The Clarion Group Copyright © 2009 Sales Executive Peer Group Customer Evaluation and Retention 18 June 2010

The Clarion Group Copyright © 2009

Sales Executive Peer GroupCustomer Evaluation and Retention

18 June 2010


Kristi Marchbanks, Partner, The Clarion Group

Background

Kristi Marchbanks has over 20 years of general management experience with demonstrated ability to build teams, scale business processes, and get results that create shareholder value. Working in both start-up and Fortune 500 environments, Kristi has built new companies, launched products, and grown existing businesses by as much as $1 billion in as little as three years.

She has demonstrated the ability to develop significant, new strategic initiatives, implement scalable change, and drive results in the roles she has held at Amazon.com, IBM, and Eastman Kodak. As the former CEO of SeaTab Software, Inc., she mastered the unique challenges of leading a high growth company, building a senior executive team and demonstrating her ability to attract and retain qualified, exceptional talent.

Kristi is a problem-solver with a flair for spotting opportunities and developing effective solutions. She thrives on using her leadership experience to achieve successful results and create value.

Community Activities and Education

MBA, Harvard Business School BA, Business Administration, University of Washington University of Washington, Center for Innovation and Entrepreneurship (CIE), Board Member Northwest Entrepreneur Network (NWEN), Board Member InjuryFree, Board of Directors FareStart, National Expansion Board Seattle Rotary #4 Member University of Washington, MBA Mentor Program

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[email protected]

Favorite Quotes“You’ll always miss 100% of the shots you don’t take.” – Wayne Gretzky“Life is short. Accept all good offers.” – Kay Adams“When your heart speaks, take good notes.” – Judith Campbell“Sometimes the questions are complicated and the answers are simple.” Dr. Seuss Favorite Word: Imagine


Higher churn in profitable and persistent customers…


Know your customer profitability and longevity

TenureNumber of Customers %

0 1183 45.82%

1 615 23.82%

2 306 11.85%

3 214 8.29%

4 115 4.45%

5 104 4.03%

6 45 1.74%

Total 2582 100

Breakeven Number of Customers Percent

No 585 22.66%

Yes 1997 77.34%

Total 2582 100


By product …..

Breakeven Kind_LH Kind_MEL Kind_PI Kind_WC

No 19.96% 21.17% 31.58% 22.86%

Yes 80.04% 78.83% 68.42% 77.14%

% of total customers 38.94% 18.45% 0.73% 98.11%

Breakeven Kind_LH Kind_MEL Kind_PI Kind_WC

No 201 101 6 580

Yes 806 376 13 1957

Total Customers 1007 477 19 2537


By geography …

Breakeven In_Alaska In_Hawaii In_Illinois In_California In_Other_StateNo 14.14% 22.92% 33.49% 23.37% 22.19%Yes 85.86% 77.08% 66.51% 76.63% 77.81%

% of total customers 7.66% 5.57% 8.31% 48.65% 50.89%Agg Est Loss Ratio 40% 44% 83% 45% 49%

Breakeven In_Alaska In_Hawaii In_Illinois In_California In_Other_StateNo 28 33 72 294 292Yes 170 111 143 964 1024

Total Customers 198 144 215 1258 1316


By product and geography mix…

Breakeven Multi_State Multi_Kind Complicated (Multi-State&Multi-Kind)No 25% 20.34% 21.53%Yes 75% 79.66% 78.47%

% of total customers 30.97% 38.59% 16.71%

Breakeven Multi_State Multi_Kind Complicated (Multi-State&Multi-Kind)No 197 203 93Yes 604 795 339

Total Customers 801 998 432


Profitable Customers Category % n1 77.12 15880 22.88 471Total (100.00) 2059

Node 0

Category % n1 90.58 1730 9.42 18Total (9.28) 191

Node 2Category % n1 75.75 14150 24.25 453Total (90.72) 1868

Node 1

Category % n1 84.54 1750 15.46 32Total (10.05) 207


Node 3

Category % n1 65.71 920 34.29 48Total (6.80) 140


Node 5

Category % n1 84.26 910 15.74 17Total (5.25) 108


Node 7

Category % n1 67.26 760 32.74 37Total (5.49) 113


Node 9

Breakeven (Training Sample)

Div_SmallMaritimePlatformImprovement=0.0037

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Max_TenureImprovement=0.0017

4;6;50;1;2;3

Max of IsChicago, ILImprovement=0.0012

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NTH_RegionImprovement=0.0009

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Div_OtherImprovement=0.0007

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• Companies in the Small Maritime Platform division• 90% are profitable = 173 customers

• Companies in Non Small Maritime Platform division• Customers with tenure more than 3 years• 85% are profitable = 175 customers

• Companies with less than 3 years of tenure and non SMP division

• Companies with Team Chicago • 65% are profitable = 92 customers

• Companies within North region and not in small maritime platform division

• 65% are profitable = 91 customers

• Companies not in the northern region andnot grouped in the other divisions (also not Chicago team and not a SMP division)

• 76% are profitable = 961 customers

88% gains


LTV and Retention Decrease

Smaller, Very Profitable Segment


Pricing may not necessarily be related to profitability

Year of acquisition Average Maximum Tenure

Average of Agg Est Ult Loss Ratio

Premium $/Payroll $

2003 2.82 26% $0.06

2004 2.91 48% $0.06

2005 2.26 44% $0.06

2006 2.02 57% $0.05

2007 1.29 56% $0.05

2008 0.89 66% $0.04

2009 0.43 49% $0.05

Grand Total 1.21 49% $0.05

Statistically tenure and profitability have a correlation of 5%


Are any of the divisions more profitable?

Divisions # of customers Agg Est Loss Ratio

Alternative Markets 305 43.55%

Construction 1421 51.41%

Maritime 325 51.18%

* These results are not based on statistically significance. This is just tabular analysis.


The Choice of How to Compete

Customer Intimacy

You investigate, identify, anticipate, and meet every customer expectation and need

Product Leadership

Your products are clearly superior to those of the competition

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historic positioning

Increase market through: Value Proposition

Increase market through: Segmentation

Operational Excellence

Your operational excellence and efficiency allow you to produce decent quality at a low price


Segmentation Examples


Customer Growth and Retention Strategy

Banana Republic (luxury)

Gap (everyday)

Old Navy (economy)


Questions ?

Documents

The Clarion Group Copyright © 2009 Sales Executive Peer Group Customer Evaluation and Retention 18 June 2010