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  1. 1. … welcoming new homeowners for 80 years Presentation by Management September 2008
  2. 2. Management team CHRIS CAPEZZUTO General Manager HELENE RICCINTO Vice President, Operations MALCOLM SARNO Vice President, Production and Fulfillment MICHAEL FOLKS Vice President, Local Sales MICHELLE GROVER Division Controller ANTHONY ANCONA Director, Human Resources DEBORAH HENRIKSEN Director, Marketing
  3. 3. Agenda <ul><li>Welcome Wagon’s Past, Present and Future </li></ul><ul><li>The New Mover Market </li></ul><ul><li>Product Overview and Opportunities </li></ul><ul><li>Sales Organization </li></ul><ul><li>Financial Overview </li></ul><ul><li>Growth Strategy and Path to Profitability </li></ul>
  4. 4. Welcome Wagon’s mission <ul><li>Help local businesses connect with new residents at a critical time when they are spending money and developing new loyalties </li></ul>
  5. 5. <ul><li>Welcome Wagon’s </li></ul><ul><li>Past </li></ul><ul><li>Present </li></ul><ul><li>Future </li></ul>
  6. 6.                                     <ul><li>Founded by Thomas Briggs in 1928 in Memphis, Tennessee </li></ul><ul><li>Briggs hired women as “hostesses” to welcome new movers to the neighborhood, on behalf of local merchants </li></ul><ul><li>Welcome Wagon was the pioneer of lead generation for local businesses </li></ul>Welcome Wagon history
  7. 7. <ul><li>Welcome Wagon was sold in 1995 to Cendant </li></ul><ul><li>In 1998, Cendant purchased Getting To Know You, a direct mail welcoming service </li></ul><ul><li>Later that year, Welcome Wagon’s business model was changed from home visits to direct mail </li></ul><ul><ul><li>Utilized the Getting To Know You product with the Welcome Wagon brand </li></ul></ul><ul><ul><li>The delivery method changed; commitment to the mission did not </li></ul></ul><ul><li>Cendant developed a new real estate search website called move.com </li></ul><ul><li>In 2001, Move, Inc. (then called Homestore), bought the move.com website along with Welcome Wagon, hoping for synergistic benefits </li></ul>Welcome Wagon history
  8. 8. <ul><li>Synergies never materialized between Move and Welcome Wagon </li></ul><ul><li>Welcome Wagon fell short of its potential due to lack of dedicated resources and focus from corporate management, as well as limited investment in infrastructure, promotion and product development </li></ul><ul><li>Over the past year, the current WW management team has developed solid growth and profitability plans </li></ul><ul><li>The team is excited to pursue opportunities with a new owner </li></ul>Welcome Wagon present
  9. 9. Welcome Wagon looking forward… <ul><li>Initiatives requiring limited investment have begun, including a combination of enhancements and cost savings </li></ul><ul><li>Groundwork laid to achieve long-term profitability </li></ul><ul><li>On track to return to profitability in 2009 (EBITDA with Est. Corp. Costs), with full-year profitability in 2010 </li></ul>2008 and 2009 Quarterly Revenue and EBITDA Projections ($000)‏
  10. 10. Welcome Wagon’s unique advantages <ul><li>Experts in new mover industry and nation’s most trusted brand in reaching new homeowners </li></ul><ul><li>Nationwide local sales force of 250+ </li></ul><ul><li>Single-source provider of direct marketing services to reach the new mover market </li></ul><ul><li>Fastest access to new homeowner data through vast network of county-level suppliers </li></ul><ul><li>Automated data processing system that verifies and scrubs new mover files </li></ul><ul><li>Highest mail list accuracy with 98%+ deliverability </li></ul><ul><li>In-house production and USPS plant-verified facility </li></ul>
  11. 11. Welcome Wagon resources – technology Headquartered in Plainview, NY <ul><li>We employ cutting-edge technology: </li></ul><ul><li>2 Xerox iGens in a variable print-on-demand environment </li></ul><ul><li>XM Pie software, which drives our dynamic publishing capabilities </li></ul><ul><li>Technology experts in variable, on-demand programming and application development </li></ul><ul><li>Best-in-class data research, collection and scrubbing processes </li></ul>
