Recommended to partner an idea of promoting sign up within purchase path. Showing the discount to a customer test proved to be highly successful.

1. 1
Analyzed historical pulse promotion results and gained initial learnings about account
lifts, behaviors and pulse lifecycle trends.
Recommend piloting expanded pulse promotions in 2014 to advance learning agenda
and generate incremental revenue.
BACKGROUND:
 Southwest pulse offer increased premium 100% and increased accounts ~100%
— Pulses executed quarterly in 2013 (2/27, 6/12, 7/16, 9/18) since Jan. 2010
— Pulse offer was in all online channels (Self-Directed, Pd Search, Affiliates, Partner Placements), PCCT and Airport
 Ink pulse offer increased premium 20% and increased accounts ~300%
— Executed one pulse in 2013 during annual U.S Small Business Administration’s Small Business Week campaign
which is heavily promoted nationally
— 2013 was first time online channels were included in pulse
 Traditionally only Retail participated in the Small Business Week pulse
Pulse Promotion Analysis and 2014 Recommendation
Shirl Evangelisto – Sr. Manager, Digital Marketing Strategy Manager

2. 2
High Level Pulse Promotion Learnings Summary
Analyzed historical pulse promotion results and gained learnings’ about pulse
trends and profitability
Pulse Account Trends:
 Lifts occur across channels, with online being the most substantial
— Opportunity to increase Retail pulse lift by utilizing best practices
 Limited knowledge base for predicting account lifts based on premium increase and pulse duration
— SWA increased premium by 100% with 30 day duration ; ~100% lift in accounts
— Ink increased premium by 20% with 1 week duration ; ~300% lift in accounts
 Similar acquisition trends occur before, during and after pulse promotions each time a pulse occurs
— Despite regular SWA pulse, no account dip observed prior to pulse
— Highest lifts are observed within Affiliates & partner placements immediately after pulse launch
— After initial spike in accounts, run rate shifts to pulse run rate
— Smaller account spikes are observed at end of pulse and present opportunity to further lift accounts
— Run rates return to normal within a week of pulse end
 SWA pulses have fairly consistent account lift pulse over pulse throughout the years
Account Behaviors:
 Pulse offers attract higher credit quality applicants
— SWA: 22% higher AR%, 33 points higher CP05
— Ink: 44% higher AR%, 48 points higher CP05
 While pulse per account profitability metrics are lower, overall lift in accounts generate higher incremental
OS, Sales and NPV
 Diminishing returns in aggregate NPV the longer the pulse is in market
— Pulses have run for 30 & 45 days with no degradation to pulse run rate
— Recommend 30 days to optimize NPV
Shirl Evangelisto – Sr. Manager, Digital Marketing Strategy Manager

3. 3
2014 Pulse Recommendation
Pulse recommendation is within execution constraints & accomplishes key learning agenda items
* Branch pulse starts Monday 6/2 & 11/3
Recommendation Considerations
 Online capacity constraint of no more than 2 pulse launches at once
2014 Pulse Learning Agenda
 Optimal pulse length – Testing SWA 60 day pulse in Q1
 Impact of overlapping pulses between Partner & Brand products – SWA/Freedom in Q2
 Increase learnings on YOY pulse performance with SWA & Freedom
 Integration & impact of pulse with 2014 media plan
 Measure incremental lift with Ink Cash pulse premium increasing to $300 (vs. $250)
Shirl Evangelisto – Sr. Manager, Digital Marketing Strategy Manager

4. 4
APPENDIX

5. 5
Pulse Account Lifts by Channel
The SWA and Ink pulses drove significant growth across all channels
 Online experienced largest lifts in Affiliates (1)
 Opportunity to increase Retail pulse lift by utilizing best practices (2)
 Limited knowledge base for predicting account lifts based on premium increase and pulse duration
 SWA increased premium by 100% with 30 day duration ; ~100% lift in accounts
 Ink increased premium by 20% with 1 week duration ; ~300% lift in accounts
Shirl Evangelisto – Sr. Manager, Digital Marketing Strategy Manager

6. 6
Pulse Promotion Lifecycle
Similar acquisition trends occur before, during and after pulse promotions each
time a pulse occurs
 Despite regular SWA pulses, no account dip observed prior to pulse (1)
 Highest lifts are observed within Affiliates and Partner Placements immediately after pulse launch (2)
 After an initial spike in accounts, run rate shifts to a pulse run rate (3)
 Smaller account spikes are seen at end of pulse and present opportunity to further lift accounts (4)
 Run Rates return to normal within a week of pulse end (5)
SWA Online 7-Day Average SWA Online Daily Sub-Channel
Shirl Evangelisto – Sr. Manager, Digital Marketing Strategy Manager

7. 7
Impact of Multiple Pulses over Time
SWA pulses have shown a consistent account lift pulse over pulse throughout the
years
NOTE: Data excludes email & purchase path
Shirl Evangelisto – Sr. Manager, Digital Marketing Strategy Manager

8. Better Responder Credit Quality with Pulse
8
Pulse offers attract higher credit quality
applicants
 SWA: 22% higher AR%, 33 points higher CP05 (1)
 Ink: 44% higher AR%, 48 points higher CP05 (2)
Shirl Evangelisto – Sr. Manager, Digital Marketing Strategy Manager

9. 9
 While SWA pulse per account profitability metrics are lower, overall lift in accounts
generate higher incremental OS, Sales, and NPV
(1) $ 40 MM in Y3 OS
(2) $ 227 MM in Y3 Sales
(3) $ 3 MM in Total NPV
 Initial Ink SBW profitability based on 90 day behavior reads. Even with a degrade in per account
performance, we estimate flat vintage performance in Tier 1 accounts, but higher incremental
YR 3 OS, Sales, and NPV for Tier 2 account vintage. Profitability metrics will be updated as accounts
mature
(1) $ 37 MM in Y3 OS
(2) $ 437 MM in Y3 Sales
(3) $ 4 MM in Total NPV
Pulse Account Behavior
Shirl Evangelisto – Sr. Manager, Digital Marketing Strategy Manager

10. 10
Optimizing Pulse Promotion Length
The investment objective function will determine the optimal pulse length
 SWA pulses have run for 30 & 45 days with no degradation to
pulse run rate
 Observed diminishing returns in aggregate NPV the longer the
pulse is in market
 The chosen optimization metric determines pulse promotion
length
(1) NPV ---> 30-45-Days
(2) OS ---> 75-Day
(3) ACQ $ ---> No Pulse
Pulse Duration Projection
Shirl Evangelisto – Sr. Manager, Digital Marketing Strategy Manager