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  • 1. Insurance and the“New” Consumer CONFIDENTIAL ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution. 90153_V2
  • 2. 1 SeCtion i About Agency Solutions Group ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 3. 2 Who are these guys? Agency Solutions Group is a company formed by Walker digital, focused exclusively on the insurance marketplace. Walker Digital is a high-tech growth lab that is dedicated to creating innovative business systems that use the tools of the digital age to unlock extraordinary value. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 4. 3 Walker Digital’s chairman and founder is Jay Walker He is one of America’s best-known entrepreneurs. tiMe magazine calls him “one of America’s most 50 influential business leaders in the digital age”… …and BusinessWeek named Jay Walker one of the 25 internet pioneers most responsible for “changing the competitive landscape of almost every industry in the world.” ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 5. 4 Walker Digital invents business solutions that sit on top of large-scale customer networks. in addition to his role as chief inventor, Jay is responsible for developing the company’s strategic relationships with some of the world’s largest companies…including time Warner and international Game technology. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 6. 5 What has Walker Digital accomplished? • 300 + U.S. business – related patents issued to date • 1,000 + U.S. patent applications filed for us, patents represent a launchpad for exciting new businesses and real-world solutions…a way to maximize value (and protect margins) on the path to commercialization. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 7. 6 Periodic Table of Lottery Emotions and Behaviors FEELING DETERMIN- TERRITOR- SENSE OF CELEBRATE HOPE GUILT FEAR MISTRUST GREED IMPORTANT ATION IALITY ENTITLEMENT FRUSTRATION DESPERATION FATALISM VICTORY Ik 10 Dt 75 Wm 70 Wn 2 10 Tl 15 Ms 55 Do 10 Fa 10 Tt 5 Fl 85 Fa 55 Pn 10 Cs 80 I’ve Been at I Lost I’m Going to I Don’t Trust the I Want More I Know the Someone Has I’m Wasting I’ve Chosen This is My I’m Due I Have to Win It’s Fate Chances to “Right” Games to Win Money the Wrong this Too Long Store or Overdue Again This Time That I’ll Lose Be Famous Way They Pick to Give Up Numbers Win M H H Numbers M M M L H L H M H M Sy 20 Ro 50 Ex 10 Bl 10 Nl 50 Mn 50 Ao 15 Kp 45 Ms 20 Me 35 Mw 90 Tr 5 Lj 25 I Have I Shouldn’t I Know These I Knew I I Need to My Memories I’m Not Playing It’s My Turn/ I Will Buy These are My The State People Like of Winning I Don’t Trust A System I’m Due Buy Expensive Too Many Numbers are Numbers Shouldn’t Escape My Me Don’t Win My Office Pool Until the Jackpot Tickets Lucky Owes Me Have Played Situation Always Stay Tickets with Me H Gets Big H M M L M H L H H H M M Vt 20 Sc 85 Is 25 Nh 5 It 90 Bs 15 Oo 20 Un 5 Ti 35 Ua 75 Kn 15 Jo 40 Jp 65 I Spend I’ll Miss a Jackpot This is My Life Can You’ve Got Winners are The Store My Numbers The Jackpot is I Knew Those The Advertised I Want Larger I’m a Too Much Drawing and My Only Numbers Jackpot is Jackpots for Veteran Suddenly My Numbers to Be in it to Always from Owes Me are Unlucky Unattainable Change Win it Way Out Would Hit Overstated My Dollar L H M Will Hit H M a Big State L L M M H M M H Sg 55 Pr 90 Ta 10 Np 10 Pb 50 Fg 60 Dw 90 Ns 15 Lb 55 Fs 65 Sw 20 Dr 35 Ma 40 All My I Haven’t I’ve Chosen The More You I Have a I Need a New I Have I Want More I’m a Smart Problems Would I Deserve I Always Lose My System The Thing Player Told Anyone the Wrong Play, the Better Favorite System a Large Bill Worked is Rigged Fun, More Go Away That I Play Your Chances Game to Win to Pay Action Game M H L L M H H M M M M M M Pd 5 Td 75 Ps 65 Lt 5 Bm 25 Bw 10 Ng 25 Wc 20 Gp 60 Rc 10 Iw 75 I’ve Played People Would What If People I Bought I’m Going I Want a the Same What if I Lose One Day it’s It’s Not Even I Don’t Trust Treat Me See Me? My Ticket? Enough Tickets I’m Never to Have a Whole New Numbers Going to be Me Going to Win Worth Checking the Retail Differently to Win Great Party Clerk Life for Years H M M L M L H L M M H Bp 25 Ei 90 Lr 65 Np 5 Fo 20 Cc 20 Wl 75 Ww 15 Tm 5 At 15 I’ll Be Teased I’m Happy I Only Play I Could Have Lotteries I’m Starting Some People to Know I Don't Trust I Like to Be in for the Big Everything Really are If I’m Not to Figure I Didn’t Even are Inherent the Sales Action All the In the Pool Come Close Someone Else Terminal Prizes I Want Gambling This Out Winner/Losers Who Won Time H H M M L M M L L H Wc 15 Nw 20 Mf 60 Universal Percentage (upper right corner): Percentage of players who experience I Was It’s Not I Want to the emotion at some time while playing a lottery game (or deciding to play) So Close Possible Win More to Win Frequently