  12. 12. Welcome Wagon resources - people <ul><li>372 employees, including approximately 256 local sales representatives in 43 states </li></ul><ul><li>Staff of professional graphic designers who create custom ads for our clients </li></ul><ul><li>Technology department – experts in variable, on-demand programming; application development </li></ul><ul><li>Print production team with traditional and digital printing experience </li></ul><ul><li>Tenured and dedicated employees at all levels, in Plainview and in Field Sales </li></ul><ul><li>PASSION! Employees truly care about the products and the company and are vested in our success </li></ul>
  13. 13.                                     After 80 years, we’re part of American culture
  14. 14. The New Mover Market
  15. 15. New movers: a constant supply <ul><li>Each year, approximately 19 million American households (42 million people) move to a new home </li></ul><ul><ul><li>This represents 16% of the US population </li></ul></ul><ul><ul><li>On average, that’s 115,000 people each day </li></ul></ul><ul><ul><li>In 5 years, nearly 80% of the population will move </li></ul></ul><ul><li>Source: U.S. Census </li></ul>
  16. 16. New movers: a lucrative target Moving triggers a wave of expenditure on move-related products and services This spending yields a staggering mover-related industry of approximately $170 B illion annually in the U.S. Source: High Point Associates, September 2006
  17. 17. New movers: desirable demographics / psychographics <ul><li>New homeowners spend 20 times more on household goods and services than non-movers </li></ul><ul><li>Average spend is $9,400 in the first year </li></ul><ul><li>More likely to make major purchases due to credit worthiness and spending power </li></ul><ul><li>Have few to no loyalties – they will need ALL new local services and merchants </li></ul><ul><li>Source: High Point Associates, September 2006 </li></ul>
  18. 18. Welcome Wagon Product Overview and Opportunities
  19. 19. Our marketing solutions <ul><li>Welcome Wagon’s suite of direct mail products helps businesses coordinate their marketing efforts to new residents at critical stages in the mover life-cycle </li></ul><ul><li>We mail 12 million pieces to movers annually, reaching over 4.5 million movers, on behalf of: </li></ul><ul><ul><li>12,000 small business clients </li></ul></ul><ul><ul><li>30 national clients </li></ul></ul>
  20. 20. Our flagship product: the Gift Book <ul><li>Businesses sponsor their category in the Gift Book (dentist, dry cleaner, pizzeria) with business listing and Welcome Offer </li></ul><ul><ul><li>Many add a full-page display ad at a higher rate </li></ul></ul><ul><li>Sponsors pay per household mailed and sign a 12-month contract </li></ul><ul><li>Approximately 2,300 local editions of the Gift Book in 43 states </li></ul><ul><li>12,000+ current sponsors </li></ul><ul><li>Annual distribution: 1.5 million households </li></ul><ul><li>2008E revenue: $ 25.0 million </li></ul><ul><li>(includes EFY)‏ </li></ul>
  21. 21. Gift Book revenue by category 0.3% 0.3% 0.9% 2.7% 2.9% 3.8% 5.7% 5.4% 7.8% 8.3% 14.9% 20.6% 26.5%
  22. 22. In progress (pilot launch Q4 2008) : addition of sponsored local content to each book, providing information on parks, beaches, recreation areas, schools, town and county municipal offices, photos Gift Book opportunities <ul><li>Regional and national corporate ads in the Gift Book </li></ul><ul><li>Negotiation with companies to develop franchise programs, co-op plans for their distributors </li></ul>Other opportunities: A dedicated national sales team or outside sales firm would enable two opportunities:
  23. 23. 90 days after the Gift Book: EFY <ul><li>“ Especially For You” is a self-mailer booklet, mailed to the same movers who received the Gift Book </li></ul><ul><li>Repeats the “Welcome Offer” and reminds the mover to utilize the businesses </li></ul><ul><li>Provides a second opportunity for customer feedback </li></ul><ul><li>Annual distribution: 1.5 million </li></ul>
