Saga plc (SAGA) Earnings Call Transcript

That's almost my queue, I guess, so that everything has come down here. I have a very important health and safety briefing because not everybody works in this building every day. So in the event of any emergency, please listen to the instructions given by the safety alarm. For your building evacuation, proceed with your host to the nearest exits. These are, I'm guessing, at the back where you came in. So -- and the assembly point is Granary Square, which is just outside behind these curtains here. So that's done, hopefully, take the health and safety box before we start, and hopefully, we won't need it. So welcome, everybody. Good afternoon. Thank you for joining us at our London hub here at King's Cross. This is a fitting setting for our Capital Markets event today as is the heart of our innovation and growth agenda for Saga. Many of you will have seen that we released a trading update this morning. We've demonstrated that we are on track to achieve our full year expectations. And building on that, this afternoon is about looking forward and some of the new drivers of growth for the group as we build Saga into the super brand for older people. If we take a step back and think about how things have changed in the last 10 to 20 years, it's clear that Saga has a unique opportunity. Take my mom, for instance, Sheila. She's 84 years old, wears jeans and regularly texts my grown-up children and uses an iPad, Snapchat and WhatsApp for almost everything. Casting our mind back to even 10 years ago, that wasn't a typical 84-year-old, but it's now becoming the norm. Our unique customer group or what we fondly refer to as the experience generation is changing constantly, whether that be by the way they're feeling older, what they want from life, their expectations and what they perceive as value or indeed, the way they interact with technology. It is these changing needs that Saga is uniquely positioned to fulfill. And today, you'll hear more about our plans to do just that. You will hear from some of our team who are creating the super brand vision for our customers. After a brief reminder of our strategy, I will hand over to Lisa Edgar to take you through our insight work. Lisa is the CEO of a leading insights agency for older age in the U.K. And Saga acquired the company last February to power up our ambition. Lisa will show you how we are tuning in and turning up exceptional customer experiences and driving commercial strategies based on how our customers think and behave. We believe that Saga customers are happier, more active and potentially live longer than non-Saga customers, which is a significant draw as you age. Lisa will then hand over to Michael Donahue, who as Chief Data Officer, has a critical role in delivering our data-led insight powered plans. Mike has recently joined us from Camelot and has deep experience in running data, customer insight and analytics teams from McKinsey, Centrica and Tesco. Michael headlined the enormous opportunity we have in mining and commercializing our database, turning years of promise at Saga into reality and creating a lifetime value model, benefiting and rewarding our customers. And finally, Mike will hand over to Aaron Asadi, who joins us -- who joined us in September as CEO of Saga Media. Aaron has 20 years' experience leading media teams across the U.K. and internationally. Saga Media will not only be a profit center in its own right, but will also supercharge our existing businesses by providing millions of customers with engaging daily content and reducing our cost of acquisition across the group. Because Saga Media is digital, it will also begin to take the brand international. So moving on to our strategy. And before we go on, it's worth just ensuring that everybody is on the same page with us as to what we mean by a super brand. This is a brand whose customers enjoy significant emotional and physical advantages over competitor brands, where customers consistently rate the brand every day with a Net Promoter Score of over 75 and are willing to pay a premium for its products and services based on its inherent additional value. This is our journey. This is what our customers have told us that they want from Saga, and it matches their life-stage ambitions. It is what Saga Cruise is already achieving under Nigel. So we know that we have the formula, and we know we can deliver it group-wide, caring for our customers and guests going the extra mile without a second thought. Our colleagues understand this, too, so we are building from a base of heritage, knowledge and experience. For us, part of this ambition is reshaping the way that people think about aging. Instead of seeing age as a negative, we should -- we see it as it should be celebrated as with it, comes experience. And this is what we've been working on over the last couple of years with our brand relaunch. But how do insight, data and media come into this? Insight, data and media are 3 of the biggest drivers of customer numbers, NPS, revenue and profit growth. And this is why we wanted to spend a bit of time with you today talking about what they mean to us and to our customers. If through our insight, we're able to understand our customers and connect the dots to a deeper level, what they really want and how they perceive themselves, then we can tailor Saga and our products and services to fit them perfectly. Doing this will encourage customers to return again and again, equating to around 30 years of value on average. Bringing Mike into the equation, when we harness this insight and connect those dots with the data that we already hold over -- for over 10 million people over 50, it becomes a huge opportunity. Knowing this group better than anyone else allows us to personalize their experience from the moment and allowing us to reduce the cost of acquiring new customers. Turning then to Aaron's Media business, which is a key enabler in this process. We built a content platform, which I'll let him explain more in detail later, but put simply, it will increase the volume of our interactions. So instead of insurance or travel booking, we'll be interacting daily by providing exclusive content and inspiration. Not only does this act as a pipeline, bringing in new customers to Saga from day 1, but the business will be profit-generative in its own right within 5 years. So our vision is simple. We want to be the largest and fastest-growing business for older people in the U.K. with ambition set for this model to go global. Our priority is to move the Saga business from low annual purchase frequency to high frequency and high-engagement products and services that are important to our customers. And this is based on maximizing the largest pool of the most insightful data within our database on what is the fastest growing and wealthiest demographic segment the world has ever seen. This is a compelling opportunity, and we will now take you through how we intend to deliver it for our customers. Three elements are vital for our success and have our primary focus. Firstly, that we increased the frequency of interaction with our customers from once a year in the most part with our existing product set to twice a day with the introduction of Saga Media and a product reset across our existing businesses. Secondly, the work on our database will enable us to increase our customers' products and services from 1 today to at least 3 in the future. We do this by ensuring that the Saga brand and what we offer is relevant for each customer as they age and step through each of their later life stages, that we capture their consent to talk to them and serve them with our carefully tailored products and services, and we maximize that opportunity through cross-selling. And finally, we create lifetime value model for up to 30 years, building on the already high loyalty and retention of over 80% across our businesses today and help our customers live longer and happier lives by serving them with exceptional products and services every day. These are our parents, our grandparents, uncles and aunts, and they deserve the best in their later years. And Saga is here to deliver it. There are 2 aspects to this slide. Firstly, on the left is a simplified view of our business model where we take our pipeline of new customers, principally through Saga Media, the brand repositioning and our innovation, and we inspire and engage them through our data-driven customer journeys. This feeds into our updated database capability, which allows us then to connect them to our existing businesses. This provides incremental targeted growth, lower cost of acquisition and higher margins over time. On the right, we're building our customer hierarchy with our most valuable customers at the top and specific journeys for new customers to enter our world and benefit from more involvement over time. Some of our most valuable customers today have already demonstrated a 25-year-plus journey with Saga, delivering hundreds of thousands of pounds of value in margin and buying multiple products, multiple times a year. This gives us confidence that we can identify and grow more customers like this. With customer today is 78 years old, has been a loyal customer for over 25 years and has delivered over GBP 0.25 million of margin alone. So what does this look like across our business in the next 5 to 10 years? The shape and size of Saga will change with profitability growing significantly as a whole, integrated by the larger pie charts at each timeframe on this slide, and the profit contribution of our businesses will change too. Insurance dominates today, and while we still expect profit growth from broking, it will be a smaller part of total group profits as we go forward. As we grow other elements of our mix, crews and travel have both been transformed in recent years. And we expect them to achieve extra significant profit growth based on increased passenger numbers, frequency of travel and cross-sell. Our small Personal Finance business, Saga Money will increase its product set and is already beginning a cross-sell program with Saga Cruise, running money-themed cruises with Paul Lewis starting in March this year. With almost 2,000 guests a week across both of our ships, we can help them with their money needs and concerns from a brand they trust. And finally, in the dark blue segment, you can see the profit contribution from Saga Media as we progress through the plan with growth in customer numbers expected to begin immediately. This is all based on our simple 3-step growth plan, which we have spoken about previously. Step one, maximizing our existing businesses. Step 2, step changing our debt reduction. And step 3, creating the super brand for older people. So to hear more about Step 3, creating the super brand for all the people, let me first hand over to Lisa Edgar, CEO of Saga Insight. Lisa?

