Three Steps to Foolproof Member Engagement (Conference Presentation Slides)

Wayne Conte Executive Vice President Affinion Group

What I’ll cover. . .

Define Your Audience

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Define Your Audience Refocus Your Opportunities

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33 44Summaryg y


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Silent AKA Swing Generation (1933-1945)

Context

9THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com

Baby Boomers

ContextBaby Boomers(1946-1964)


Context


Generation X(1965-1976)

Context

Millennials


(1977-1994)

Matrix AKA

ContextMatrix AKA Generation Z(1995-Present))


iGen? WiiGen?(2015 - ?)

Context


Take out your cell phones!

How To Vote via Texting



Context

Millennials


(1977-1994)

Less satisfiedMobile

Less satisfiedSecurity

Profitability

Trusted Advisor

Cost Conscious

Income up over XIncome up over X

2020 @ 50%

Mill i l20THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com

Millennials

How Non-Millennials view Millenials


Source: BCG Perspectives “The Millennial Consumer – Debunking Stereotypes”

How Millennials View Themselves


Brands that resonate with Millennials


Brands that resonate with Non-Millennials


Millennial Attitudes

Trust friends more than corporate mouthpieces

Premiumon speed and

More engaged in

mouthpieces and convenience

engaged in rating products and services

DigitalNatives

Use the internet to

Fast adopters of new technology

internet to broadcast their thoughts


Millennial Behaviors

Nearly 60% receive financial support from

82% are finding it t h t

47% turn to

ppparents tougher to

find a job

print circulars for shopping research

35% follow their favorite brands on social media

MoreHonesty is the

researchsites

More millennialsaren’t buying homes

important quality for FI brands


Millennial Behaviors

Nearly 60% receive financial support from

82% are finding it

47% turn to

support fromparents tougher to

find a job

47% turn to print circulars for shopping

h

35% follow their favorite brands on social media

MHonesty is the

research on social media sites

More millennialsaren’t buying homes

yimportant quality for FI brands


Some credit union programs focus on Millennials


“78% of Boomers are online, and out of these, 55% bank online. We have to remember that Boomers grew up with technology too; g p gyApple computers were not even invented when they were in college, meaning they y g g yhave been using this technology since the early days.”y y

Suzie MitchellBoomer Expert


Do you know who your STAR members are?

STARS

Vulnerable Members

Lost Causes

F Rid


Free Riders


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Millennials & Matrix

Every Generation

How do different generations make buying decisions?

Influence


Generation X and Direct Mail

86% bring86% bring in the mail

68% have 75% rate used DM coupons

DM as valuable


Generation Y and Direct Mail

87% bring87% bring in the mail

73% have 75% rate used DM coupons

DM as valuable


rsB

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erite

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Mos

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Source: Nielsen Company

rs als

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Mill

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ites:

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ites:

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Who uses the social web?

0-17 | 15%

18 24 | 9%18-24 | 9%

25-34 | 18%

35-44 | 25%

45-54 | 19%|

55-64 | 10%

65+ | 3%


Information Revealed on Social Networking SitesInformation Revealed on Social Networking Sites

Birthday (Month & Day)

Phone Number

High School

Birthday (Month, D Y )Name Day, Year)

Email Address


Source: 2012 Identity Fraud Report, Javelin Research

“Identity Theft” term coined Internet commercialized

1964 1969 1992 20111964 1969 1992 2011

Frank Abagnale caught 11 6 million victimsFrank Abagnale caught 11.6 million victims


Sources: Oxford English Dictionary onlineJavelin Strategy and Research Study 2012

Changes in Smartphone Ownership

60%

48%

40%35%

41%46%

48%

20% 17%12%

0%

12%

Smartphone Other cell phone No cell phone

May 2011 February 2012


May 2011 February 2012

Source: Pew Research Center’s Internet & American Life Project, 2011 & 2012

Category Trends: Identity Theft

Social Peer to Peer

Data Breaches

Difficult to

Difficult to Smart to

Resolvetodetect Phones


Do you expect your financial institution to offer Identity Theft yprotection? p


Only 17% say 21% NeutralOnly 17% say “no”

21% Neutral

More than 6 out of 10 expect ID theft products from their FI relationshipfrom their FI relationship


Source: Affinion Group Identity Theft Product Research

If fi i lIf your financial i tit ti ff dinstitution offered an Identit Theft protectionIdentity Theft protection program how wouldprogram, how would you perceive them?you perceive them?