  24. 24. EFY opportunity <ul><li>EFY is currently a one-time follow-up mailer </li></ul><ul><li>Expanding EFY to a 3x (multi-touch) mailer would provide a marketing opportunity to reach new movers at critical points after they move: </li></ul><ul><ul><li>3 mos. – as they are first discovering their new home </li></ul></ul><ul><ul><li>6 mos. – as they begin to settle in </li></ul></ul><ul><ul><li>9 mos. – as they complete the process and now feel </li></ul></ul><ul><li>truly “at home” </li></ul><ul><li>Enables better opportunity for more targeted and relevant messaging </li></ul>
  25. 25. Pinpoint postcards <ul><li>Personalized one-on-one communication </li></ul><ul><li>Oversized postcard </li></ul><ul><li>Proven solution for targeting best prospects for our advertisers </li></ul><ul><li>Can be timed for optimal impact and frequency </li></ul><ul><li>Close to 400 designs in our library; customization also available </li></ul><ul><li>2008E revenue: $3.8 million </li></ul>
  26. 26. Pinpoint opportunities <ul><li>Enhanced version of product that leverages XMPie, allowing elements of the postcard design to be highly personalized to the recipient </li></ul><ul><li>Build out demographic/ psychographics to provide more client options </li></ul>
  27. 27. Post-Move insert program <ul><li>Welcome Wagon provides a channel for large, national businesses to reach 3 million movers </li></ul><ul><li>The distribution is comprised of: </li></ul><ul><ul><li>1.5 million through our standalone Post-Move mailer </li></ul></ul><ul><ul><li>1.5 million via inserts into the Gift Book </li></ul></ul><ul><li>2008E revenue: $1.3 million </li></ul>Opportunity : Add a dedicated national sales channel to increase revenue Mr. & Mrs. John Doe 123 Main Street Anytown, US 12345
  28. 28. Pre-Move insert program <ul><li>Initiated in 2004 </li></ul><ul><li>Re-launched with improvements in 2007 </li></ul><ul><ul><li>Reached profitability within a few months </li></ul></ul><ul><li>In Q4 2007, lost national sales support and profitability slipped </li></ul><ul><li>Due to lack of revenue, Pre-Move was decommissioned in June 2008 </li></ul><ul><li>2008 revenue (actual for Q1 & 2): $150,000 </li></ul><ul><li>Opportunity: </li></ul><ul><li>This product has great potential </li></ul><ul><li>Advertiser appeal and few competitors </li></ul><ul><li>Once a national sales channel is assembled, this product can be reinstated for a quick “win” </li></ul>Mr. & Mrs. John Doe 123 Main Street Anytown, US 12345
  29. 29. <ul><li>A division of Welcome Wagon, GDR sells the company’s mover data files either directly or via list brokers to large marketers (e.g., banks/credit card companies, housewares/electronics, catalogers, etc.)‏ </li></ul><ul><li>GDR has a reputation of consistently supplying names that others cannot quickly or easily obtain on their own </li></ul><ul><ul><li>Supplies approximately 280,000 new mover names per month or 3.4 million annually </li></ul></ul><ul><li>2008E revenue: $1.1 million </li></ul><ul><li>Opportunity : E xpect current profitability to continue </li></ul>New mover data
  30. 30. Getting To Know You <ul><li>Getting To Know You is a new direct mail product, designed to reach new movers: </li></ul><ul><ul><li>Solo mailer – only one business per envelope </li></ul></ul><ul><ul><li>Brightly colored envelope with a personalized letter inside </li></ul></ul><ul><ul><li>Mailed to ALL movers, including home buyers, home renters, apartment renters, etc. </li></ul></ul><ul><ul><li>Can be sold in any available zip code </li></ul></ul><ul><li>Getting To Know You has launched in July 2008 with 7 categories </li></ul><ul><li>Anticipated 2008 revenue (Q3 & 4): $700,000 </li></ul>
  31. 31. Getting To Know You opportunities <ul><li>Customized version for national advertisers </li></ul><ul><li>Telesales to expand reach across entire U.S. </li></ul><ul><li>Expanding to additional categories </li></ul>
  32. 32. welcomewagon.com <ul><li>The local business directory built </li></ul><ul><li>for “movers” </li></ul><ul><li>Featured placement for Welcome Wagon partners </li></ul><ul><li>Keyword and category searches, link to client’s website, client’s special offer </li></ul><ul><li>Map and driving directions with business location flagged </li></ul><ul><li>Customer recommendations </li></ul>