Thank you, Euan. Good afternoon, everyone. It's great to be with you. I'm Lisa Edgar, Chief Executive of Saga's wholly-owned Insight and aging expertise unit. I've owned and run agencies for over 20 years. And I have a background in econometrics and forecasting, psychology and more lately, consumer and aging insight. Saga acquired my team and I about 10 months ago because for a number of years, we've been working at close quarters with the fastest-growing and wealthiest older consumer base, we've ever seen. The acquisition of my business was about fully realizing the opportunities this offers. To be forthright about it, we're not here to gaze at our navels about aging or insight. We're here to ensure that what we offer is so uniquely meaningful, relevant and compelling to the huge numbers of people over 50 and within them, the ever-expanding population of retirees that they want to engage with Saga and on a regular basis. The latest data suggests there are about 25.7 million people over the age of 50 in the U.K. now. And between them, they are spending GBP 292 billion on non-household expenditure. We're here to ensure they choose to spend their considerable disposable wealth on what we offer because what we offer is built on the needs of today's older population. To put it even more bluntly, we know the 50-plus population of today do not want benevolent brand support from Saga or indeed anyone. They want a brand capable of giving them the unlimited retirement life they seek, life unconstrained in their older years, a time for them. And this is the super brands connection we are building. We want to encourage first purchase into a lifetime of purchases and advocacy, precisely because we can anticipate and serve customers' needs as they develop with age. So during the next few minutes, I will talk about the size and nature of the opportunity open to Saga, why we're in prime position to realize this, what that means for what we must do and are doing before sharing with you key components of the work we've already done over the last few months. And I'll finish with our system and plan for moving our customer-led strategy forward. So we talk about the opportunity in the 50-plus population as whole, but I'm going to highlight now those in their 60s because this is the opportunity bullseye and where Saga is aiming its offer, but also because this group exemplify what today's older consumers have in front of them. So let me talk about the components that make this bullseye. The first of 3 key components is health. Life projections demonstrate how we can serve even those in their 60s or perhaps another 30 years. Males or females aged 60 years old today can expect to live another 25 to 30 years or more. In fact, those in Saga's more affluent consumer base can expect to live even longer, and they are healthy. Very few of even those on the edge of retirement, only 15% see themselves all their lives being limited by health and Saga customers are even less limited by their house. Second, their wealth shows this is a lifetime of demonstrable value. Those approaching their 65th year today are the wealthiest cohort overall and on almost every O&S wealth measure. Further 1 in 4 of every post 65-year olds in the U.K. have more than GBP 1 million in pension and property assets. Research also shows that this group have always been wealthier than the other generational counterparts. And again, Saga customers are even more affluent than this. So our target and existing market has health and wealth. They also have time, this is key. It is likely that approximately 25 million hours per week are released into free time when people get into their 60s and beyond. The majority see this period as something to really embrace and maximize. They spend it doing a plethora of activities, 6 on average. They are heavy consumers of enjoyment. So health, wealth, time. We know this to be a heavy combination. It's the combination that makes for an engaged and discerning consumer. And of course, we know that not everyone has this profile, but our modeling shows that this is the group that's particularly attracted to Saga. So why do we believe that Saga's in prime position to realize the opportunities that I've outlined, it's for 3 key reasons. First, we're not only single-mindedly focused on older consumers, but also on how aging develops and changes them, because we know that it does. Second, because we know these age and life-stage related changes do matter in that they impact on what consumers need, what they spend their wealth on and how they do so. And third, driving this age and aging-related expertise and insight into meaningful propositions present real commercial value. So let me bring this logic flow to life. This is an example of how the journey from aging expertise and deep understanding of customer needs leads to compelling propositions and one that's showing early signs of success. At our annual results, John Constable, our Travel Group CEO, revealed our exciting tailor-made travel proposition. It's a personalized travel experience delivered by specialist travel experts. It has a deluxe VIP service wrapper that enables the traveler to enjoy the [indiscernible] of the experience, make all the nice choices with none of the sacrifices or effort. It is the door-to-door unbridled experience. So we all have a vision, I'm sure of what our personal travel dreams look like. I have to admit that this is one of mine, and I'm delighted that Saga can now make this happen and in the way that I wanted. This proposition is a function of our in-depth knowledge of the phasing from pre-interactive retirement and what our customer base is looking for as they do so. Our aging expertise helped identify the opportunity. We knew we were servicing a different expectation from pre into active retirement and one that is focused on a personal hedonistic experience, one that wants a life unlimited in older years rather than slowing down, one that wants adventure without sacrifice multiple gap-year experiences on memory phone, king-sized beds rather than the paper-thin sleeping bags when I was traveling as a student, a cake-and-eat-it experience. And one that enjoys service, but not supporting its traditional forms, service that nods to our customers' success rather than labels them as being old. So our insight capability then supported the build from the proposition and its features to the naming and positioning. And as I was saying, the early signs look good. The 5 new proposition categories and 300 new individual products have already spawned almost 1,000 calls from potential customers of this high-service, high-value proposition already ahead of our targets. Ultimately, tailor-made is driven from a clear age-related need to have the very best time, both before and in retirement. So when we were acquired 10 months ago, we knew that if Saga could harness its aging expertise, insight and its considerable data assets, we could build unbeatable propositions. With tailor-made, I've given you the first example of this, bearing fruit. We knew, though, that doing this on a consistent basis meant setting ourselves some clear targets. First, ensuring we have absolute focus on who we target and what they need from us as they age to every Saga colleague and demonstrate them how they can add value in what they bring to our customers through their roles. And third, that our knowledge is built into the way we develop products and the way that we serve our customers. It is just the start, but we are delighted with the progress that we've already made. During the last 10 months alone, we've used our age-related expertise to segment the 50-plus market, giving us the ability to target and build by what drives our customers and potential customers. And as of today, every single one of our Saga colleagues at every level has been through a basics of aging program, exploring the opportunities our demographic offers and what we need to expand about them to realize those opportunities. And we have further shaped our product-development process to be needs-led