OVERVIEWJuly 2013

PayCheck Direct® is operated by Bluestem Enterprises, Inc.

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Agenda

• Introductions

• PayCheck Direct Overview – Program Specifics– Walk-through of site

• Merchandising and Pricing

• Marketing and Implementation

• Wrap-up

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PayCheck Direct enables employees to buy what they need when they need it through the convenience of payroll deduction

12 Months

Easy online and phone shopping

Convenient home

delivery

No revolving balances with high interest

rates and fees

Payroll deduction –no writing checks,

no online payments

Simplified approval Process

• No cost, easy-to-implement benefit for your employees• Easy approval process – no credit check• Avoids predatory practices of credit card and rent-to-

own companies• No hidden/surprise fees or interest charges• Especially helpful for those with no credit history• Improves employee financial well-being

http://www.mypaycheckdirect.com/overview-video/

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PayCheck Direct meets the needs of both employers and employees.

Employer Benefits• No-cost benefit option

with a competitive advantage

• Provides benefits that employees value

• Low time commitment to launch and administer

• No liability to you, we do the work, including marketing and fulfillment

Employee Benefits• Easy, cost efficient and

convenient alternative for making large purchases

• No late fees or interest payments to worry about

• Affordable, simple payments over 12 months

• Great budgeting tool

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*National Foundation for Consumer Credit Counseling survey July, 2011.

ONLYsolutionfor some

64% NEED to utilize a source other than

savings to satisfy a $1,000 unplanned

expense*

Great solution when you WANT- Competitive pricing- Interest free opportunity- Simple and worry free convenience- Save money and build for the future

25% 0% 50% 75% 100%

A No Cost Solution That Will Benefit Your Entire

Workforce • Make a large purchase when cash & credit is not available

• Avoid costly alternatives – responsible purchase solution

• Get superb convenience and value

- Employee Relevance Spectrum -

Because of their job… they can

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PayCheck Direct is part of a $700MM retailer committed to a no-hassle customer experience.

• PayCheck Direct is part of a Bluestem Enterprises, Inc., a subsidiary of Bluestem Brands, Inc. – 10 years in business.

• Our company is proud to serve millions of customers and has an ACSI score of 84 to reflect their satisfaction – one of the highest in the US.*

• For the employer, we assign an account manager with full cross-functional support.

• For the employee, toll-free customer support is available to handle all customer needs.

• We offer a very customer-friendly return policy.

* Source: ACSI proprietary research fielded in Q4, 2012 via telephone and email

Gettington.com

Nordstrom

Fingerhut

Retail Website

J.C. Penney

Kohl's

Target

Best Buy

Dollar General

Macy's

Specialty Retail

Dept/Discount

Sears

Walmart

85

84

83

82

81

81

81

78

78

78

78

77

75

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Bluestem Family of Companies Customer Satisfaction Index*

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The Bluestem family of companies, an experienced partner with a 60 year history.

Merchandising• Top 100 retailer nationally• Deep expertise in analytics• 3rd largest e-commerce in MN• Distribute nearly 100 Million product catalogs annually

Buying Power• Vendor network of more than 1,400• Offer more than 20,000 products• PayCheck Direct has a dedicated buying team

Customer Service• We have over 1,000 employees• Named top 100 workplaces Twin Cities – 2010• Serve >3 million customers nationwide• Industry leading ACSI satisfaction scores

Product Fulfillment• Shipped more than 4 MM products in 2011• Sales revenue over $700 million in 2012• Not a reseller. We are a retailer.

Employer and

Employee win!

Distribution Center

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Our Clients

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Here is what our customers and business partners have to say…

Hi Bev,

 We are very happy with our first launch!  The participation

looks great for the first week.  Hava has been wonderful

regarding her responsiveness and help.  She has been really

great to work with.  We also very much appreciate working

with you and your flexibility.

 We are looking forward to partnering with you on future

accounts and feel even more confident in your program!

