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Auto Club Group

Auto Club Group. ACG Direct Mail Program September 21, 2009. Agenda. RPM Direct Overview Auto Club Group Overview Auto Club Group Case Study. RPM Direct – your key to direct success. R esponse P rofitability M arketing R evenue R isk R etention.

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Auto Club Group

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  1. Auto Club Group ACG Direct Mail Program September 21, 2009

  2. Agenda RPM Direct Overview Auto Club Group Overview Auto Club Group Case Study

  3. RPM Direct – your key to direct success Response Profitability Marketing Revenue Risk Retention RPM leverages the drivers of customer profitability through highly sophisticated targeting and a data driven creative development process. RPM Direct Overview

  4. Our Solution The Turnkey, Outsourced Solution for Highly Targeted, Profitable, Direct Market Auto Insurance Customer Acquisition. RPM targeting techniques have driven in over $1.5 billion of profitable direct auto insurance premium. RPM Direct Overview

  5. Proprietary Methodology • Methodology developed over the past 12 years. • Employs a measure of Policyholder Lifetime Value to target each marketing prospect. • RPM builds discrete multivariate scoring models on the key drivers of insurance profitability: Response, Conversion, Revenue, Risk, and Retention. • Proprietary methodology integrates multi-dimensional scoring models into a measure of Policyholder Lifetime Value for each prospect. • Customized for each client. RPM Direct Overview

  6. Insurance Drivers of Profitability + Policy Premium - Claims - Operating Expense - Acquisition Cost = Annual Profit x Life of Product = Lifetime Value of Policy Revenue Model Risk Model Response andConversion Models Retention Model RPM Direct Overview

  7. RPM Direct CapabilitiesDatabase Marketing Model RPM Direct Overview

  8. Monthly Targeting Cycle RPM Direct Overview

  9. Auto Club Group Began operations as Chicago Motor Club in 1906 Currently operates 6 AAA clubs in 8 Midwest states 4 million members 5,000 associates Home office in Dearborn, MI ACG Overview

  10. ACG-Major Businesses Road Service North American network of 42,000 towing providers Travel Full service agency $300 million annual sales Insurance Auto/Home/Life Sales through ACIA and joint ventures with other AAA clubs ACG Overview

  11. Auto Club Insurance Association Insurance sales in 12 states Distribution through captive and independent agents, partner clubs and call centers 1 million policies in force $1.8 billion in assets “A” Rating (excellent) from A.M. Best. ACG Overview

  12. Auto Club Group Case Study RPM has been working with ACG since 2005. Direct mail is a major lead generation channel for ACG. Direct mail targeting selections based on fixed allowable through June 2008. Tiered allowables implemented in July 2008. ACG Case Study

  13. Tiered Allowables ACG developed separate allowables for each risk tier. Allowables reflect differences in lifetime value by risk tier. Differences in lifetime value are driven by differences in losses, persistency, premium and other related expenses. Targeting for each tier is done on the basis of index to allowable (CPS/Allowable). ACG Case Study

  14. Claims by Credit Tier ACG Case Study

  15. Persistency by Credit Tier ACG Case Study

  16. Targeting Using Fixed Allowable Fixed Allowable ACG Case Study

  17. Targeting Using Fixed Allowable Untargeted segment tends to be high credit Fixed Allowable ACG Case Study

  18. Targeting Using Tiered Allowables Tiered allowables reflect customer value Tiered Allowable Fixed Allowable ACG Case Study

  19. Targeting Using Tiered Allowables Fewer low-credit prospects targeted ACG Case Study

  20. Targeting Using Tiered Allowables Additional high-credit prospects targeted ACG Case Study

  21. Targeting Using Tiered Allowables Net effect is to produce a better credit mix ACG Case Study

  22. Results-Change in Marketing Metrics Change Associated with the Use of Tiered Allowables But… ACG Case Study

  23. Results-Change in Business Mix ACG Case Study

  24. Results-Change in Business Mix Remember these… Claims Persistency ACG Case Study

  25. Results-Change in Business Mix ACG Case Study

  26. Results Tiered allowables produce: Higher credit mix of business. Higher persistency. Lower claims risk. Higher overall Net Present Value. Higher cost per sale. ACG Case Study

  27. Lessons Learned Working closely with Risk and Product people leads to better decisions. The use of tiered allowables lets you focus on your market niche. Don’t rely on traditional marketing statistics alone. Tie targeting to profitability. ACG Case Study

  28. RPM Direct, LLC 24 Arnett Avenue, Suite 100, Lambertville, NJ 08530 Ph. 609.566.7150 | Fx. 609.566.7155 www.r4pm.com

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