and based on design thinking. This approach is now being used by our insurance business. And we will ensure all of our business units use this approach during 2023. So I'm now going to focus more on the first of these, our ability to target and specifically build around those targets. I've overseen countless segmentations, and Saga's is unique in that not only is it large in scale based on nearly 3,000 market consumers, but age representative from 50 through to 90. The 2,500 Saga customer numbers, you can see on this chart, then allowed us to see where we are strong, who we should focus on, the size of the opportunity and ultimately, how their needs might change over time. Our segmentation [indiscernible] variables, we knew would be pivotal, enabled us to understand how needs and purchase behaviors change for different groups of people typically at different life-stage points and what it will take to drive that behavior change in Saga's favor. The model allows us to shape our offer going forward at the right times and to those groups with the most potential. It will also support our specific targeting of those groups. And combined, these will result in a customer base that costs less to attract and simply feels happier, more recognized and better about the life stage that they are at. So our segmentation, the model produced 8 segments, cohesive groups and consumers we can target. 3 of them, the most affluent of the 8 market-based groups represent about 76% of Saga's customer base, and each of them has considerable opportunity, both within the Saga customer base and the 50-plus population as a whole. The numbers here are the size of each in the 50-plus population. And we are prioritizing the 3 you can see over the other 5 because what our model tells us. These 3 have significant spending power, strong propensity to buy the types of products we have and are building, alignment with our brand direction. And we feel confident we can attract them. This gives us focus for our development. And it doesn't, of course, mean we won't be serving the needs of the other 5 groups too, we will. It is simply about focus. So our primary focus is our life maximizers. This group is the wealthiest of our retirement targets. They are just less than the 5th of the 50-plus consumer population as a whole, but almost half of our customer base. And further, we expect this group to expand as the notion of how people live in retirement continues to change, and we're keeping an eye on this. The headroom is significant. There are over 800,000 of this key group on our database but a further almost 4 million in the general population. They start to become customers just before their retirement and continue to do so until past their 90th year, giving us a potential of 30 years with them. We know who they are and what they're looking for. They are discerning, confident, active consumers of stimulating experiences and they embrace retirement. They're comfortable with digital. In fact, they expect it. They like premium but want proof of value within that. They have the greatest combination of health, wealth and time. We want to grow and sell a wider range of products to meet the needs of this group, we will shape our full range of key propositions around them. The second is probably a group that many would associate with the traditional Saga customer. They are cautious planners. They are comfortably off but worry more and need increased support, particularly with digital. They are about 1/5 of the customer base. There is smaller headroom in this group, but they are very strong Saga advocates, over-indexing on all of our current products. We will continue to respect the needs of this group and retain their trust as we develop a more forward-looking product set. And third is the group we call Horizon seekers. Our analysis shows they're very likely to become life maximizers. They're currently still maximizing their careers, but they do have an eye on the horizon, their retirement. When like their older counterparts, we expect them to max out on their newly found free time. The headroom is significant, too. As whilst they may not generally consider themselves ready for Saga products now, they are buying the types of products we want to sell to them, including Cruises and Travel, and they will do so for perhaps another 30 or more years. So we can start to have a conversation with this target group through Saga Media, which Aaron will talk to you about in a bit. So they are warm when they reach our heartland. They will be our yardstick for development. So I want to tell you proudly about our unique customer panel. It is and will support deployment of our segmentation as well as Mike's work in funnel and lifetime value maximization. Aaron's and Saga Media's mission to truly engage customers and our business units drive to value by enabling faster and more compelling proposition to reach our audience. We have built an almost 12,000 strong customer panel, the largest 50-plus age representative customer panel in the U.K. Further, 6,000 of them are rising are labeled according to the 8 consumer groups I mentioned earlier, we've appended to this 6,000 mosaic profiles, and we also have the ability to append transactional data, too. Furthermore, on a weekly basis, all of our customer panel members are telling us more and more about themselves and what drives them. It is a powerful tool that helps us maximize the value of the segmentation as well as translate constantly evolving insights to propositions and communications that work on an individually, meaningful level. So I speak to you earlier about our tailor-made travel proposition. This is focused on primarily on our life maximizers, though we already know it has appeal across all of our key customer groups. But our segmentation has also already revealed a number of opportunities within our existing product range. An example being the need for a tiered travel insurance product due to launch quarter 3 this year. It is built around knowing how our customers' travel protection needs and concerns develops as they age. It means we can offer choice depending on where our consumers sit against that journey. Ultimately, it means we can maximize the value from our travel insurance offering, and it was built on our experience voices, customer panel. So we've made very, very good strides in the last few months, but we're now embarking on driving a needs-based design-thinking customer strategy. And we know we're only the first few steps in. At a broader level, this disciplined human-centered design will be hardwired into our business units. With our segmentation complete, needs identified and personas articulated, we're now working with the business units to build and optimize propositions that drive optimal customer journeys. We will measure expectations and experiences against these journey-based needs and ultimately align everything we do around them. My experience tells me that many businesses, including Saga, are doing individual elements of this. The key though is how everything links together as a direct flow from customer needs. We intend to ensure these linkages over the next 12 months, a continuous cycle, enabling our customers' best lives, a life unlimited, unconstrained by hassle or sacrifice. So coming back to the slide I started with. In 2022, you input insight and data at the top table. We believe that together, this provides Saga with a twin engine it needs. Saga has a unique opportunity to drive value because taken together, data and insight can reflect in what we do, who customers truly are and what they need as they age, which means they will be regularly compelled to engage and spend with us. They will do so, as Aaron will tell you, on a regular, not a once-a-year basis, and they will do so throughout our lifetime with them. So Saga is poised to capitalize on the combination of health, wealth and time. Our focus is clear. And I'm delighted to hand over to Mike to work through with you how the data engine will translate this to a profitable lifetime value model.

