Direct Marketing . . .Direct Marketing . . .

Fueling the Engine for the Next Generation of Marketing

UCLA Coach John WoodenUCLA Coach John Wooden

Simplicity Defined … “Basketball is a game of threes … Pass, Drive, Shoot.”

Igniting the Spark… Getting Igniting the Spark… Getting Back to the BasicsBack to the Basics

Direct Marketing 101 … What are the reasons we are still in this business?

Direct Marketing - Any communication designed to generate:

- a response- a direct order- a sales lead or traffic for a business

Consumers with higher education levels are more receptive to direct marketing

50% - 60% of the US Population Buys by DM

Getting Back to the BasicsGetting Back to the Basics

Direct Marketing 101 … Seven Principles for DM Success (DMA)

Establish Your Objective Target the Right Audience Good Copy - Demonstrate USP Make Responding Easy Think Campaign or Strategy, Not a

1-Shot Deal Research and Test (Continually) Make the Offer Fit Your USP

Igniting The Spark … Latest Trends Igniting The Spark … Latest Trends From Direct Marketing AssociationFrom Direct Marketing Association

Direct Marketing … It Still Works

This year, American marketers will spend nearly $205 billion dollars on direct-response advertising & marketing

In 2002, direct marketers generated some $2 trillion in sales, a 10 percent increase over 2000

Direct mail has emerged as the most preferred marketing channel of the industry

Latest Trends From The DMALatest Trends From The DMA

DM … Building Brand Loyalty

Credit Cards: How many people still have a card from first group to issue them one?

Catalogue mailings: Do they work? What is the lift to most retail stores? William Sonoma?

Direct Marketing Trends and Direct Marketing Trends and StatisticsStatistics

Why does Insurance via Direct Mail Perform Well? Danger Lurks Everywhere (Wall Street Journal, 4/24/2003)

Fixation on risk, Fed by Labs, Law and Media, all haunt world’s safest nation

“Easier to scare than unscare”12 times more likely to lose their lives

on a highway as at the hands of a hostile fanatic

Progeny Marketing InnovationsProgeny Marketing Innovations

A Three-Pronged Approach to Providing Winning Direct Response Strategies

Creative Testing – Element and Breakthrough Creative Testing Designed to Beat “Control”

Channel Testing – Testing New Methods of Delivery to Meet Needs of Clients and Customers (Statement Inserts, Outbound TM, etc.)

New Product Testing – Developing Products To Meet A Variety of Customer Needs and Offer Clients a More Diversified Product Contact Strategy

Progeny Marketing InnovationsProgeny Marketing Innovations

New Product Testing for 2003• Pet Health Insurance• Cancer Care• Hospital Indemnification (HIP)• $1,000,000 Accident Protection Plan• Comprehensive Accident• Simplified Issue Term Life

Channel Testing• Inbound Telemarketing (DM Generated

Calls)• Statement Inserts• Call Transfers

Revenue StrategyRevenue Strategy

JanuaryADD A Mail Drop

FebruaryTerm A

AprilHAP to ADD Insured

MayTerm B

JulyNew Product

SeptemberTest Product

OctoberHAP to Uninsured

AprilADD B Mail Drop

Cycle Repeats

TM - - Ongoing

Creative Test - - Ongoing

Traditional Mail Cycle with added products

NCF Insurance ServicesDirect Marketing Initiatives

ABIA Presentation - October 2003

Steven R. KnockleinSenior Vice President

Insurance Services

About National Commerce Financial

A provider of financial and consulting services through a national network of banking and non-banking affiliates. Banking affiliates include National Bank of Commerce, Central Carolina Bank, First Market Bank, and NBC Bank, FSB

Headquartered in Memphis, Tennessee $23 billion in assets. Almost 500 branches. NCF branches are located in 14 of the nation's

fastest growing metropolitan areas throughout the southeast. States include: Tennessee, North Carolina, South Carolina, Virginia, West Virginia, Georgia, Arkansas, Mississippi

Direct Marketing InitiativesDirect Marketing Initiatives

Direct Marketing - Needs Approach verses Revenue Approach

How does NCF distribute all of the products that our customers need and want profitably? Direct Marketing provides a low cost distribution platform to NCF customers. NCF drives approximately 85% of the revenue from direct marketing to the bottom line while providing our customers with products and services to meet their needs and concerns.

Direct Marketing InitiativesDirect Marketing Initiatives

What are our customers concerns?

- Access to Health Care

- Asset Protection

- Maintaining their standard of living

Direct Marketing - Needs Approach verses Revenue Approach

Direct Marketing InitiativesDirect Marketing Initiatives

Due Diligence - what are the components of a “good” program?

—Is the offering good for our customer?

—Can the program be smoothly executed?

—What is good customer penetration for the

offering?

—Will the program generate significant

revenue?

Direct Marketing - Needs Approach verses Revenue Approach

Direct Marketing InitiativesDirect Marketing Initiatives

Direct Marketing InitiativesDirect Marketing Initiatives

Direct Marketing - Financial Results/ Profitability

35% Increase in Revenue August 2002 verses August 2003.

85% Profit Margin

Provides increased revenue per household

Products leverage customer base and helps drive NCF

efficiency ratio.

Direct Marketing - Keys to Success

Education and support of Senior Management Team.

Education, Support and communication to branch network and

call center.

- Any mailing will generate customer traffic to the branches.

- Provide Branches with information necessary to quickly and efficiently route the customer.

- Leverage Institution’s Intranet to make information readily accessible.

Direct Marketing InitiativesDirect Marketing Initiatives

Direct Marketing - Keys to Success - continued

Product Partners that can manage programs that work.

—Quickly and efficiently service customers (answer

questions, billing,cancellations).

—Provide products beyond AD&D (commitment to R&D of

new products, develop products that meet the needs of

customers).

—Strength and Staying Power of Partner.

—Pay Revenues from programs in a timely manner.

Direct Marketing InitiativesDirect Marketing Initiatives

Bank One Card Services

Doug CorriganFirst Vice President

Getting Back to BasicsGetting Back to Basics

Execution is the key

• Easy to get single minded “Make Money”

• Don’t forget

—Marketing expense (all elements)

—Operations expense related to marketing

—Operations expense not related to marketing

—Legal and compliance

—Long term relationship effect

—Analytical needs

—Organizational awareness

—Organizational Pride

The easy way out:

• Pitch every card member something– Lots of Products and Partners– No Marketing Budget– Little analysis– No modeling– One Channel

Getting back to basicsGetting back to basics

The Right Way

1. Establish your goals (NPV, PTP, ROI, NPV/CPA)2. Account for EVERYTHING!3. MEASURE MEASURE MEASURE4. Watch the back end5. Select good partners6. Get the operations right

Getting back to basicsGetting back to basics

Getting back to basicsGetting back to basics

For Bank One, Over the last two years,

– Customer satisfaction for our enrollees is now 2% higher than the the rest of the card base

– We have strategic long term partnerships– Our business is growing for the first time in 3

years– We are getting back to the basics

QUESTIONS?

Thank You!