 Thanks,

 T. L.

“The new Wii U is very hard to find. I ran all around town only to find them

sold out at every store. Then I discovered they were listed on PayCheck Direct’s website so I placed an order for two of them. It was the first time I had ever used the site. I created my profile and placed the order with no

trouble. The whole process was very seamless and easy. The best part is that I already have in my possession the “hot” item of the Christmas season. My kids know nothing about this and I cannot wait to see the look

on their faces when they open these gifts. It was a great experience and I will definitely use PayCheck Direct again.”-Bill A.

Shelley shared with me that a member called to thank them for offering the PCD program, she just completed a purchase of several products and couldn’t believe all she could get for $75 per month, and she asked why wasn’t this program offered sooner! 

“It was super easy to sign up for PayCheck Direct and purchase my television.  It arrived within a few days with no issues.  The entire process  was so simple!” –Miles B.

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We offer a wide variety of merchandise categories to meet your employee’s needs.

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We continually evolve our assortment with the customer in mind• Experienced Merchandising team at headquarters• Assortment focused on categories of products that

employees want and need• High quality, relevant products that employees will enjoy

for years to come• Our merchants source the best products from vendors at

markets all over the world– Half of our products ship from state of the art warehouse– Tight controls on products shipped by vendor partners

• Pricing is competitive with where and how customer shops– Each new item analyzed at time of set up– Regular competitive reviews with resulting pricing adjustments

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What do employers need to do in support of this program?

• Our goal is for the employer to do very little

• We meet jointly to discuss implementation

• We are able to roll it out when it works best for you since it’s not tied to open enrollment periods as there is no enrollment process

• Employer provides a Census File for order validation

• Usually requires approximately 15 – 20 minutes per payroll period to process new records for new orders

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What does the employee need to do to participate?

• The employee shops online or by phone.

• They register with PayCheck Direct when they place their order.

• We validate employment information through the census file.

• The order is processed and shipped to the employee’s home.

• Payroll deductions begin and continue for 12 months of payroll periods.

• No checks to write!

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How does an employee qualify?

• No credit check is required to make a purchase

• To be eligible an employee must:– Be a full-time employee– Be at least 18 years of age– Meet the minimum salary

requirement of $18,000 per year

– Have a tenure of at least six months

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If an employee leaves, does the employer end up paying the balance?

• No. The employer has no liability for the employees’ obligations

• When an employee leaves your company, PayCheck Direct will work with the employee to obtain payment for the item

• We’ll work with the employee to pay the remaining by providing them with alternative payment options

• We just ask the employer to provide most current information for the terminated employee

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What if an employee goes on leave?

• If a leave is 90 days or less, we will push out the payment period for the employee.

• For leaves greater than 90 days, we will bill the employee directly after the first 90 days until they return to work.

• When they return to work, payroll billing will resume.

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Are we allowing/encouraging employees to get in over their heads?• PayCheck Direct believes in responsible lending.• Our purchasing tiers are designed to not exceed 3.5 – 4.0%

of gross pay and in most cases are less than 3%.

Employee Purchase Limits Based on Income

Annualized Employee Base Income PurchaseMin Max Maximum

$ 18,000.00 $ 25,000.00 $ 500.00

$ 25,001.00 $ 35,000.00 $ 750.00

$ 35,001.00 $ 50,000.00 $ 1,000.00

$ 50,001.00 $ 65,000.00 $ 1,500.00

$ 65,001.00 $ 75,000.00

$ 2,000.00

$ 75,001.00 -- $ 2,500.00

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What does your marketing plan include?

 

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov DecCatalog   X     X   X     X    

Flyers         X           X  

Email X   X   X   X   X X X  

Postcards                     X  

The key to successful employee engagement and usage of the program is communication. PayCheck Direct will create a program for communicating out the program to your employees. The program will be submitted for your approval prior to execution.

Below is an example of a recommended program for a typical calendar year:

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What marketing communications are presented to our employees?

• The website and catalog are co-branded

• 3-4 catalog mailings per year

• Opportunities exist for messaging to employees through catalogs, email and online

• Ample opportunity is available for reinforcing your presence with your employees in these communications.

Client Logo

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What do you expect usage/penetration to be?