Thank you, Lisa. One brand is best placed to win with customers over 50. 40% of the market is already known to them. They have rich, actionable data and millions of interactions annually with prospective customers. That brand is Saga. Afternoon, everyone. I'm Mike O'Donohue, Camelot's -- Saga's New Chief Data Officer. I joined the business in October from Camelot, the operator of the National Lottery. There, I was part of the management team that drove 6 years of consecutive growth and record returns to good causes. Data and how we used it was an important part of that success and the same potential is here. As Euan set out and Lisa has just brought to life, our customers want to maximize their health, wealth and time. Saga's opportunity is to offer a broader range of products and services to serve those needs, particularly the needs of the most valuable segments, the Life maximizers and the Horizon seekers. This will drive growth in both, customer numbers and value per customer. Data is a major source of competitive advantage. Over many years, we have built a database covering 40% of the market, giving us unrivaled access to customers at lower costs. The database contains actionable information on needs, preferences and behaviors, giving us the data to deliver personalization at scale. And by linking Lisa's panel with the database, we will generate even more, deeper proprietary insights. Finally, the Saga brand attracts more than 11 million unique annual visitors, giving us valuable information about customers' preferences and their buying intentions. And this too is set to accelerate with the growth of our media business. In the next few minutes, I want to set out our plans to finally translate these competitive advantages into customer growth and value per customer. First, I'll describe a data-driven approach to marketing based on lifetime value. Second, I'll share with you the steps we are already taking to deliver this. Finally, I'll explain what you can expect to see from us over the next few years. So with that introduction, let's get into our plans. The opportunity for Saga is to have a broader and deeper relationship with more valuable customers. To unlock this, we are adopting a data-driven approach to marketing and maximizing lifetime value. This involves focusing our investments in customers, marketing and data on driving enduring relationships. In doing so, it's essential to measure 2 things accurately. The first is the true value of a customer today. They're value over an entire lifetime after subtracting investments in acquisition and retention. The second is their future value, which changes with their needs over time, as Lisa also ably explained. By analyzing the underlying economic drivers of these relationships, we can establish a much more informed basis for marketing investments and work out how to maximize the value of every single customer relationship. Let me unpack this a bit further. Making lifetime value central to marketing investments recognizes 3 facts. First, customer relationships extend well beyond a single year. The average tenure of Saga's most valuable customers is 17 years. And even amongst the rest, it averages at 13 years. Second, customer relationships extend beyond a single product. Our most valuable customers typically have 2.7 products and buy services and products across the group multiple times a year. Third, some customers will be more valuable in the future than others. Most -- our most valuable customers are 17x more valuable than our least. In adopting a lifetime-value approach, we have established a new goal for marketing investments, which will lead to better performance. This financial benefit flows from creating more advocates and promoters, people who spend more, stay longer and recommend Saga to friends, family and neighbors. Let me explain how this differs in practice from what you're used to seeing from Saga. Starting at the top of this slide, the first significant difference is attracting more valuable customers from the outset. We want to maximize growth amongst the higher-value life maximizers and working with Lisa and her team, we can identify these customers on our database and then target similar prospects using Google, Facebook, social media and other digital channels. The second major difference is moving away from merely transacting to actively nurturing relationships with customers. This involves connecting with their needs and preferences and delivering relevant, tailored experiences that are genuinely exceptional. With the support of the new media business, we can now deploy more engaging content into the buying journeys. And this sets up the next difference, which is shown at the bottom of this chart. We introduced customers to products and services in a timely and relevant way. By monitoring customers' reaction to the content and the journeys, we can evaluate their readiness to buy and work with them to encourage that. The final difference is an emphasis on retention and encouraging loyal customers to recommend Saga. By way of illustration, transactional NPS in our Cruise business is 80%, and we have the opportunity to capitalize on this with a program of rewarding customers for recommending Saga to friends, family and neighbors. At this juncture, I expect you're all wondering with all of these advantages why Saga hasn't done this before. We'll try and use the analogy of a car to explain this. First, until now, we didn't have the right fuel to put in the car. Understanding true value means bringing together multiple data sets and integrating them into a single view of the customer. This view needs to include product holdings, revenue margins, transaction history and all of the costs are associated with the customer. To address this over the last 2.5 years, we've invested in replatforming all of our data and creating a single, integrated view of the customer. Second, until now, we didn't really have the engine room in the car. Delivering highly relevant, timely and personalized experiences requires capturing and processing large volumes of interaction data across multiple channels. And although Saga was once best-in-class, the toolbox we have was built to support an outbound direct marketing model with long response times. To address this, we've had to deploy new state-of-the-art technology and tools for data processing, data science and marketing operations. Finally, until now, we haven't really had a qualified driver. Optimizing lifetime value requires an operating model that is customer rather than product-centric. To address this, we've had to shift to managing the customer as an asset of the group as a whole and based on an integrated strategy. The analogy is no doubt imperfect, but hopefully helpful. And having addressed this, I'll turn to talk through the steps we are taking to move forward at pace. The key sets of actions are already underway. First, we are taking steps to grow our database, focusing on driving digital sign-up, enriching our data and increasing marketing consent. Second, we are taking steps to build the value model, focusing on developing a strategy for maximizing lifetime value and designing a program of test and learn. Finally, we're taking steps to deliver personalized experiences to customers in our channels, focusing on building a recommendation to optimize value. In the next few minutes, I want to unpack the more critical elements of this and explain how they lead to growth. Our database identifies 10 million customers and a further 1 million interact with Saga's website every week. To exploit this, we need to have the right permissions to introduce customers to our products and services. We calculate that doing so is worth an incremental GBP 97 in margin per customer annually. However, to unlock this value, we're going to have to change our approach to opt-in. Currently, what we ask customers is for a very narrow, specific product and channel-based permission. This constrains us in 3 ways. We cannot share with many customers the full range of Saga's current product offering nor can we share new products and services that we are developing nor can we introduce them to trusted partners. Going back to my car analogy, this is the equivalent of trying to drive with a hand-break all. To address this, we're trialing a new simpler approach using a group-wide opt-in. This approach is aligned against our Super brand strategy. It's simpler for customers and easier for colleagues. And consequently, we've seen a 20% increase in the number of marketing consents gained. The next step is to launch a concerted program to reconsent all customers in quarter 2. Over time, this will grow the size of the market in database and the market in universe and reduce our CPAs. As I mentioned a moment ago, we are building the lifetime value model. We've calculated the value of each customer and are in the process of categorizing them and setting strategies. The strategies and supporting initiatives will be focused in 5 key areas: extending relationships in existing product categories, introducing new products to customers, driving engagement, improving retention and encouraging recommendation. Maximizing value will require finding the best propositions, messages, incentives and rewards, which we'll do through a program of test-and-learn and through working with the Saga Insight team. It's important to draw out that this approach extends beyond current customers and will enable us more effectively to target both, known and unknown prospects. As such, we expect to see a significant improvement in the effectiveness of all of our marketing over time. As well as building the lifetime value model, we're also building a recommendation engine for the best next action for each customer, thereby enabling us to deliver more personalized experiences. We've designed the system and aim to have it live by the end of quarter 1. The first iteration is fed with data from a suite of propensity models. These propensities are adjusted based on recent customer behavior such as website browsing. The recommendations can be tuned based on the time of year, the trading calendar or the trading conditions. Over time, it will grow in sophistication, and we will be able to orchestrate sequences of activities covering brand building, offer management, customer service as well as sales. This will enable us to deliver a much more relevant, timely and personalized experiences. There's also considerable opportunity to use the data from Saga Exceptional, our newsletters and the magazine to enrich the experience even further. There'll be a 2-way link between the recommendation engine and the channels. This enables us to push best next actions to the channel and then collect the data on what the customer is doing in response, which in turn feeds the next recommendation. By the end of this year, we'll be using this recommendation in our digital channels to attract higher-value customers on our website and in our CRM channels to offer more personalized experiences and to convert more traffic and in our contact centers to offer better service. In summary, we have already begun implementing a new data-driven approach to marketing based on lifetime value. Now over the next final few minutes, I want to share with you what you can expect from Saga going forward. Our roadmap will see us increase the use and sophistication of lifetime value over time. The roadmap has 4 phases. Phase 1 is approaching completion and will see us establish the lifetime value model. Over the next financial year, we will fully connect this into all of our channels, transition to using it as the basis for planning and prioritizing all of our marketing activity and prove out this approach using test and learn. As a customer, you will start to see much more personalized, relevant and engaging content. Over the next 2 years, we'll fully embed this approach and broaden the application to all touch points. This will involve expanding the predictive capabilities of the model with much greater focus on future value. We'll be working closely with the media team, which will provide rich seams of data on customers' interests, their preferences and their behavior. Over time, we'll speed things up, updating recommendations in real time across all channels. This will require greater automation based on much more use of advanced machine learning and self-learning models. The result for customer will feel like a much more seamless experience from Saga. In summary, our roadmap will see us harness the full potential of data-driven marketing, focused on lifetime value to capture, satisfy, delight and retain customers and turn more of them into advocates. I said at the outset, data is a huge source of competitive advantage. And now we have the platform, the tools and the operating model to translate this into action. Through adopting a data-driven approach to marketing based on lifetime value, we will better understand our customers, serve more of their needs more effectively, build stronger relationships and ultimately create more advocates for this business. In doing so, we will deliver growth, both in customer numbers and in value for our customer. Thank you for listening. And now I hand to Aaron.

