The Clarion Group Copyright © 2009 Sales Executive Peer Group Customer Evaluation and Retention 18 June 2010

The Clarion Group Copyright © 2009 Kristi Marchbanks, Partner, The Clarion Group Background  Kristi Marchbanks has over 20 years of general management experience with demonstrated ability to build teams, scale business processes, and get results that create shareholder value. Working in both start-up and Fortune 500 environments, Kristi has built new companies, launched products, and grown existing businesses by as much as $1 billion in as little as three years.  She has demonstrated the ability to develop significant, new strategic initiatives, implement scalable change, and drive results in the roles she has held at Amazon.com, IBM, and Eastman Kodak. As the former CEO of SeaTab Software, Inc., she mastered the unique challenges of leading a high growth company, building a senior executive team and demonstrating her ability to attract and retain qualified, exceptional talent.  Kristi is a problem-solver with a flair for spotting opportunities and developing effective solutions. She thrives on using her leadership experience to achieve successful results and create value. Community Activities and Education  MBA, Harvard Business School  BA, Business Administration, University of Washington  University of Washington, Center for Innovation and Entrepreneurship (CIE), Board Member  Northwest Entrepreneur Network (NWEN), Board Member  InjuryFree, Board of Directors  FareStart, National Expansion Board  Seattle Rotary #4 Member  University of Washington, MBA Mentor Program Favorite Quotes “You’ll always miss 100% of the shots you don’t take.” – Wayne Gretzky “Life is short. Accept all good offers.” – Kay Adams “When your heart speaks, take good notes.” – Judith Campbell “Sometimes the questions are complicated and the answers are simple.” Dr. Seuss Favorite Word: Imagine

The Clarion Group Copyright © 2009 Higher churn in profitable and persistent customers…

The Clarion Group Copyright © 2009 Know your customer profitability and longevity Tenure Number of Customers% % % % % % % % Total BreakevenNumber of CustomersPercent No % Yes % Total

The Clarion Group Copyright © 2009 By product ….. BreakevenKind_LHKind_MELKind_PIKind_WC No19.96%21.17%31.58%22.86% Yes80.04%78.83%68.42%77.14% % of total customers38.94%18.45%0.73%98.11% BreakevenKind_LHKind_MELKind_PIKind_WC No Yes Total Customers

The Clarion Group Copyright © 2009 By geography … BreakevenIn_AlaskaIn_HawaiiIn_IllinoisIn_CaliforniaIn_Other_State No14.14%22.92%33.49%23.37%22.19% Yes85.86%77.08%66.51%76.63%77.81% % of total customers7.66%5.57%8.31%48.65%50.89% Agg Est Loss Ratio 40% 44%83%45%49% BreakevenIn_AlaskaIn_HawaiiIn_IllinoisIn_CaliforniaIn_Other_State No Yes Total Customers

The Clarion Group Copyright © 2009 By product and geography mix… BreakevenMulti_StateMulti_KindComplicated (Multi-State&Multi-Kind) No25%20.34%21.53% Yes75%79.66%78.47% % of total customers30.97%38.59%16.71% BreakevenMulti_StateMulti_KindComplicated (Multi-State&Multi-Kind) No Yes Total Customers

The Clarion Group Copyright © 2009 Profitable Customers Companies in the Small Maritime Platform division 90% are profitable = 173 customers Companies in Non Small Maritime Platform division Customers with tenure more than 3 years 85% are profitable = 175 customers Companies with less than 3 years of tenure and non SMP division Companies with Team Chicago 65% are profitable = 92 customers Companies within North region and not in small maritime platform division 65% are profitable = 91 customers Companies not in the northern region and not grouped in the other divisions (also not Chicago team and not a SMP division) 76% are profitable = 961 customers 88% gains

The Clarion Group Copyright © 2009 LTV and Retention Decrease Smaller, Very Profitable Segment

The Clarion Group Copyright © 2009 Pricing may not necessarily be related to profitability Year of acquisitionAverage Maximum Tenure Average of Agg Est Ult Loss Ratio Premium $/Payroll $ %$ %$ %$ %$ %$ %$ %$0.05 Grand Total1.2149%$0.05 Statistically tenure and profitability have a correlation of 5%

The Clarion Group Copyright © 2009 Are any of the divisions more profitable? Divisions# of customersAgg Est Loss Ratio Alternative Markets % Construction % Maritime % * These results are not based on statistically significance. This is just tabular analysis.

The Clarion Group Copyright © 2009 The Choice of How to Compete Customer Intimacy You investigate, identify, anticipate, and meet every customer expectation and need Product Leadership Your products are clearly superior to those of the competition 12 historic positioning Increase market through: Value Proposition Increase market through: Segmentation Operational Excellence Your operational excellence and efficiency allow you to produce decent quality at a low price

The Clarion Group Copyright © 2009 Segmentation Examples

The Clarion Group Copyright © 2009 Customer Growth and Retention Strategy Banana Republic (luxury) Gap (everyday) Old Navy (economy)

The Clarion Group Copyright © 2009 Questions ?