Moving Response to the Web

1
Moving Response to the Web
September 15, 2008
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Agenda

• RPM Direct Overview
• Unitrin Direct Overview
• The Web Loss Ratio Mystery
• Moving Response to the Web

3
RPM Direct your key to direct success

• R4 P M
• Response Profitability Marketing
• Revenue
• Risk
• Retention

4
RPM Direct

• 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.
5
RPM 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.

6
Auto Insurance Drivers of Profitability
Policy Premium
Revenue Model

- Claims
Risk Model
- Operating Expense
Response and Conversion Model(s)
- Acquisition Cost
Retention Model
Annual Profit
X Life of Product
Lifetime Value of Policy
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RPM Direct Database Marketing Model

Names
Credit

• Regression
• Models
• Response/
• Conversion
• Revenue
• Risk
• Retention

• Solicit
• Mail
• Phone
• E-Mail

• Phone Center/
• Website
• Underwrite
• Sell Product

Product Delivery
PLV Targeting
Prospect Database
Demos
X Date
Capture Responder Data
Responder Database
Events
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LTV Targeting Drives Higher Underwriting Tiers
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LTV Targeting Drives Higher Underwriting Tiers
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Unitrin Direct-The Right Choice is Simple

• 3 billion financial services company.
• 6 million PIF and 2.5 billion annual premium
  revenues.
• 9 billion in assets and 8,000 associates.
• 146,000 loans outstanding and 1 billion in
  consumer finance receivables.
• A Rating (excellent) from A.M. Best

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Unitrin-Major Operating Companies

• Unitrin Property and Casualty Insurance
• Kemper
• Unitrin Specialty
• Unitrin Business Insurance
• Unitrin Direct
• Unitrin Life and Health Insurance
• Fireside Bank-Consumer Finance

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Unitrin Direct-The Right Choice is Simple

• Founded in 2000, began marketing in 2001.
• Currently operates in 47 states.
• Direct Mail, Worksite, Telemarketing and Internet
  distribution channels.
• 2007 Net Written Premium 224 MM with 154 M
  policies in force.
• 10.5 growth in PIF in 2007.

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Unitrin Direct Case Study

• RPM has been managing Unitrins direct mail since
  2001.
• Direct mail to inbound Telemarketing has been
  Unitrins primary acquisition channel.
• Low cost Internet volume is growing exponentially
• Direct Mail Profitability Measures Look Good . .
  . .

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Channel Loss Ratio
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Channel Policy Lifetime Expectancy
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Targeted Mail Call Center to Web Mix
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But Theres a Fly in the Ointment . . . .
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A Second (Bigger!) Fly in the Ointment!!
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The Web Plan
Web Model
Optimized Quote Engine
PURL
Web Creative
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Web Targeting Model
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Control with Web Hype
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New Web Creative
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Personalized PURL Creative
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Streamlined Quoting Engine
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Web Program Results

• Web Targeting Model increases web response rate
  by 17.
• Web Creative Kit increases web response rate by
  28.
• PURL package increases web response rate by
  another 5.
• Web Model and Creatives produce a lower
  acquisition cost.

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Peace Returns to Happy Valley
Targeted Mail Call Center to Web Mix
Original Mix
New Mix
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But Wait! Theres More!!
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A Mismatch!
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Life is Good!!
After Targeting
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Grand Finale

• And Thats How
• RPM and Unitrin Direct Saved the
• World Wide Web.