Thanks, Mike. Hi, I'm Aaron. And since September last year, I've been Chief Exec of Saga Media. It's my 20th year working media. And from 2016 to this time last year, I was on the exec at future PLC. While I was there, we grew that business from GBP 150 million market cap to at its peak, GBP 4 billion. It was a great journey. We took long-standing brands to new audiences, reaching millions of people across the world. And I'd like to think making their lives a little better as a result. And now with Euan and Mike and Lisa and the rest of the Saga team, I want to bring that same success in media here, connecting with and growing our Saga audience in an entirely new way. So I'll talk today about how we're going to do that. What it takes to win in this space and why Saga's so well positioned to achieve so much. I'll talk about how we can grow our audience, how we create value from that and how we extend beyond. But from 30,000 feet, it's what we're talking about and part of the reason we're so excited is 10 million global Saga media customers in 5 years, 1.5 million new customers to the wider group arriving through media, over GBP 50 million of new to Saga revenue from next year to 2027. And the business in its own right, we're going to generate upwards of GBP 40 million PBT. So as diversified capital [ light ]. Now as is the case when you join a new business, you often hear lots of stories. There are many stories I've heard about Saga since joining. At some point, actually, I'd invite you to ask Euan about the cruise ship customer that likes strong tea. It is surprisingly compelling. But it is the -- it is, I promise. It is the origin story that I like best. A hotel, Hotel [ Redesa ] where it became a home away from home for an older generation, a place they could call their own, come together, find trust, connection where they seem more than mum or dad, grandma and grandad. And today, I want to tell you about a new home away from home that we have created a new place for experienced people to feel like they belong as individuals, not as relatives. Lisa gives me lots of stats. I don't remember all of them, but this one I do, [indiscernible] has written down. People over 50 command 55% of consumer spend, but they only feature in 23% of consumer marketing. About 50 million people over the age of 50 use Facebook in the U.S. alone, and there's nearly 10 million here. But they aren't who Silicon Valley wants to talk about, right? My mom as semi-retired miss might look to buy laptop online and find some good advice, really good advice from the likes of TechRadar or Tom's Guide. But she doesn't believe it's for her because she doesn't see herself in that recommendation. So all she do, she calls me up or she asks around. So Saga, we want to change that. We know that our customers need a home online that they can call their own, where they can get advice or want to buy from someone who understands them, where they can feel at ease but equally inspired and connected. Our mission is to build and launch digital media that is proud to represent the real needs and interests of people over 50 to give advice, share stories, give them a place where they can be heard and valued. We want to create a space online for our customers that embodies everything that has made Saga such an incredible brand. We believe our customers observe the place online [indiscernible] to a luxury cruise ship or a seat on a private jet flying across the world. And while great sites, and they are great sites such as good housekeeping or [ ARP.org ] exists and attract tens of millions of people every month. The truth is that there isn't a site just for our customers until now. Today, I'm delighted to introduce Saga Exceptional before you whip your phones up to Google this, it is found at exceptional.com. So feel free to do that while I talk. A brand-new website. It is proud to be made for Saga customers with best-in-class consumer advice and inspirational stories that celebrate these incredible generations. Now Saga Exceptional will concentrate on 2 types of content and both will have infinite potential. First, great consumer advice, in depth reviews of products and services for the way our audience wants to use them with buying guides, how-tos, opinion columns and news, making sure every visitor finds exactly what they need. And second, inspiring stories about our audience from 80-year-old marathon runners to 70-year-old stunt driver, our stories will celebrate the personal brilliance of these generations in a way no one has before, powered by the various insight [ lease ] shared with you today. Saga Exceptional will shine a bright light on its people and their passions. Now I recognize that nothing truly great is built without amazing talent. So that's why Saga Exceptional was being led by some of the most respected creators in specialist media, joining Saga from giants such as Future and TI Media, among them, [indiscernible], our Chief Operating Officer. [ ELT at ] Future and TI Media leading major brands such as Women & Home and [ Marin Chief ] of Techradar, one of the world's largest consumer tech sites. [ Sam Robson ], Chief Audience Officer, SEO industry leader, overseeing audience development at Future, TI Media and GoCompare. Ross Curtis, Chief Product Officer, e-commerce platform leader of future owning the tech that supported millions of annual transactions. Matt Smith, Chief Revenue Officer, features e-commerce leader from 2017, growing revenue from GBP 0.5 million to over GBP 120 million a year. This is a brilliant team of real, proven talent. And it's a testament to what we're doing here that they were so quick and keen to join. Simply, they believe in the opportunity. They see the potential to win. And more than that, they care about a mission. They know that this is a chance to make a real difference to lives that touch us all. But this team alone can make Saga Exceptional what it needs to be. We know to be different, we need to work in a new way, which is why I'm also delighted to say that only be Saga Exceptional before its audience, it will be by its audience. We have done over 150 interviews with experienced writers and creators and recruited amazing individuals aged over 50, who have been working on the website since November. But we wanted to go even further. We recognize that the best advice is often from a friend. And at Saga, we are blessed with that panel of over 12,000 customers and what better way to give a voice to our customers and to have experts from this panel share their views on new products. So all of our views will represent the views of our audience. Saga Exceptional is a place where they'll be seen and heard. I learned a many great things at Future. One of the things I alluded to, and that's why we've built a powerful platform. It is simple and readable, powered by custom-made CMS containing excellent relatable photography and video. Using some of the same technology as New York Times and wired, we have adopted a block-based CMS editor using static file hosted front and distributed across an enterprise level CDN, coupled with industry-leading measurement and monetization potential. And we have 2 very clear goals for content on Saga Exceptional. One, within 3 seconds of arriving on the homepage or article, they feel like this is a site for them, their corner of the Internet. They're [indiscernible] inspired to try something new or do something better. So our talent will be a huge part of achieving this. And the very articles we create will be informed by the in-depth knowledge Lisa and her team have provided. But we also have to have an operation that complements this. So we're ensuring the very best for engagement measurement. SEO performance, productivity management and platform excellence are in place from day 1. We are also about to cut the ribbon on our first Saga testing center, where our products will be tested in lab conditions to ensure the best possible reviews for our readers. Our plan is simple, grow an audience online using a variety of proven methods, monetize our audience, expand into new categories, grow that audience, monetize that. Now how big the prize is here? We know people over 50 account for roughly a 1/4 of Internet usage. And as you have seen today, they have the time and wealth to fully enjoy it. With over 6 million contactable Saga customers on our database already, Saga Exceptional has an incredible advantage. We can create immediate awareness with the very people we want to help and inspire, but we won't rely on it. We want to build something that extends far beyond the borders of Saga today. And we'll do that by creating a site with the authority to compete at the highest level on major search engines. SEO is a battleground that this team has proven it can win in. And the reward will be immense. As we understand, but meeting the needs of our audience in the U.K. will naturally also meet those with the same needs across even larger English-speaking territories. We are also committing to a multiyear PR campaign to support its launch, ensuring Saga Exceptional is in all the conversations it belongs in. Combine this with our expected social audience growth, and we can see millions of people joining Saga Exceptional every month from all over the world. And this won't sit in isolation from the rest of the group, quite