Intensity (lower right corner): An indication of how powerfully the M M L emotion affects the player (H=High, M=Medium, and L=Low) Ed 35 Financial Impact (lower left corner): How the emotion impacts the bottom line of the lottery, ranging I Want from negative impact of 1 to 3 units (red coins) to a positive impact of 1 to 3 units (green coins) an Edge M Od 85 Ch 60 Gw 70 Cg 80 Nr 50 Ri 30 Vc 20 Pw 10 Hl 50 Nk 75 On 25 It’s Just My I’d Be Generous Money Goes It’s Not Some Vices I’m Playing One Ticket RATIONAL- It’s Only Gambling, It’s Part of I Haven’t Lost You Never Spare Change with the to Something/ My Routine are Worse with My that Much is Not Enough IZATION a Dollar Common Good Really Winnings Know Winnings L L M M M M L H L H H Kr 45 Pa 10 Sn 10 Nd 20 Sk 5 Hs 10 Fc 10 Bd 15 Re 5 Th 40 Go 20 SPIRITUALITY My Prayers Numbers From AND I Sense I Always Play My Numbers Numbers Run I Follow My I Use Fortune I Use My Kids’ My Thoughts I Saw a Good/Bad Will Be the Same Cookie Recent Events Influence the SUPERSTITION are Due in Streaks Horoscope Birthdays are Drawn Good Omen Karma Answered Numbers Numbers Outcomes Frequently L M M M M L M L M M M Ml 90 Qj 45 Sp 99 Pf 60 Hm 95 Rw 75 Fv 85 Im 50 Ls 75 Mc 65 Mt 85 Tw 75 What Would I How Would I What Do I Where do I What’s My What’s Really Would I Would I Give I Just Like the FANTASY How Would I It Could Who Would I Do with the Spend It? Want to Play Happen to Me Really Want Fantasy Important Take the Money to Give Money to? Thought of Rest of My Life? Quit My Job? Charities? For? to Live? Vacation? to Me? Lump Sum? Being a Winner H M H M H H M L L L L M Walker Digital Lottery Confidential How we innovate is an important part of who we are. We are marketers first, not technologists. First, we study human behavior and emotion and these insights guide our efforts to develop new models. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 8. 7 Second, we find a solution or adapt a technology. We focus on inventing new network applications…which can become very large and profitable, overnight. Air Light Conditioner Blender Fast Food Mail Order Restaurant Shopping Business Malls Television Microwave Interstate Mail Suburbs Sewing Toaster Machine Gas Farming Stations INTERSTATE HIGHWAYS Refrigerator Copier Railroads USA Trucking Vacuum Cleaner Radio Office Parks Big Box /Factories Stores Clothes Dryer Computer Bus Travel RV’s Electric Clothes Iron Washer National GPS Dish Washer Parks Vacation Navigation Trips Electrical Network Applications Highway Network Applications (1900) (1950) ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 9. 8 What kind of relationships does Walker Digital have? We’re not vendors, consultants or technologists. We are marketers and “solutions suppliers” to strategic allies and business partners. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 10. 9 We use a broad array of tools and models to bring our patented ideas and business solutions into the marketplace. • partnerships with established companies • licensing arrangements to other operating companies • Creating business prototypes and finding operating partners • Strategic financial investors in our patent portfolio ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 11. 10 Multi-billion-dollar industries have experienced Walker Digital’s market-changing impact. • Priceline.com, a Walker digital innovation, serves 25 million customers annually by matching buyers with time-sensitive inventory for profitable bargains. • Synapse processes tens of millions of magazine subscriptions with automatic renewals each year, using a system patented by Walker. • Retail DNA is testing a “spare change up-sell” program in quick-serve restaurants as part of an intelligent poS technology to optimize revenues. • VendMore Systems is revolutionizing the vending industry with QuickStore 24, a networked machine for intelligent, multi-service automated retail. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 12. 11 Case Study #1 Priceline travel business service suppliers hate losing money on empty airplane seats, vacant hotel rooms, and idle rental cars. Unfortunately, offering last-minute, deep discounts on such “perishable commodities” could significantly harm standard retail price structures. GREAT LOW Walker digital’s radical insight was that suppliers can offer deep FARES! discounts on these “soon to expire” services and goods – while Hurry, sale ends 8/29/08. preserving standard prices -- by masking brand names and asking consumers to be slightly flexible on timing. Priceline offered deep discounts on “soon to this led to the priceline solution: a powerful use of the internet expire” services and goods while preserving to achieve an unprecedented intersection of “partial-knowledge” standard pricing. supply and demand. priceline.com has revolutionized the travel industry. this year, priceline expects to generate nearly $8 billion in gross travel bookings worldwide. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 13. 12 Case Study #2 Federal Express for many decades, each Christmas U.S. consumers had to choose between competing desires for instant gratification and for the ability to make catalog purchases, which UpS insisted required a 7-10 day delivery window. til Jay Walker realized this conundrum provided the perfect opening Deliver y un! Dec. 23rd r When you plac e your orde by dec. 22nd. for a potential UpS competitor. federal express could expand beyond its traditional 1980s niche (premium-priced urgent document delivery for business customers only) and into residential parcel deliveries…a vastly more lucrative market. Federal Express was able to help catalogers expand their “holiday selling season.” By offering the key insight: consumers would buy more from catalogs with greater their customers last-minute shipping options, catalogers increased their revenues and FedEx confidence in on-time delivery – especially at Christmas-time. increased its bottom line. By showing catalog firms how to use fedex to keep selling until december 23, Walker added -- in effect -- a “second Christmas” selling season for catalog sales every year. Without dropping its prices, fedex became competitive with UpS, acquiring a giant new market: home deliveries. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 14. 13 Case Study #3 Synapse Group, Inc. (A wholly-owned subsidiary of time inc.) the $35 billion magazine publishing industry has -- for 250 years -- been stuck with an antiquated, money-losing, and inefficient sales model: one year at a time subscriptions and direct-mail renewals that generated only 30% renewals from first-year subscribers. Walker digital saw that providers of renewable services like cable tV and telephone had solved this problem with open-ended subscriptions with automatic rollover. Walker’s creation of a new, patented “continuous service” model Synapse’s patented for magazines is far more than a credit card payment option. it “continuous service” model for magazines leverages the credibility of every major bank and financial services eliminated costly and bothersome renewal provider (including partners Citibank, Chase, and American packages. express), plus several other industries. We created an operating company – Synapse – which transformed the publishing business, becoming the leading third-party provider of subscribers. time Warner purchased Synapse in 2001 to strengthen circulation and embrace this emerging new standard. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 15. 14 What does all this mean for the Insurance Marketplace? Agency Solutions Group’s mission is to apply its broad experience in transforming other consumer industries to the insurance sector, this enables us to create insurance- specific inventions to generate growth. each invention is a versatile tool that provides the basis for multiple, new, market-changing solutions for insurance operations, promotion, sales and profitability. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 16. 15 Why does Walker Digital devote so much time, attention and resources to the insurance industry? Because we see opportunity in the insurance marketplace. • opportunity in agent’s ability to adapt and innovate. • opportunity in carrier’s potential to generate sustainable, long-term revenue growth. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 17. 16 SeCtion ii Delivering Substantial Long-Term Growth to Agents and Carriers ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 18. 17 Agents and Carriers are not alone in many of the challenges they face. from banks to broadcast tV networks, every consumer market and consumer industry is asking the same question: “How can we serve the ‘new consumer’ who is armed with a whole new set of habits, requirements and technologies?” ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 19. 18 We’re all familiar with the macro trends that are reshaping today’s economy. For example: • rapidly advancing technology • An increasingly mobile society • the rise of “social commerce” • the growth of consumer-controlled content and commerce But the combined impact of these trends is still evolving and unfolding. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 20. 19 Just when banks had become used to customers who never saw a teller but did all their business with ATMs… now all kinds of credit and debit instruments threaten to eliminate cash completely from the U.S. economy…and to eliminate banks entirely from the payments business, as companies like Google and Apple plan for mobile transactions. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 21. 