management approval was secured for the investment required

Key learnings  The Segmentation and Propensity Models worked  Changing the rules  Capacity for follow up calls at the office  Potential for cross-sales to existing members  Engagement with stakeholders throughout the journey

The Business Case  Business case was approved for investment in a dedicated campaign management infrastructure  Increased spend in direct mail  Increased head count in the team  Great buy in from the sales team  Held response rate during a tough financial year

Transition to Business as usual  Implemented the technology − increases in-house capability; − changes role for the agency; increased no of campaigns; MI  Member contact plan now developed inline with the segmentation  Campaign optimisation – right message right time  Making it easier for the offices to use this data − Member Insight Packs for each office − Redesigned internal website to share prospecting leads  New approach now integrates and supports overarching Marketing Strategy

And where are we now