the opposite. Saga Media is about increasing the frequency of engagement we have with our customers from a few touchpoints a year to multiple conversations a day. We see it as the difference between seeing a family once a year for the holidays and living with them. This will have a transformative effect on the quality of our relationship with our customers. We will enrich our understanding of our audience, adding depth to the already huge volume of data points. What's more, as the website will bring in millions of new customers who aren't known to us, we can measure their behavior and preferences and match it to unknown users. This will mean we can create extremely valuable cohorts to -- that our commercial partners would love to reach. So if unknown user A matches no news [indiscernible] advertising and affiliates. To achieve this, we are using brilliant technology on the site that connects quickly and effectively to the Saga data lake. It will be seamless. But of course, we do not want any user to be unknown to us over time. We are here to build relationships with millions of people. So over time, what will happen is that our unknown users trust on site will improve with each use. They will start to depend on our buying advice. They will enjoy our stories. They will spend time on our site because it is for them and by them. And even if you take a conservative view about what this means for our registered users, i.e., people who want to share their details with us in exchange for offers and exclusive content, we would expect to have a further 1.5 million known users within 5 years. Of course, Saga Exceptional will help market Saga's existing offerings to a new audience. But this is about something bigger. Saga Media means a new revenue diversification for the group, capital-light, predictable digital revenue delivered through incredible technology and driven by unmatched customer data. Saga Exceptional will monetize advertising sponsorships, endorsements, affiliates and more. And many of our users will arrive with the purchasing intent, meaning they're in-market and ready to buy. Advertising affiliate programs suit this, and we are working to create a great experience for customers and partners alike that delivers meaningful value to the group as well because of the power of our brand. We'll be able to syndicate our content and win sponsorship deals with the many companies who have a strong message to send to the over 50s markets. And not only that, we believe that just like good housekeeping and which Saga Exceptional will have re-endorsement value for retailers, retailers who will be willing to pay for use of our logo as a recommendation to customers are about a product we have endorsed. And from today, we are pleased to share that we have joined affiliate programs for over 50,000 retailers where we will enjoy a CPA range of 4% to 10% on products purchased through our recommendation. Not only that, our media business enjoys the support of over 200 advertising partners with many, many, many more to follow and huge potential for premium CPMs. So with Saga Exceptional, we believe we created a website that serves the valuable online market like no other can. We will publish fantastic content that serves our users' needs and passions and we'll do it with the same level of care, integrity and love that has made Saga such an incredible brand for so many. Saga Exceptional is free to everyone. We will not build a wall between what our customers need and what we can provide. It's global. This is a site that takes Saga across the world, opening up vast new opportunities. It's built on cutting-edge tech and it has incredible content, which is the only site for the over 50s and by the over-50s. And it is live today. [indiscernible] getting the phones now. But with that, Saga Exceptional is a proud achievement. It is a spectacular experience on desktop and mobile, and we believe it will truly mean a better online experience for people over 50 than ever before, but Saga Media is more than exceptional.com. We are here to create content and delivering formats that suit all. So it's clear our database will be a great advantage for marketing. But what if it was more than that? What if we made e-mail a brilliant content experience too where our customers could feel informed and inspired in their inbox? That's exactly what we're going to do here. Starting with the magazine newsletter list, we're going to create a more meaningful experience for our users. One needs to look at the success of Morning Brew or Substack to see the power of newsletters right now. And our unique advantage is the sheer size of our preexisting reachable customer base. We've already run tests and seen breakthrough results. One Black Friday e-mail sold GBP 25,000 worth of products with the lowest ever on subscriber rate. That's one e-mail recommending 5 products to only the magazine portion of the database. We see content as the best way to reengage with our 6 million e-mail subscribers to change that twice year transaction to an everyday conversation. Now content is not entirely new to Saga. It's one of the U.K.'s best-selling magazines, and it's a magazine with incredible content, but it's never really had a home online. Now we can finally bring that amazing, exclusive content on to the web. This means that the magazine content will be created once but published multiple times over, extending its reach to millions more than it ever could have in print alone. It's an incredible archive of fabulous articles, and we plan to ensure the very best of it as a digital home. Saga Magazine is a key part of our Saga Media plans. As such, we want to transform its fortunes, creating an even better experience for our readers and a winning part of the wider business. Now there are 9.9 million over-55 users of Facebook in the U.K. alone. We currently have 0.7% penetration. That is not good enough. We have to go, the currency of the Internet. But now with our brilliant new content and fantastic talent, we can finally grow our Saga social audience and engage in a way that we haven't before. Not only is this important for traffic referral, social platforms have become great monetization platforms themselves. So if we simply speak to our old, we will unlock the incredible potential of over-50s social media. Our ambition is clear. We know what we need to do to win, but it won't happen overnight. And where we are today is not where we will be tomorrow, but here are just some of our targets. 3,000 purpose-driven high-quality articles live by the end of '23, '24 end of this year; dwell time to exceed industry standard by '24, '25; pages possession to improve our competitors by '24, '25; 25 social posts per week from May this year and 200 videos created on live across multiple platforms in 2023 alone. Now initially, audience will outpace monetization because that is the natural priority. Over the 5 years, the rate of monetization increases more attractive to commercial partners, increases further still as data enrichment improves and further still as we unlock premium U.S. commercial partners. And when we combine both, our input goals and output projections, we believe we create something truly meaningful for Saga. So 30,000 customer interactions a day by the end of '23, '24; GBP 50 million of new revenue across the first 5 years; GBP 130 million plus sessions in the fifth year; GBP 7 million of PBT in '27, '28 growing to over GBP 40 million by '33, '34; revenue growing at 80% to 100% as we exit our first 5-year period; over 10 million monthly users by 2027, and as I've said, 1.5 million new registered users by the same point. This will seem a bold direction for Saga to go in. And I'm obviously excited to be a part of it. But on the other hand, it does seem rather obvious. Why? Well, it delivers on our purpose, Media resolving is for Saga delivers on our purpose. We are better able to support our customers if we talk to them every day. It's high frequency, it's high engagement. Media means to move from an annual touch point to a daily one and about people's passions. It means a wider reach for Saga than ever before. And media business, just like features can be high-margin capital-light success stories. It helps us become that super brand, where we convert loyalty and trust into lower-cost acquisition and higher retention. And media can become a funnel for customers into the wider Saga universe. And likewise, Saga is a perfect partner for media. We are about exceptional experiences every day. And right now, the unique commitment to quality gives us a tremendous cultural and algorithmic advantage online. We are also a famous brand, and that means something, commercial partners and customers alike love that. And as you've seen today, we have amazing customer data and insight. Media companies that have been in this game far longer would love what we already have. And our ambition is at the right level. We know we can half-heartedly do this and win, and Saga wants to win. And finally, at its core, it is about making our customers' lives a little better every day or cruise ships that gives a sense of wonder or travel that hold your hand as you walk across Peru. Saga Media is proud and part of the business that will finally give our customers a place online that they can call home. Over to you.