24% Neutral

More than 3 out of 4 will think more favorably of that institution because of the

offer


Source: Affinion Group Identity Theft Product Research

A number of institutions have already begun to include these types of programs

Marketplace Examples A number of institutions have already begun to include these types of programs

into their checking options

Identity Theft

Credit Management

Everyday Savings

Health & Wellness Insurance

TravelSavingsTheft Management Savings Wellness InsuranceSavings


ProtectionIdentity Theft Services Credit Management

Identity Theft ServicesServices

Social Media Monitoring

Triple Bureau Credit Monitoring g

UndergroundPublic R d

Monitoring

Underground Chatrooms

Identity Risk Score

Records Monitoring


Credit ManagementManagement

Triple Bureau Credit Reports

Credit Score Simulators

All ClearDaily C dit

Reports

All Clear NotificationsTriple

Bureau Credit Scores

Credit Monitoring


Scores

Consumers have reduced spendingspending

Focus on paying down debt

35% have a FICO >650

Credit Management Trends

1/3 don’t know their score


*Source: American Express Spending & Saving Tracker consumer survey, July 2010**Source: FICO data from April 2010***Source: National Foundation for Credit Counseling, 2009 Financial Literacy Survey, April 2009 ****PRWeb, August 2010

Assisting Millennials with their credit is another opportunity for your FI.


FinancialT i lS i l M di Financial Calculators

Triple Bureau Credit

Social Media Monitoring

Monitoring

Millennial job seekers will need to be concerned about identity theft.


Percentage of the top 50 CU’s withPercentage of the top 50 CU s with a fee rose from 18% to 26%

41/50 have no balance requirement qor monthly checking acct fee

39/50 offer free. Another 10 will

Bankrate.com 2011 Credit Union Checking Survey

waive it with DD and/or e-statements

Avg NSF fee grew to $26.05 in 2011.


2011 Fee income decreased, while deposits increased

2011 deposits increasedb 800B 8 5%by 800B – or, 8.5%

2011 Fee income on deposit accounts pdecreased from 36.2B to 34.1B


Source: Credit Union Journal, May 7, 2012

2011 service fees on deposit accounts

Minimum deposit balances

# of checks drawn

Deposits/ withdrawals via an ATM

Deposit Account

Fees

Withdrawals from non-transaction

tNSF/OD

Closing of savings accounts

accounts


accounts

"These findings suggest the potential for fee income from traditional services is gradually diminishing. Institutions need to start offering value-added services th t t d d dthat consumers want and need and are willing to pay for."

Dan Geller, EVP at Market Rates Insight



Why Prepaid Debit (GPR)?

47% ill

42% are Boomers

SUB47% will use if offered by their FI

60 million under banked

SUB POINT

Prepaid Cards

SUB POINT

21% earn between $66k-$100k

36% of likely users earn between $35k-$65k Activity

will

14% earn over $100k

will increase to $442B by 2017

Supplement


$100k lost revenue

Consumers are getting GPR cards from a variety of sources


Target Member Segments

Checking Account Turn-Downs Checking Account Turn-Downs Industry experts estimate that a typical financial institution turns away

approximately 20% of all members wanting to open a checking account Chexsystems verification Drivers License verifications Less than favorable credit circumstances Length of residence Out of town applicants

Small Business and Commercial Members Effective budgeting tools for expense management Versatile funding vehicle for letters and lines of credit and convenient/control-

able disbursementable disbursement Payroll solutions

Teens and College Students Teens and College Students Parental driven funding options for students and teens Effective spend accountability Transactional reporting tracking spending


Outstanding way to revitalize stagnant overlay programs

Product Concepts:

Two core prepaid card products:

Gold Gold ToggleGUARD™ RxAdvantage CardPatrol

Platinum ToggleGUARD™ RxAdvantage CardPatrol CardPatrol Emergency Roadside Assistance Get Gas Rewards


ToggleGUARD™…

ToggleGUARD™ is the ultimate in funds security…

→ “Hey, can I have a double skinny latte mocha frappachino with

?extra WHIP please?”→ “Sure, that will be a gazillion

dollars”→ Swipe card, and by the time your

l l i d i k i d


low calorie drink is ready, you have the following text

Consumers:

What and Why “merchant funded”?

Consumers: Rapid increase and convergence of coupon usage, daily deal adoption, online

shopping and mobile Expecting more value from their debit and credit cards, particularly in light of fee-

based account programs Shop with whom they trust

Merchants: Merchants: Seeking new ways to acquire, retain and grow members Applying greater use of data analytics and targeting to stretch ad dollars More open to cross-pollination of membersp p

Financial Institutions: Striving to increase card utilization and member loyalty, while minimizing costs Expanded focus on growing share of other products and services Seeking to mitigate impact of Durbin


MerchantMerchant--funded loyalty is at the intersection of all three trendsfunded loyalty is at the intersection of all three trends

Credit Union‐branded browser extension member to always shop through the CU

Shopper’s Assistant reminds members to always get cash back

Credit Union branded browser extension member to always shop through the CU

Downloaded by user at enrollment or post‐enrollment and sits/viewed in browser

Immediately deploys when user lands on in‐network merchant site

Reminds members to shop through earnings site every time a merchant is recognized

No redirecting, no hassle, easy to use, clickable browser extension

C b l d t di t ib t i C dit U i i ti d ff ll Can be leveraged to distribute ongoing Credit Union communications and offers – all through the browser

One‐of‐a kind, Affinion patented



Sample Merchants


U.S. VEHICLE SALES (in Millions)

17.4 17.116.9

17.3 17.417.0 16.4

13.5

10 611.8

13.012.8 (projected)

10.6

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

1111 yearsAverage age of cars on the roadAverage age of cars on the road

4 5 years4.5 yearsAverage length of time owners keep th i / dtheir new/used cars

The cost of owning and operating a vehicle

Finance ChargesDepreciation Gas Insurance g

Maintenance Tax, License, Registration Tires

POINTPOINT

Source: AAA 2012 “Your Driving Costs” study

2011’s biggest expense was gas.

