AAA Uncovers More Profitable Customerswith a Customer Value AnalysisHow AAA of Western & Central New York Made Sure Their ...
CATALYST CASE STUDY: AAA               AAA offered three membership levels: Basic, Plus and Premier. Each membership  Back...
CATALYST CASE STUDY: AAA                      • Former members looked more like that top 20% than never-ever members.What ...
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How AAA of Western & Central New York Made Sure Their Most Profitable Customers Weren’t Left by the Side of the Road

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AAA offered three membership levels: Basic, Plus and Premier. Each membership
was annually renewable. The association wanted to identify who its most profitable
customers were and reduce the level of annual attrition. They also hoped to move
customers from roadside-only service to other more profitable AAA services, such
as travel. Their business objective: To increase average member three-year net
revenue by 30%

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How AAA of Western & Central New York Made Sure Their Most Profitable Customers Weren’t Left by the Side of the Road

  1. 1. AAA Uncovers More Profitable Customerswith a Customer Value AnalysisHow AAA of Western & Central New York Made Sure Their MostProfitable Customers Weren’t Left by the Side of the Road
  2. 2. CATALYST CASE STUDY: AAA AAA offered three membership levels: Basic, Plus and Premier. Each membership Background was annually renewable. The association wanted to identify who its most profitable customers were and reduce the level of annual attrition. They also hoped to move customers from roadside-only service to other more profitable AAA services, such as travel. Their business objective: To increase average member three-year net revenue by 30%. Our analytics team began with a Customer Value Analysis to segment High ValueOur Approach customers, Low Value customers and identify trending patterns. The data clearly showed that, true to the Pareto Principle, the top 20% of customers generated the highest value. We then asked: • Where did these top customers come from? • How do we keep more of them? • How do we find others just like them? Next, Catalyst built a Lifetime Value Model to predict who was likely to become AAA’s best customers within a three-year period.
  3. 3. CATALYST CASE STUDY: AAA • Former members looked more like that top 20% than never-ever members.What We Learned It was more effective to make reactivating them a priority • The membership level purchased did not predict long-term customer value— people who bought the most expensive membership did not necessarily become best customers • The association was spending more to engage certain segments than the value of their purchase • Promoting all levels of membership at the same time increased purchase of the more profitable Plus and Premier memberships • Our strongest offers produced higher first-year attrition … but over time, yielded more profitable customers • Once best prospects were identified, we increased contact frequency Putting it Into Action • We developed a specific contact strategy to reactivate former members and reduced higher-cost acquisition mailings • We eliminated mail to lowest-value prospects • A test to former members resulted in a 300% lift over never-ever members Did it Work? • After three years, the strongest membership offer produced 50% more paid memberships • Providing a clear explanation of all three membership levels increased Plus and Premier memberships by more than 750% • After three years, average per-member net revenue is projected to increase by 30% To learn more, contact: Mark D’Amico 110 Marina Drive Director of Business Development Rochester, NY 14626 mdamico@catalystinc.com www.catalystinc.com 585.453.8338 Facebook Twitter LinkedIn

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