STRATEGIC OUTLOOK:Direct Response Marketing

Brian A. SmithExecutive Vice President & Chief Operating Officer AEGON Direct Marketing Services, Inc.September 15, 2008

ADMS Snapshot • One of the largest direct response marketers of life, supplemental health,

specialty insurance, and fee-based products

• Composed of business units that focus on key market niches

• Virtually all methods of non face-to-face distribution

• Operating in 17 Countries

• 23 million policies serviced

• 2,385 employees

Madrid, Spain

London, England

Tokyo, JapanSeoul, S. Korea

Sydney, Australia

Frankfurt, Germany

Taipei, Taiwan

Paris, France

Sao Paulo, Brazil

Rome, Italy

Mexico City, Mexico Bangkok, Thailand

Hong Kong *

*

Mumbai, India

International Offices

Scandinavia

Major North America Locations

5

21

43

Baltimore, MD

Exton, PA

Atlanta, GA

Toronto, Canada

Plano, TX

5

2

1

4

3

Outline

• What's Happening in Our World

• What's Happening in the Real World

• What’s Next

• Key Ingredients for the Future

• Remember the Value

What's Happening in OUR World

• Last ten years… – Industry consolidation– Contraction– Disposal– Shut down

• Property & Casualty – Growing

• Life/Health – Stagnant – May be retracting

• Pure innovation replaced with change in tactics

• Limiting to the buyers of the past

What's Happening in OUR World

• Increasing Regulatory Mandates – Privacy– Data Encryption– Data Sharing – Data Storage– ID Theft

• Costs - When did they last go down?

• Response Rates - When did they last go up?

• Increased pressure on profits not based on sub-prime investments

What's Happening in the Real World

• Global pressure on the economy

• Aging population

• Technological revolution

• Generation X and Y- the “ME” generation

• Fast adoption of change

• Increasing consumer indifference

• Increasing consumer desire for control

• Challenging times create tremendous potential

• The ‘need’ has never been better for the ‘protection’ segment

• Younger generations are extremely comfortable with buying direct– Older generations are getting more

comfortable

• We offer real solutions to real problems

Could the Opportunity be any Better?

What’s Next

• Take action!– CHANGE– Know your customers of the future– Know those customers needs – Know the best way to reach those

customers

• Be transparent

• Be consistent

• Be trustworthy

Be Transparent

• The internet delivers transparency– Be ready for it…

• Keep messages unfettered from gimmicks

• Be clear about what you’re selling

• Be clear about why what you’re selling is needed

• Make information about your organization accessible

Be Consistent

• Price and product features need to be the same no matter the medium

• Messaging and promotion need to work together

• Variances should be minimized

• Minor differences with major price variances should be avoided

Be Trustworthy

• We are here to protect– Our products lend themselves to long-term relationships– Our promotions can get in the way

• We sell paper and promises– Actual service and benefits need to match expectation– Deliver on time– Keep your promises

Key Ingredients for the Future

• Multi-step and Integrated approaches

• Middle market is wide open

• Higher complexity of analytics

• Innovation for the future vs. the past

• Customer centricity

Multi-step is Necessary

• One step-processes have their place, but will not revolutionize

• Integrated multi-faceted approach necessary– It will raise cost– It must also raise result– Set higher results expectation and manage to that

• Prospect management will be key– Coordination of the process

– Logical progression of activities

– Logic is in the eyes of the prospect…NOT the company

• Prospect engagement is essential– Develop a rapport with the prospect

– Personalizing the experience is key

Middle Market

• Agents continue to move up the income chain

• Ownership of protection products continues to decline

• An opportunity GAP has emerged

• The needs are different

• Their resources are more plentiful

• They demand a different set of solutions

• They are comfortable with direct purchasing

• They need help deciding what their “needs” are

Analytics

• Analytics are critical to success

• We need better and more

• Move beyond who doesn’t buy … to what will they buy

• Anyone can segment to success

• We need to look at REAL ‘lifetime value’ and invest in it

• Multi variant issues will dominate the future

Innovate for the Future

• Ask yourself…– Should we spend money on the new kit for Burial Insurance?– Would we be better off investing in selling to 25-year-olds?

• Meet the needs of the future– Cannot continue to repackage past success

• Invest in the long-term– Short-term ROI is important, but cannot prevent long-term

innovation

Customer Centricity

• Ask yourself…– Do we make products to sell to real people?– Do we understand what peoples’ needs are and meet them?– Do we never talk to these people again after gaining them as a

customer?– Do we understand that peoples’ needs change? – Do we educate people on the value and importance of our

products?

• In the end its about real people with real needs…

Remember the Value

• We are not direct marketers of widgets

• We must remember the value of what we offer– We serve millions of people and provide billions in

‘needed’ funds – We make a ‘difference’ in the lives of people in need

• Every person in a direct marketing position should go hand-deliver an insurance claim check to a customer– That is why we do what we do

• Be proud of the service you provide!

Summary

• The moons have never been better aligned

• We will thrive if we take advantage of our opportunity

• Remember the past, but target the future

• Enjoy today’s success, knowing that it needs to change tomorrow!