Thank you, Aaron. Thank you, Lisa and Mike. I'm aware that we've covered a lot of [indiscernible] over the last hour and 15 minutes. So let me just try and bring it to a close with some key takeaways on this slide. We are committed and have already made progress towards building Saga into the super brand for older people. There are, of course, several components to this. With insight, the new Saga Media team and data being critical to that formula. But fundamentally, we are committed to serving older people with the best products and services designed for them, and we continue to prioritize what they want and what they need. We made a commitment to create a high engagement, high-growth, capital-light model to achieve that, and that is well underway. As such, we're developing a more profitable Saga, creating a lifetime value model that will keep customers at the heart of all of our businesses. So to achieve this, there are 4 things that we are focused on. Firstly, growing the size and depth of our database. Secondly, creating a more personalized experience for our customers. Thirdly, creating compelling reasons for our customers to consume 3 or more Saga products and services. And finally, increasing the frequency of those interactions to daily.

We'll now open up to give you the opportunity to ask any questions that you might have starting with questions in the room and then moving to any investors and analysts online. I would like to keep the questions focused on the presentations that we've made today. Mike, Lisa, Aaron, I invite you up to the stage. Any questions anyone has? You're obviously stunned with the clarity. We have one at the back.

Ross from Investec. I just want to ask Aaron. You've obviously referred to Future a couple of times in your presentation. And obviously, they've really made their name in sort of niched focus websites, dominating a vertical, not necessarily the #1 site but owning that vertical. Could you just sort of run us through a little bit, the thought process behind going for a more one-stop shop approach in terms of the single vertical? And then second question, I guess, building on from that. Again, are we likely to see a specific focus on certain verticals at the outset to really drive that audience based? Or are we likely to see sort of more broad-based approach to start with?