Finance ChargesDepreciation Gas Insurance

Maintenance Tax, License, Registration Tires

POINTPOINT

“Auto lending has always been aAuto lending has always been a challenge. The competition is for new autos We’re surrounded by dealersautos. We re surrounded by dealers in the areas we serve.”

Brian Thornton, senior vice president and chief lending , p gofficer at Stanford Federal Credit Union in Palo Alto, Calif.


Source: “Auto Lending: Players Vie for Same Members Traditional Competitors Have Lock on Market” – Credit Union Times Magazine, May 30, 2012

• Americans take 1.1 billion trips a day – 87% of daily trips take place in personal

The Facts

vehicles1

• U.S. daily travel averages almost 40 miles per person per day1

− Complete Auto360°SM coverage is comprehensive covers members and their family− Complete Auto360 SM coverage is comprehensive – covers members and their family− Coverage follows the individual – not the vehicle – so members are covered in any car when

needing roadside assistance− Nationwide roadside assistance is available 24/7 with over 30,000 participating service

providersproviders

• Average annual cost of maintaining a vehicle is $6902

− With discounts of 10%-50% off, members can save hundreds on annual maintenance and repairsrepairs

• 70% of car owners neglect regular car maintenance due to confusion about what services need to be performed or are concerned about being scammed by a

3service provider3

− ASE-certified mechanics are available to assist members with auto inquiries and validation of repair estimates

1) National Household Travel Survey - http://www.bts.gov/programs/national_household_travel_survey/daily_travel.html


) y p g p g _ _ _ y y_2) Bureau of Transportation Statistics - http://www.bts.gov/publications/national_transportation_statistics/html/table_03_14.html3) Carjunky.com - http://news.carjunky.com/car_maintenance/neglected-car-service-costing-motorists-cdh602.shtml

Dent Guard® Auto Protection Plan

Complete Auto360°SM Overview

• Paintless dent repair coverage for metal dents and door dings• Interior repair including fabric tear and scratches• Windshield repair

Emergency Roadside Assistance with NEW LocateMe® GPS Technology• Roadside assistance, home and auto lock-out protection 24-hours a day, 7-days-a-week• Members are covered for up to 3 events per year, up to $80 per occurrence• Nationwide network of over 30,000 road-service professionals• LocateMe GPS technology makes requesting emergency assistance easier and quicker

Auto Maintenance Discounts• Point of sale discounts of 10%-50% on most automotive maintenance and repairs• Over 15,000 participating service centers nationwide• Search by zip code to find the nearest participating service center

ASE-Certified Mechanics Helpline• Toll-free repair and maintenance information• Certified mechanics on staff to answer member questions• Instant diagnostic help in real time

Gas Rebate Rewards• Members receive up to a $40 rebate per calendar year for gasoline purchases at any gas station in the U.S.• Members submit gas receipts quarterly and receive up to $10 back per quarter


*If product is being marketed as a retail product (via direct mail, etc.) then $1,000 AD&D Insurance is included in the product.

Credit Union Success Story – Fee Income / Acquisition

Business Result:Client Data – Western Credit Union Assets $620 MillionBranches 20Members 56,000

Business Result: 20% cross-sale ratio in the first two months

(account launched in April)

Client Need: To develop a brand new checking account designed to create a competitive advantage drive non interest

Nearly 20% of all new checking accountshave at least one value-added package (year-end goal 50%)

create a competitive advantage, drive non-interest income, and attract new members/accounts - all while providing a valuable product that members want and can design themselves.

Program is trending 100 brand new checking accounts / week

“C dit P k ” b th t h fAffinion Solution:Create 6 different “Packages” ranging from credit and identity theft services to travel and shopping discounts and services.

“Credit Package” as been the most chosen of all package options

National media exposure: Forbes, Yahoo

Let members design their own account by choosing the package(s) they want, for a nominal fee, to add to their account.

Leverage bank’s strong sales culture as an opportunity

Finance, CNBC


Leverage bank’s strong sales culture as an opportunity to maximize revenue and program penetration.

P l Fi i l M t (PFM) 1Personal Financial Management (PFM) 1

Online Banking 2

Revenue Generating Products 3g 3



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33 44Summaryg y

Credit Unions have high service levels

ATM AATM Access

MobileOnline BankingMobile

BankingBanking


Banks andBanks and Financial services are the t l t t t dtwo least trusted industry sectors for the second year in a row. Technology, for the sixththe sixth consecutive year, is the most t t dtrusted.


2012 Edelman Trust Barometer

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Wayne ConteWayne ConteEVP, Affinion Group400 Duke DriveFranklin, TN [email protected]@affiniongroup.com

http://www.linkedin.com/pub/wayne-conte/a/117/915