• An employer can expect employee usage to be 10 - 20% or higher each year with high repurchase rates.

• The key to success is in the communication plan approved by the employer.– Program brochures will be developed for distribution

during annual open enrollment.– Catalogs will be delivered to employees 3-4 times per

year.– Email templates will be created for the program.

• PayCheck Direct or employers can send periodic employee emails.

• Periodic emails will be made available for hot deals, newsletters, reminders and other program appropriate correspondence.

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How do we differentiate ourselves from our competition?

PayCheck Direct Company A Company B Company C Company D

Merchandise Array

2500+ Offers Varies Varies Varies Varies

In-Home Trial 30 days in home return

for full refund

Up to 14 days after receipt

Refuse at door Up to 3 days after receipt

Up to 7days after receipt

Restocking Fee No NA 15% restocking fee

25% restocking fee

NA

Employee Tenure >= 6 mos. Varies Preferred >= 2 years

NA NA

Pricing 15 – 30% lower in many

cases

- - - - - - --

Free Shipping Appliances ship for free

Promotional Offers

Yes Promotional Offers

Promotional Offers

Major Brands Yes Yes Yes Yes Yes

Alternate Method of Payment Required

No Yes No No No

As of March 1, 2013

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How do we ensure a good customer experience? • The PayCheck Direct Customer Service Center is based in the US and is available

Monday through Friday from 8:30 a.m. to 5:00 p.m. Central Time through a toll-free number. – After hours, customers can leave a voicemail or contact us through email. – All after-hours communication will be responded to the next day. – As volumes dictate, customer service hours can be extended to meet growing demand

• PayCheck Direct representatives are provided with the necessary training to service customers efficiently and with high quality.  – These representatives are required to graduate the training class in order to be a member

of the PayCheck Direct Contact Center Team.  – Representatives receive 2 days of training as well as on-going product and process training

on a quarterly basis. – Silent monitoring is used to provide feedback to the representatives on their performance.  – We typically provide 3-5 feedback sessions per representative on a monthly basis.   

• PayCheck Direct representatives have been prepared with a high level of knowledge and experience to be able to best address customer questions.– If the customer has an issue, PCD agents are authorized to do what is in the best interest

of the customer to resolve the issue.  – All interactions are tracked via their resource: calls via our Avaya phone system, email via

outlook, and letters via scan/Microsoft Word folders. 

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Does PayCheck Direct operate in a secure environment?

PayCheck Direct is committed to working in a secure environment. We are classified as a level 3 merchant for PCI (Payment Card Industry) compliance.

– Installed perimeter firewalls between any wireless networks and the customer data environment, and configured these firewalls to deny or control any traffic from the wireless environment into the customer data environment.

– Do not allow any direct routes inbound or outbound for traffic between the Internet and the customer data environment.

– Appropriate facility entry controls are in place to limit and monitor physical access to systems in the customer data environment.

– Intrusion-detection and/or prevention systems are in-place and up-to-date and used to monitor all traffic in the customer data environment alerting personnel to suspected compromises.

– All users are assigned a unique ID before allowing them to access system components or customer data. Passwords must be changed at least every 90 days. Terminated employee privileges are revoked immediately.

– All client data for PayCheck Direct employers/employees is firewalled and only used for purposes of conducting business provided for under client agreements.

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How can PayCheck Direct afford to do this without charging interest?

• The likelihood of repayment is substantially higher when payments are made via payroll deduction– This allows us to take on customers without a credit

check, making the program available to the broadest possible audience

– This significantly reduces the cost of collecting payments and losses associated with bad debt

• Employer access to employees reduces marketing costs We pass these savings

on to your Employees

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How did PayCheck Direct decide to enter this business?

• We saw a market emerging as a result of the economy and changing perception of other forms of financing.

• Existing firms in this space are small and lack the ability to leverage our scale and customer service platforms.

• Financial stress on the part of consumers, which decreases productivity at work, is unfortunately growing, creating a real need for new alternatives.

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Thank you for considering thePayCheck Direct® Employee Purchase Program.

We appreciate your time and consideration!