Three Steps to Foolproof Member Engagement | Affinion 2012

Wayne Conte Executive Vice President Affinion Group

Define Your Audience

1 2
Refine Your Marketing Efforts
g

Define Your Audience Refocus Your Opportunities

1 2 3
g

Define Your Audience Refocus Your Opportunities

1 2 3 4
g Summary
y

Silent AKA Swing
Generation (1933-1945)

Context

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

Baby Boomers
(1946-1964)
Context


Context

Generation X
(1965-1976)

Context

Millennials
(1977-1994)


Matrix AKA
Generation Z
(1995- Context
Present))


iGen? WiiGen?
(2015 - ?)

Context


How To Vote via Texting


Context

Millennials
(1977-1994)


Less satisfied
Mobile Security

Profitability

Cost Conscious

Trusted Advisor
Income up over X

2020 @ 50%

Millennials
Mill i l

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 Premium
corporate on speed
mouthpieces and
convenience

More
engaged in
rating
Digital
products and
Natives
services

Use the
internet to
broadcast Fast adopters
their of new
thoughts technology


Millennial Behaviors

Nearly 60%
receive financial 82% are
support from
pp finding it
parents tougher to
t h t
find a job

47% turn to
print
35% follow their
circulars for
favorite brands
shopping
on social media
research
sites

Honesty is the
More
important quality
millennials
for FI brands
aren’t buying
homes


Millennial Behaviors

Nearly 60%
receive financial 82% are
support from finding it
parents tougher to
find a job

47% turn to
print
35% follow their
circulars for
favorite brands
shopping
on social media
researchh
sites

Honesty is the
y
More
M
important quality
millennials
for FI brands
aren’t buying
homes


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 gy
Apple computers were not even invented
when they were in college, meaning they
y g g y
have been using this technology since the
early days.”
y y

Suzie Mitchell
Boomer Expert


Do you know who your STAR members are?

STARS

Vulnerable
Members

Lost Causes

Free Riders
F Rid


Millennials & Matrix

Every Generation

How do different generations make buying decisions?

Influence


Generation X and Direct Mail

86% bring
in the mail

75% rate 68% have
DM as used DM
valuable coupons


Generation Y and Direct Mail

87% bring
in the mail

75% rate 73% have
DM as used DM
valuable coupons


Most vi
M B rs
isited sites: Boomer

Source: Nielsen Company

M
Most vi
isited sites: Boomer
B rs

M
Most vi
isited sites: Millennia
M als

Who uses the social web?

0-17 | 15%

18-24
18 24 | 9%

25-34 | 18%

35-44 | 25%

45-54 | 19%

55-64 | 10%

65+ | 3%


Information Revealed on Social Networking Sites

Birthday Phone
(Month & Number
Day)

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

Email
Address

Source: 2012 Identity Fraud Report, Javelin Research


“Identity Theft” term coined Internet commercialized

1964 1969 1992 2011

Frank Abagnale caught 11.6
11 6 million victims

Sources: Oxford English Dictionary online
Javelin Strategy and Research Study 2012

Changes in Smartphone Ownership

60%
48%
46%
40% 41%
35%

20% 17%
12%

0%
Smartphone Other cell phone No cell phone

May 2011 February 2012

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

Category Trends: Identity Theft

Peer to Data
Social Breaches
Peer

Difficult Difficult
to to Smart
Resolve detect Phones


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


Only 17% say 21% Neutral
“no”

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

Source: Affinion Group Identity Theft Product Research


If your financial
fi i l
institution ff d
i tit ti offered an
Identity
Identit Theft protection
program,
program how would
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


Marketplace Examples
 A number of institutions have already begun to include these types of programs
into their checking options
Identity Credit Everyday Travel Health &
Theft Management Savings Savings Wellness Insurance


Identity Theft Services Protection Credit Management

Identity Theft
Services

Triple
Social
Bureau
Media
Credit
Monitoring
g
Monitoring

Public
Underground
Records
R d Chatrooms
Monitoring
Identity
Risk Score


Credit
Management

Triple
Bureau Credit Score
Credit Simulators
Reports

Daily
All Clear
Credit
C dit Notifications
Monitoring Triple
Bureau
Credit
Scores


Consumers have reduced
spending

Focus on paying down debt
Credit Management Trends

35% have a FICO >650

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 THE GLOBAL LEADER IN CUSTOMER ENGAGEMENT & LOYALTY ENHANCEMENT www.affinion.com 58

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


Social Media
S i l M di Triple
Ti l Financial
Monitoring Calculators
Bureau
Credit
Monitoring

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


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

41/50 have no balance requirement
q
or monthly checking acct fee
Bankrate.com 2011 Credit Union
Checking Survey
39/50 offer free. Another 10 will
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 increased
by
b 800B – or, 8 5%
8.5%

2011 Fee income on
deposit accounts
p
decreased from 36.2B to
34.1B

Source: Credit Union Journal, May 7, 2012

2011 service fees on deposit accounts

Minimum
deposit
balances

Deposits/
# of checks
withdrawals
drawn
via an ATM

Deposit
Account
Fees
Withdrawals
from non-
NSF/OD
transaction
accounts
t

Closing of
savings
accounts


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

Dan Geller, EVP at Market Rates Insight


Why Prepaid Debit (GPR)?

