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?

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

ProspectDatabase

RegressionModels:•Response/ Conversion •Revenue•Risk•Retention

LCRTargeting

Solicit:•Mail•Phone•E-Mail

Phone Center/Website•Underwrite•Sell Product

ProductDelivery

CaptureResponderData

ResponderDatabase

R4PM Direct — Database Marketing Model

•100+ MM Households•Credit Variables•Predicted Renewal Dates•Demographics•Custom Model Scores •Promotion/Response Tracking•e-mail Addresses

165+ MM Prospect Names

500+ Data Variables

Each

R4PM Direct — Prospect Database

• Individual Level

• Dynamic

• “Psychological” Profile

• Accurate

Power of Consumer Credit Data

0%

5%

10%

15%

20%

25%

30%

35%

40%

NS MM Standard Preferred Ultra

Acquisition Cost

LTV Targeting Drives Higher Underwriting Tiers

0%

5%

10%

15%

20%

25%

30%

35%

40%

NS MM Standard Preferred Ultra

Acquisition Cost Lifetime Value

LTV Targeting Drives Higher Underwriting Tiers

Creative (Targeting) Commandment 2

Keep Testing New Targeting Techniques

and Data

Micro Segment Targeting

Models / Segments States Business Missions

Nation wide Response Model All Improve response

Nation wide Net Response Model All Improve conversion

State Specific Response Model CA, FL, GA, PA, TN, TX Improve response further at state level

Risk Model All Target only preferred tiers

BI Limit Model AllDrop the bottom decile to reduce the percentage of sales with low BI limit, therefore to improve loss ratio

Age Specific Tageting

Segment 1: Age group 30 - 49 AllMarketing allowable is $450 for this segment because it is relatively less credit worthy to MetLife's business.

Segment 2: Age group 50 - 70 AllMarketing allowable is $500. Also, this segment is more responsive to Metlife's DM solicitation, therefore, mail deeper into model deciles.

SCF Targeting FL Eliminating low net yield SCFs. Deeper decile penetration in the best SCF group and top score selection in intermediate SCF group.

MetLife Direct Mail Targeting Methodology

• Compiled Demographics

• Aggregated Auto Data

• Real Property Data

• Survey Data

• Lifestyle Data

• E-mail Data

• Life Event Data

• Direct Response Buyers

• Geo-Demographic Clusters

• Zip+4 Aggregated Credit

Non-Credit Data

Credit vs. Non-Credit Response

0.00%

0.50%

1.00%

1.50%

1 2 3 4 5 6 7 8 9 10

Response Decile

Res

po

nse

Rat

e

Credit Data Noncredit Data

R4PM Predictive Auto Clusters

Percent of Resp Cum Cum Cum Resp CumSegment Mail Qty Mail Qty Resp Rate Index Mail Qty Resp Rate Index

1 28,579 11% 9485 33.19% 480 28,579 9,485 33.19% 480

2 37,187 14% 3067 8.25% 119 65,766 12,552 19.09% 276

3 37,096 14% 1847 4.98% 72 102,862 14,399 14.00% 202

4 50,295 19% 1788 3.56% 51 153,157 16,187 10.57% 153

5 27,897 10% 729 2.61% 38 181,054 16,916 9.34% 135

6 36,708 14% 820 2.23% 32 217,762 17,736 8.14% 118

7 51,368 19% 886 1.72% 25 269,130 18,622 6.92% 100

Response Model Using Responders DataCHAID Analysis

Development Sample: 0601 - 0603 Responders

RESPONSE INDEX

480

11972 51 38 32 25

0

100

200

300

400

500

1 2 3 4 5 6 7

Creative (Targeting) Commandment 3

Get the Channel Attribution Right on Marketing Reports!!

Marketing Channels and Attribution

Mail

TV

Print

TM Quote TM Sale

Marketing Channels and Attribution

Mail

TV

Print

email

Banner

Search

Aggregator

TM Quote

Web Quote

TM Sale

Web Sale

Marketing Channels and Attribution

Mail

TV

Print

email

Banner

Search

Aggregator

TM Quote

Web Quote

TM Sale

Web Sale

Marketing Channels and Attribution

Mail

TV

Print

email

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

IM Weekly sales including state to states

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

Week

IM sales IM Group sales IA, PCS, ADG sales State to State sales

Tagline Introduction

Notes:

Association sales are equally divided prior to tagline introduction

Jan - April, monthly mail circ - 3.3m, avg wkly sales 1,548May - Aug, monthly mail circ - 2.2m, avgas wkly sales 1,349

Mail reduction -33%Sales reduction -13%

Jan - April, Sale to mail ratio, 448 to 1 itemMay - Aug, Sale to mail ratio, 360 to 1 item

Creative (“Creative”) Commandment 5

Keep Boldly Testing NEW Creative (Not Just Incremental Tweaks)

Try us again

Integrated Marketing

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

Mail Telephone/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

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cal

ls p

er i

tem

2006

2007

2006 – Avg 5.122007 – Avg 3.82

Integrated Marketing

Creative (Call Center) Commandment 10

Raise your Handle Time while Dramatically Increasing Sales?

Integrated Marketing

Average Handle Time

12:34

13:24

14:09 14:13 14:13 14:18

15:22 15:2715:11 15:07

14:2614:42 14:54

10:30

11:24

12:19

13:14

14:08

15:03

15:58

Jul 0

7

Aug 0

7

Sep 0

7

Oct 07

Nov 0

7

Dec 0

7

Jan 0

8

Feb 0

8

Mar

08

Apr

08

May 0

8

Jun 0

8

Jul 0

8

Prior 12 mos Goal - 12:00 mins

Free Bonus Creative Commandment

Have a Strategy!!!