Glad you asked that question. We don't see a demographic as a vertical. So I take my mom, I talk about incessantly. Her interest is not being over 50 or over 60. Her interest is running and health care, those are her interest. So we've launched Saga Exceptional today. The verticals that we're launching with are in-home and in-fitness. We will launch into further verticals as the years go on. And our role is to become authorities in those verticals on that 1 site over time because we believe, as I'm sure you all do, that once you hit over 50, you do not lose passion for whatever it might be. People are rolling stones fans forever. Or they love music or they love movies and that doesn't go away simply because they get older. So we know that if we focus on people's passions and build out authority within particular verticals online, we will eventually be discovered for that. So by no means we're moving away from verticals, we're focusing very much on that. It just happens to be in 1 side.

Great. And 1 more, if I might. Just in terms of the content mix, obviously, video much higher yielding around 6x versus editorial. Could you give some insight into how that mix might play out? And sort of in the longer term, what sort of proportion of that digital ad revenue you're hoping to come through more data-led products versus more programmatic open market type ads?

Yes. So I think at this moment in time, we are obviously going to go through a test-and-learn phase for a lot of it. And this is going to be new to our commercial partners as well, because we do believe we're the first of a kind. Initially, our role is to build our audience. And we'll be building an audience with obviously written articles and with video. We'll be commencing our video production very, very soon. And as I've said in the presentation, there'll be a lot of video as the year goes on, and then we'll build on that. We will publish that video across multiple channels. So that will be available on Facebook, which obviously is monetized 1 way, on TikTok perhaps and obviously, on the website itself. Obviously, the yield we get for each of those video publications or distribution channels for [indiscernible] will vary. It may well end up that YouTube becomes the most popular channel for the Saga Exceptional brand. We don't know yet. So I'm sort of reluctant to commit to any numbers, but what I can assure you is video is going to be a large part of what we do. And as that commercial mix unfolds, we'll -- I would say, broadly speaking, my experience, I would -- with the customer data that we have, in terms of the third-party programmatic and first party, I would say, we should be far less reliant on third-party here. I think we can drive a lot of first-party advertising. We've got a lot of advertisers already. And I think the quality of our customer data really puts us in a driving scene. And obviously now, from working with other publishers in the past, that the sort of data Saga has means it is going to be very attractive to clients. I'd like to see us get a larger than market average share in first party.

Great. Thank you. Any other questions? Point for one here.

It's Marcus from Jefferies. A couple of questions, please. So just on the data points that we've been measuring this business by. So the PBT growth, you talked about that being fresh revenue and fresh PBT to Saga. Have you thought about the benefits of the broader group from -- or can you give guidance on that? The benefits for the broader group of retention, great loyalty, lower acquisition costs for the wider group. Are they on top of that or embedded within that figure? And then secondly, in terms of the investment required to build this out, what sort of cash burn should we be expecting in the near term from this business as it ramps up? Is it relatively short-lived as well? Or is it going to extend over a few years?

So perhaps I'll take the first question and then kind of lead into the second question. So we have monetized the stand-alone media business. So those are the numbers that Aaron has talked about. There is, as you've said, and we've indicated today, a second order maximization of the Saga community through the database work and through the influx of new users as well as maximizing existing users. That's not in those numbers. We haven't worked through the detail yet, but we would expect that to be on top. So improving CPAs, efficiencies, margins within each of our current 4 businesses and also attracting new customers into them, not work through yet. We have to do the data work first and then build those models. In terms of the cash burn, it's low single-digit millions in terms of the investment into media and innovation. We have a sister innovation called Saga Village, which we haven't talked about today, but we will talk about as we go through the second quarter, hopefully, of the year. But it's low single-digit millions in terms of kind of cash investment upfront as we've said, we expect to be breakeven into profitability through year 4 and into year 5 with Media and these other innovations coming through as well. Yes. Anything else you want to add in terms of the investment?

No.

Okay. Nick, thank you.

It's Nick Johnson from Numis. Couple of questions. Firstly, to pick up on the stat that 20%, 25% of consumer marketing is directed at the over 50s. Is there a reason for that? For example, maybe the over 50s brand loyalty is already very entrenched and therefore, marketing money, perhaps is not well spent. Is there any truth in that? What does your research say in terms of return on investment in terms of marketing to over 50s relative to the return on investment you might get to younger generations? And second question is on just looking at potential comparatives. I don't know if let's say, example, which and -- or maybe Mumsnet, if they're relevant. How do the sort of revenue ambitions for Saga Media compare to the revenue of those businesses?

Yes, great question. Lisa, do you want to pick up the first point in terms of the marketplace?

Yes, sure. So I mean, we still own an external research business. So we still get quite a lot of data from talking to our other clients. And I guess it's true to say that across the industry, very, very few clients, if any, are focused on the older consumer base. You made the point in the presentation -- I guess one of our advantages is that we are single-mindedly focused on that generation. And therefore, our lifetime model is built from that year 50, 55 points out. Where you think about the other organizations kind of their lifetime models are built from a much earlier point, so the focus then doesn't end up that kind of on the stage. And I think that gives us a huge advantage because not only do we have that focus, but we understand what happens at those age points. And we know that quite a few things do happen, which I'm glad to share with you over the [indiscernible]. These guys have heard it many, many times before.