  33. 33. “ Hello Welcome Wagon” alpha website <ul><li>Visit – and help create – their “virtual” neighborhood </li></ul><ul><li>Get the “inside scoop” from the locals on things to do, local sites, events </li></ul><ul><li>Meet the neighbors </li></ul><ul><li>Make recommendations, browse those made by others </li></ul><ul><li>Post questions and answers </li></ul><ul><li>Share photos </li></ul><ul><li>Opportunity: </li></ul><ul><li>Build upon $1 million investment already made </li></ul><ul><li>Create a “must visit” site that retains eyeballs long after the move </li></ul>Local neighborhood “social networking” site that allows consumers to:
  34. 35. Sales Organization
  35. 36. Sales organization 256 Total Sales: 2 Trainers 2 Trainers 223 Account Execs
  36. 37. Regions <ul><li>Each region consists of 6-8 districts </li></ul><ul><li>Quota breakdown: </li></ul><ul><ul><li>Northeast: 26% </li></ul></ul><ul><ul><li>Mid-America: 26% </li></ul></ul><ul><ul><li>American South: 28% </li></ul></ul><ul><ul><li>Western: 20% </li></ul></ul><ul><li>RVP key responsibilities include hiring and managing District Managers, developing and executing regional sales strategy, overseeing sales training, assisting with larger sales deals and setting pricing strategy </li></ul><ul><li>RVP compensation: salary + override of regional revenue with accelerators if goals are achieved </li></ul>
  37. 38. Districts <ul><li>28 districts made up of an average of 10 sales territories </li></ul><ul><li>Annual sales quotas range from $900,000 to $2 million </li></ul><ul><li>DM key responsibilities include hiring, training and managing Account Executives, handling customer service issues, developing and executing a district sales strategy and overall motivation and development of their team </li></ul><ul><li>DM compensation: salary + monthly override for achieving district quota </li></ul><ul><li>Introducing a variable compensation plan in August, which will replace all DM fixed-cost salary comp plans </li></ul>
  38. 39. Sales territories <ul><li>363 active territories within 43 states </li></ul><ul><li>8 - 12 books are assigned per AE </li></ul><ul><li>Monthly quota for a territory runs between $8K to $16K </li></ul><ul><li>AE key responsibilities include prospecting potential clients, contracting new clients, renewing existing clients for Welcome Wagon’s suite of products sold to local business advertisers and handling customer service calls </li></ul><ul><ul><li>Requires a 1:1 “sales consulting” approach to position WW as a marketing solution as opposed to simply selling ad space </li></ul></ul><ul><li>AE compensation: 100% commission/bonus plan; commission ranges from 20 – 25% of net revenue + quarterly and annual bonuses </li></ul>
  39. 40. Key sales challenges <ul><li>Current turnover is 55% </li></ul><ul><ul><li>Skewed higher by certain territories </li></ul></ul><ul><li>However, we retain our top performers (COEs), demonstrated by a 5.3 year average tenure </li></ul><ul><ul><li>Those who are successful make great income and stay longer </li></ul></ul><ul><li>Continuous efforts to lower turnover include revamping AE comp plan, significant training changes </li></ul><ul><li>Current renewal rate is 27% </li></ul><ul><ul><li>This number reflects the inherent nature of small businesses </li></ul></ul><ul><ul><li>COE rates are significantly higher (40%)‏ </li></ul></ul><ul><ul><li>Consistent with historical performance </li></ul></ul>
  40. 41. DNA of a successful AE <ul><li>Self-motivated </li></ul><ul><li>Highly competitive </li></ul><ul><li>Resilient </li></ul><ul><li>Sales experience preferred </li></ul><ul><li>Financially driven </li></ul><ul><li>Thrives on recognition </li></ul><ul><li>Entrepreneurial </li></ul><ul><li>HR’s contributions supporting Field </li></ul><ul><li>and Plainview operations… </li></ul>