20 A generation ago… …gas stations successfully transitioned from “auto service only.” they added C-stores that sell sodas, hot dogs, and snacks. now they’re losing those incremental sales because today’s “pay at the pump” generation just wants to gas and go. tomorrow, gas stations may lose half their fuel sales to the new generation of hybrid electric vehicles. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 22. 21 Newspapers are in danger of extinction from the Internet… …as they themselves report. the publisher of the New York Times says in five years, they may not print a paper edition. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 23. 22 Books are next. in a generation or less, printed books will be replaced by electronic media, according to today’s most successful bookseller: Amazon. Will physical books still exist? Amazon’s Jeff Bezos says:“Sure, just like horses are still around…even though we all drive cars.” ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 24. 23 Obviously, individual examples of “industries in transition” could be multiplied case after case. But the bigger picture is what happens when you combine all these trends together. this scale and magnitude of change is a wave of transformation that is continually redefining the entire consumer economy… across America, and worldwide. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 25. PLEASE PULL DOWN In the past ten years there are many examples of industries in transition. See inside.
  • 26. 24 THEN… NOW… U.S. airline industry will save $3B this Paper year by going 100% Paperless (airline tickets) paperless (e-tickets) Fixed Location/ 95% of all Mobile / Americans between Hardwired ages 15-65 own Wireless (landline) cell phones (Cell phone) Generation “C”: Top-Down Design Blogs, YouTube, Bottom-Up Design & Programming Wikipedia, Linux, & Programming (aBC, nBC, CBS) Desktop (Blue M&M’s) Publishing Redbox Full Service passed 100 Self-Service million rentals (Blockbuster) in February, (redBox) 2008 80 million One-Way Experience GPS-able units Interactive Experience (rand Mcnally paper map) will ship in (GpS) 2010 alone Automatic renewals Single Transactions save the average Ongoing Relationships American family (toll booth) 475 hours a year (e-Zpass®card) Google lists 1.4 million Publisher Reviews websites featuring Peer Reviews (Consumer Reports consumer ratings (Myriads of magazine) internet reviews) 55,000 possible Few Possibilities combinations to Abundant Possibilities (Generic choose from (limitless varieties coffee-to-go) at Starbucks of coffee flavors) ©2009 agency Solutions Group. all rights reserved. Confidential and proprietary. not for distribution.
  • 27. 25 Fundamental changes… the combined impact of all these forces means that all consumer-based industries are experiencing a fundamental change… not just a short-term dip in revenues due to a soft economy, or product fatigue. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 28. 26 Adapt and innovate. Successful industries know that to thrive in this new environment, they must adapt and innovate on a broader scale than ever before. this applies to the insurance industry, as well. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 29. 27 Agents and Carriers must look beyond… that means the traditional set of growth and retention tools – will not be enough to attract the “new consumer” . ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 30. 28 Important questions arise. What is the most promising approach for agents and carriers to attract new customers? to generate more business from current customers? And to open up new markets? Agents and Carriers need an entirely new generation of solutions, for the new generation of consumers. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 31. 29 Innovation is the key. Agents and Carriers must choose the right kinds of innovation. And, must be highly selective about choosing innovation partners. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 32. 30 What we offer… Priceline revolutionized the hospitality industry. Synapse reinvented the magazine subscriptions sector. Agency Solutions Group is prepared to offer equally bold, market- changing solutions to the insurance marketplace. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 33. 31 How does an established industry meet the demands of an ongoing consumer revolution? one small step at a time! Agency Solutions Group has come up with a carefully conceived roadmap that will help the insurance industry make this journey in easy stages. We’re ready to learn more about your priorities and explore ways that Agency Solutions Group can help you accomplish the things that are most critical to you. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.
  • 34. 32 Thank you. ©2009 Agency Solutions Group. All rights reserved. ConfidentiAl And proprietAry. not for distribution.