The Ten Creative Commandments September 15, 2008

What does “Creative” mean, anyway? 3 Targeting Commandments 3 Creative Commandments 4 Call Center Commandments 1 Free Bonus Commandment Agenda

What Does Creative Mean, Anyway?

Creative (Targeting) Commandment 1 Target based on Lifetime Value of Policyholder (which is rarely the same as Low Acquisition Cost!).

Risk Model Revenue Model Response and Conversion Model(s) Retention Model + Policy Premium - Claims - Operating Expense - Acquisition Cost = Annual Profit X Life of Product = Lifetime Value of Policy Auto Insurance Drivers of Profitability

Names Credit X Date Demos Events Prospect Database Regression Models: Response/ Conversion Revenue Risk Retention LCR Targeting Solicit: Mail Phone Phone Center/ Website Underwrite Sell Product Product Delivery Capture Responder Data Responder Database R 4 PM Direct — Database Marketing Model

100 + MM Households Credit Variables Predicted Renewal Dates Demographics Custom Model Scores Promotion/Response Tracking Addresses 165+ MM Prospect Names 500+ Data Variables Each R 4 PM Direct — Prospect Database

Individual Level Dynamic “Psychological” Profile Accurate Power of Consumer Credit Data

LTV Targeting Drives Higher Underwriting Tiers

Creative (Targeting) Commandment 2 Keep Testing New Targeting Techniques and Data

Micro Segment Targeting

Compiled Demographics Aggregated Auto Data Real Property Data Survey Data Lifestyle Data Data Life Event Data Direct Response Buyers Geo-Demographic Clusters Zip+4 Aggregated Credit Non-Credit Data

Credit vs. Non-Credit Response

R 4 PM Predictive Auto Clusters

Creative (Targeting) Commandment 3 Get the Channel Attribution Right on Marketing Reports!!

Marketing Channels and Attribution Mail TV Print TM QuoteTM Sale

Marketing Channels and Attribution Mail TV Print Banner Search Aggregator TM Quote Web Quote TM Sale Web Sale

Marketing Channels and Attribution Mail TV Print Banner Search Aggregator TM Quote Web Quote TM Sale Web Sale

Marketing Channels and Attribution Mail TV Print Banner Search Aggregator TM Quote Web Quote TM Sale Web Sale

Putting Response in Correct “Bucket” Putting Sales in Correct “Bucket” Calculating Media Cost per Sale Channel Attribution Issues Spending Next Tactical Marketing Dollar Building Media Specific Targeting Models Making Strategic Business Decisions

Channel Attribution Methodology Individual Customer Identification Numbers Marketing Source Codes Name and Address Match Factor Analysis Dynamic Time Series Regression Proportionately “Factor” Leftovers into Marketing Channels

Creative (“Creative”) Commandment 4 Synergize Marketing Channels!!!

Measure the Overall Return

The Tagline Breakthrough!!

The Tagline Results

Creative (“Creative”) Commandment 5 Keep Boldly Testing NEW Creative (Not Just Incremental Tweaks)

Try us again Integrated Marketing

Is less more or can be more be less?

Thou shall not test too much! Creative (“Creative”) Commandment 6

Too Much Testing!!

Creative (Call Center) Commandment 7 Account for Your Call Center in Your Marketing Budget

Cost To Deliver Response Volume Cost To Make Sale Agent Capacity MailTelephone/Website Overall Acquisition Cost Depends on Getting This Balance Right... So Measure in Same Cost Center!! Balancing Mail and Sales Capacity

Creative (Call Center) Commandment 8 Reward Desired Behavior – Pay Sales Reps Per Phone Call

Creative (Call Center) Commandment 9 Send the Best Phone Calls to the Best Sales Reps.

Capitalism at Its Finest All sales consultants are not created equal Lobster tails and Chicken salad Secondary skilling vs. Performance Mgmt. Penalized for more? What? Less turnover – Better Performance AHT change of philosophy

Calls to Sales (CTS) Results 2006 – Avg – Avg 3.82 Integrated Marketing

Creative (Call Center) Commandment 10 Raise your Handle Time while Dramatically Increasing Sales?

Integrated Marketing

Free Bonus Creative Commandment Have a Strategy!!!