STRATEGIC OUTLOOK: Direct Response Marketing

1
STRATEGIC OUTLOOKDirect Response Marketing
Brian A. SmithExecutive Vice President Chief
Operating Officer AEGON Direct Marketing
Services, Inc.September 15, 2008
2
ADMS Snapshot

• One of the largest direct response marketers of
  life, supplemental health, specialty insurance,
  and fee-based products
• Composed of business units that focus on key
  market niches
• Virtually all methods of non face-to-face
  distribution
• Operating in 17 Countries
• 23 million policies serviced
• 2,385 employees

Baltimore, MD
Major North America Locations
Exton, PA
Plano, TX
Atlanta, GA
Toronto, Canada
3
Outline

• What's Happening in Our World
• What's Happening in the Real World
• Whats Next
• Key Ingredients for the Future
• Remember the Value

4
What's Happening in OUR World

• Last ten years
• Industry consolidation
• Contraction
• Disposal
• Shut down
• Property Casualty
• Growing
• Life/Health
• Stagnant
• May be retracting
• Pure innovation replaced with change in tactics
• Limiting to the buyers of the past

5
What's Happening in OUR World

• Increasing Regulatory Mandates
• Privacy
• Data Encryption
• Data Sharing
• Data Storage
• ID Theft
• Costs - When did they last go down?
• Response Rates - When did they last go up?
• Increased pressure on profits not based on
  sub-prime investments

6
What's Happening in the Real World

• Global pressure on the economy
• Aging population
• Technological revolution
• Generation X and Y- the ME generation
• Fast adoption of change
• Increasing consumer indifference
• Increasing consumer desire for control

7
Could the Opportunity be any Better?

• Challenging times create tremendous potential
• The need has never been better for the
  protection segment
• Younger generations are extremely comfortable
  with buying direct
• Older generations are getting more comfortable
• We offer real solutions to real problems

8
Whats Next

• Take action!
• CHANGE
• Know your customers of the future
• Know those customers needs
• Know the best way to reach those customers
• Be transparent
• Be consistent
• Be trustworthy

9
Be Transparent

• The internet delivers transparency
• Be ready for it
• Keep messages unfettered from gimmicks
• Be clear about what youre selling
• Be clear about why what youre selling is needed
• Make information about your organization
  accessible

10
Be Consistent

• Price and product features need to be the same no
  matter the medium
• Messaging and promotion need to work together
• Variances should be minimized
• Minor differences with major price variances
  should be avoided

11
Be Trustworthy

• We are here to protect
• Our products lend themselves to long-term
  relationships
• Our promotions can get in the way
• We sell paper and promises
• Actual service and benefits need to match
  expectation
• Deliver on time
• Keep your promises

12
Key Ingredients for the Future

• Multi-step and Integrated approaches
• Middle market is wide open
• Higher complexity of analytics
• Innovation for the future vs. the past
• Customer centricity

13
Multi-step is Necessary

• One step-processes have their place, but will not
  revolutionize
• Integrated multi-faceted approach necessary
• It will raise cost
• It must also raise result
• Set higher results expectation and manage to that
• Prospect management will be key
• Coordination of the process
• Logical progression of activities
• Logic is in the eyes of the prospectNOT the
  company
• Prospect engagement is essential
• Develop a rapport with the prospect
• Personalizing the experience is key

14
Middle Market

• Agents continue to move up the income chain
• Ownership of protection products continues to
  decline
• An opportunity GAP has emerged
• The needs are different
• Their resources are more plentiful
• They demand a different set of solutions
• They are comfortable with direct purchasing
• They need help deciding what their needs are

15
Analytics

• Analytics are critical to success
• We need better and more
• Move beyond who doesnt buy to what will they
  buy
• Anyone can segment to success
• We need to look at REAL lifetime value and
  invest in it
• Multi variant issues will dominate the future

16
Innovate for the Future

• Ask yourself
• Should we spend money on the new kit for Burial
  Insurance?
• Would we be better off investing in selling to
  25-year-olds?
• Meet the needs of the future
• Cannot continue to repackage past success
• Invest in the long-term
• Short-term ROI is important, but cannot prevent
  long-term innovation

17
Customer Centricity

• Ask yourself
• Do we make products to sell to real people?
• Do we understand what peoples needs are and meet
  them?
• Do we never talk to these people again after
  gaining them as a customer?
• Do we understand that peoples needs change?
• Do we educate people on the value and importance
  of our products?
• In the end its about real people with real needs

18
Remember the Value

• We are not direct marketers of widgets
• We must remember the value of what we offer
• We serve millions of people and provide billions
  in needed funds
• We make a difference in the lives of people in
  need
• Every person in a direct marketing position
  should go hand-deliver an insurance claim check
  to a customer
• That is why we do what we do
• Be proud of the service you provide!

19
Summary

• The moons have never been better aligned
• We will thrive if we take advantage of our
  opportunity
• Remember the past, but target the future
• Enjoy todays success, knowing that it needs to
  change tomorrow!