Organization Session Group Creating Value for the 50+ Consumer Stephen Driscoll VP Value Communication AARP Thomas Begin VP, Client Partner Merkle

Agenda

• Introductions and Objectives

• Identification of the Challenge

• The Solution

• How AARP Can Now Leverage Marketing Solutions

• Additional Obstacles and Challenges

2

Objectives – About AARP

• Nonprofit, nonpartisan membership organization for consumers aged

50+ dedicated to improving the quality of life for all as we age

• Founded in 1958, now has a customer base of over 35 million

• Offers a wide range of benefits from health insurance, financial services, and discounts to information and advocacy to champion positive social change.

• Requires a vast marketing operation to manage the diversity of the programs and centralize information

3

Objectives – What We’re Here to Talk About

• Migration from an emphasis on business-unit objectives to a more

consumer-centric structure

• Understand the issues that created this change in mindset

• The benefits that have been realized since making this move

• How this changed the way AARP uses its technology platform

• Areas for continued improvement and challenges yet to solve

4

Identification of the Challenge

Business Challenges

• Decentralized marketing – Disaggregated communications – Non-optimal cross-channel alignment

• Business units with sometimes competing business objectives

• Declining response rates

– Increasing frequency and volume of communication

• A need for revenue diversification

• Dramatic shift toward digital communication

6

The Solution

Matching Organizational and Leadership Alignment to Priorities

8

Organizational Area

Focus Area Examples Addressing Challenges

Segmentation • Understanding Wants and Needs • Listening – Voice of the Member

• Putting customers first

Value Creation • New offer development • Pilot testing

•Meeting customer needs •Revenue diversification

Acquisition and Renewal

• Direct response channel ownership

• Deemphasizing channel silos

Value Communication

• Onboarding • Engagement Marketing • Positioning and Offer Management

• Coordination of communications

Marketing Operations

• Cross functional efficiency and optimization

Business Strategy Clarity • Desired outcomes • Objective function

Customer Understanding • Our value to the customer • Customer expectations of us

Customer Lifecycle Management • Building and maintaining a

relationship • Product/offer management;

product extensions

Integrated Communication • Speaking to the customer as One

AARP • Matching customer wants/needs

with organizational goals and value proposition

Governance and Measurement • Delivering on our mission • Health of our business • Exceeding customer expectations

Culture • ‘Culture kills strategy every day of

the week’

Our offerings define the experience

Our communications

define the experience

Our culture influences the

experience

Listen

Act

Listen

Listen

Act

Listen

Creation of Collaborative Work Groups

Intra-department Onboarding to High Performing Teams

Expected… • Hard work ethic • Always working in AARP’s best interests • Fully deserving of high trust and independence • Sense of urgency, speed • Team attitude – your team, our team, EVP team, cross association work teams, etc • Speak up frequently and easily – particularly if you have a different opinion • Understand that you bring something special and new to the party – share • Discern the big opportunities from the smaller ones • Be proactive and ‘own’ your career growth

Valued… • Intellectual curiosity • Openness, sharing, generosity of ideas • Innovative thinking (what if…) • Whatever it takes • Passion, marketing enthusiasm

10

Leveraging Marketing Solutions

Centralize and consolidate the vast and varied information sets to construct and maintain a

360° view of former, current and prospective

members.

Accurately consolidate the varied data available to establish the “record of truth” as the basis for

the member records.

AARP and partner systems able to access

member profile information to tailor

communications and enrich member

experience.

Enable data exchange between key AARP

systems and near-real-time integration with select partners and

promotional systems.

Promote the “Segments of One” goal by

delivering highly relevant messages and offers

based on their segment, demographic, and

profile.

Expand member data to include their own

personal profile and preference elections. Where not explicitly

provided by the member, leverage inferred

preferences.

Enabling the cCRM Movement

360 Degree View

Data Quality Management Real-Time Data Access Real-Time Data

Integration Personalized

Messaging and Offers

Member Profile and Preference

Phased Approach: Functionality Delivery Matrix

Dynamic Member Profile and Preference

Customer 360 Degree View

Data Quality Management

Real-Time Data Access

Real-Time Integration

Personalized Messaging and Next Best Offer

Phase I Phase II Phase III

• Member 360° view • Insight Member Integration • Segmentation and Scores

• Additional Data Sources (ongoing)

• Hygiene and Standardization • Unique, persistent Keys

• Call-center access • Web access • State, Local office access

• Capture Member activities • Call-center, Web integration

• Real-Time CDI Key mgmt

• All Member activities

• All touch-point integration • All Member access • All Member activities

• Real-Time Preference Mgmt

• Web services platform readiness

• Campaign offer readiness

• Campaign Integration • Real-Time Offer Management • Personalized Messages

• Preference center readiness • Preference Center • Real-Time Preference Mgmt • ODS Integration

• Real-Time CDI • Non-Member activities • Real-Time Offer Management

• Transactional integration • Call center / Web activities • Additional Data Sources

• Preference Center • ODS Integration

• Web services platform readiness

• Campaign offer readiness

IMAX – Phase III: Illustrative Use Case

IMAX Solution

Mark & Barb receive AARP bulletin in mail…

Mark and Barb receive highly relevant offers based on activity and

profile elections

Members: Mark & Barb

Life Stage: Transitioning Comfortably

Loyalty: New & Engaged

Age: 65 & 57

Tenure: 2 years

Expiring: No

Donor: Never

Advocate: Never

…then access their account on AARP.org

Changes preferences: eNewsletter interest in travel

Performs real time profile updates and revises Next

Best Offers

Phase I Phase II Phase III

Confirms changes and updates offers

displayed

By transitioning renewal marketing from legacy systems to IMAX, AARP gains complete flexibility in marketing execution

Choosing individuals and segments to target

Developing the media each member will be communicated through

Determining the marketing spend for an individual based on their value

The sequence and frequency for contacting each member

Given their history, determine the offer and term to be communicated

Targeting

Media Optimization

Allowables

Contact Optimization

Offer Optimization

How this affects Renewals

Additional Obstacles & Challenges

Remaining Challenges – Organizational Alignment and Change Management

“For things to change, somebody somewhere has to start acting differently. Maybe it’s you, maybe it’s your team. Picture that person (or people).”

Switch: How to Change Things When Change Is Hard by Chip Heath and Dan Heath

• Goal setting and planning

– Enterprise strategy and planning process • Effective use of cross functional teams

• IT and Partner road-mapping and alignment

• A common currency

– Universal understanding of the customer – Universal method to measuring incremental return – Universal definition of customer value

17

What We Mean By A Common Currency

18

IllustrativeIllustrative

18%$72542%

-4%-$9598%

37%$1,90033%

19%$3,5009%

30%$6,3008%

Percent Total Value

Captured

Average Value

Pct of Customers

18%$72542%

-4%-$9598%

37%$1,90033%

19%$3,5009%

30%$6,3008%

Percent Total Value

Captured

Average Value

Pct of Customers

Hidden Heavies

HighValue

MediumValue

LowValue

NegativeValue

50% of customers account for 86% of the total CLV captured

8% of customers have negative value

Company Example

AARP’s Currency Dilemma

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Three Distinct Currencies at AARP:

Foundation

• Charitable arm of AARP

• Goals include donations and participation

Membership

• The core team responsible for members and their status as a customer

• Measures success through membership revenue and volume

Other sources

• Ad revenue • Royalty revenue

Summary

21

Thank You

Stephen Driscoll Thomas Begin VP, Value Communication VP, Client Partner AARP Merkle sdriscoll@aarp.org tbegin@merkleinc.com 202-434-6393 610-212-3839