  41. 42. Sales force enhancement initiative <ul><li>WW management strongly supports introducing a multi-level marketing structure to expand sales force with additional pay-for-performance compensation </li></ul><ul><li>Designate top AE candidates as “Super AEs” (based on performance/tenure)‏ </li></ul><ul><li>Super AEs may recruit, hire and train part-time reps to sell within their territory </li></ul><ul><ul><li>Allows the Super AE to build their own team and grow into more book areas </li></ul></ul><ul><ul><li>Provides Super AE with an override from their “downline” reps </li></ul></ul><ul><li>Benefits: </li></ul><ul><li>Super AE hand-picks their team, can grow into more territories </li></ul><ul><li>DM earns additional revenue without having to hire, train and mentor </li></ul><ul><li>Part-time AEs benefit from a flexible position, working with a friend or neighbor, earning some spending money </li></ul>
  42. 43. Financial Overview Growth Strategy and Path to Profitability
  43. 44. Financial Overview – past and present
  44. 45. Future – path to profitability
  45. 46. Path to profitability (implemented in 2008)‏ Renegotiated pricing agreements for certain supplies and services New AE commission plan (reduced training and travel expenses, unrecoverable draw)‏ <ul><li>Reduced number of samples </li></ul><ul><li>Negotiated alternative mailing solutions with USPS to reduce postal rates </li></ul>Reduced headcount by 23 (includes overhead) since Jan 2008 <ul><li>Outsourced appointment setters and telesales </li></ul><ul><ul><li>Reduced fixed headcount by 13 </li></ul></ul>$655,000 None $100,000 $300,000 (annual cost savings)‏ $45,000 $1,170,000 $15,000 $500,000 None None Initiatives Costs Benefits
  46. 47. Path to profitability (in projections)‏ Initiatives Costs Benefits Create a dedicated national sales channel (for Gift Book, Pinpoint and Post-Move mailer)‏ Ties sales compensation directly to sales revenue in 2009 and beyond (2008 = $350,000)‏ Incremental $3 million in revenue by 2011 Ramp up to $500,000 by 2011 <ul><li>Introduction of new products (e.g., multi-touch mailing)‏ </li></ul><ul><li>Enhancement of existing products (e.g., Pinpoint)‏ </li></ul>Institute variable compensation plan for District Managers Reduce facility expense (enabled by outsourcing) Sublease in 2009 & 2010; lease buyout in 2010 Cost savings: 2009 = $200,000 (approx.)‏ 2010 = breakeven 2011 = $1 million Introduction of multi-level sales strategy Revenue enhancement: 2009 = $2,400,000 2010 = $2,600,000 2011 = $2,800,000 Revenue enhancements: 2009 = $500,000 2010 = $1,000,000 2011 = $1,500,000 < $10,000 $200,000 (IT and upfront costs)‏ < $100,000 + commissions $1,000,000 buyout in 2010 Outsource all production and mailing operations Increase in out-of-pocket costs for production of book ($0.50), offset by corresponding staff reductions Equipment sale = $700,000
  47. 48. Path to profitability ( not in projections)‏ Initiatives Costs Benefits Invest in new online order entry and publishing system $700,000 Cost savings: $900,000 annually Invest in web development ; possible integration of welcomewagon.com and Hello Welcome Wagon sites Move has invested $1 million in the Hello Welcome Wagon website; additional investment depends upon scope Significant local business directory + social networking site = increased traffic = advertising dollars = revenue gains Active solicitation of new mover email addresses to enable development of an email product 3 rd party Email Service Provider + promotion investment New revenue channel Suspension of lower-value Books None Increase average book value; more cost efficiencies Outsource new product development Partner with direct mail experts in consumer redemption to improve results tracking on behalf of clients $50,000 Improved renewal rate will enhance revenue TBD Expand our current resource capabilities
  48. 49. Conclusion <ul><li>Local businesses will always need to find new customers </li></ul><ul><li>Welcome Wagon has proven to be a highly effective lead generation partner for those businesses </li></ul><ul><li>The Company’s unparalleled expertise in the robust new mover industry will continue to enable the development of increasingly valued products </li></ul><ul><ul><li>We have a proven track record in bringing new products to market and ongoing product enhancement </li></ul></ul><ul><li>Welcome Wagon is in an ideal position to “own” the new mover space – via both print and online – with the right partner and resources </li></ul>