42% are
Boomers
SUB
47% will
ill POINT
use if 60
offered million
by their under
FI banked

SUB
POINT
Prepaid
Cards
21% earn
between 36% of likely
$66k- users earn
$100k between $35k-
$65k Activity
will
increase
to $442B
by 2017
14% earn
over Supplement
$100k lost
revenue


Consumers are getting GPR cards from a variety of sources


Target Member Segments
 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 disbursement
 Payroll solutions

 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
 ToggleGUARD™
 RxAdvantage
 CardPatrol

 Platinum
 ToggleGUARD™
 RxAdvantage
 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
low calorie drink is ready, you
l l i d i ki d
have the following text

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:
 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 members
p 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

Merchant-
Merchant-funded loyalty is at the intersection of all three trends


Shopper’s Assistant reminds members to always get cash back
Credit Union branded browser extension member to always shop through the CU
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
Can be leveraged to distribute ongoing Credit Union communications and offers – all
d t di t ib t i C dit U i i ti d ff ll
through the browser
 One‐of‐a kind, Affinion patented


Sample Merchants


U.S. VEHICLE SALES (in Millions)
17.4 17.1 17.3 17.4
16.9 17.0 16.4

13.5
12.8
13.0 (projected)
11.8
10.6
10 6

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

11 years
Average age of cars on the road

4.5
4 5 years
Average length of time owners keep
their
th i new/used cars
/ d

The cost of owning and operating a vehicle

Finance
Depreciation Gas Insurance
g
Charges

Tax, License,
Maintenance Tires
Registration

POINT POINT

Source: AAA 2012 “Your Driving Costs” study

2011’s biggest expense was gas.

Finance
Depreciation Gas Insurance
Charges

Tax, License,
Maintenance Tires
Registration

POINT POINT

“Auto lending has always been a
Auto
challenge. The competition is for new
autos. We re
autos We’re surrounded by dealers
in the areas we serve.”
Brian Thornton, senior vice president and chief lending
, p g
officer 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

The Facts
• Americans take 1.1 billion trips a day – 87% of daily trips take place in personal
vehicles1

• U.S. daily travel averages almost 40 miles per person per day1
− Complete Auto360 SM coverage is comprehensive – covers members and their family
Auto360°
− 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
providers

• Average annual cost of maintaining a vehicle is $6902
− With discounts of 10%-50% off, members can save hundreds on annual maintenance and
repairs

• 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
service 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.html
3) Carjunky.com - http://news.carjunky.com/car_maintenance/neglected-car-service-costing-motorists-cdh602.shtml


Complete Auto360°SM Overview
Dent Guard® Auto Protection Plan
• 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

Client Data – Western Credit Union Business Result:
Assets $620 Million  20% cross-sale ratio in the first two months
Branches 20 (account launched in April)
Members 56,000

 Nearly 20% of all new checking accounts
have at least one value-added package (year-
Client Need:
end goal 50%)
To develop a brand new checking account designed to
create a competitive advantage, drive non-interest
advantage non interest
income, and attract new members/accounts - all while  Program is trending 100 brand new checking
providing a valuable product that members want and can accounts / week
design themselves.

Affinion Solution:  “C dit P k
“Credit Package” as b
” been th most chosen of
the t h f
all package options
Create 6 different “Packages” ranging from credit and
identity theft services to travel and shopping discounts
and services.
 National media exposure: Forbes, Yahoo
Finance, CNBC
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
to maximize revenue and program penetration.


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

Online Banking 2

Revenue Generating Products
g 3


Credit Unions have high service levels

ATM Access
A

Online
Mobile Banking
Banking


Banks and
Financial
services are the
two l
t least trusted
tt t d
industry sectors
for the second
year in a row.
Technology, for
the sixth
consecutive year,
is the most
trusted.
t t d

2012 Edelman Trust Barometer


Wayne Conte
EVP, Affinion Group
400 Duke Drive
Franklin, TN 37067
615-764-2537
wconte@affiniongroup.com

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


Three Steps to Foolproof Member Engagement | Affinion 2012

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