Promotional coverage can put agents in front of clients' profits centers, enhancing the top line, while protecting the bottom line
By Dennis Pillsbury
Donald J. Silberstein is senior vice president, strategic marketing and business development, for SCA Promotions, Inc.
It was a great idea--instant recognition on a nationwide basis. The client loved the idea--national television exposure for virtually no cost--unless, of course, the contestant made the kick. And what are the chances that the contestant will actually win the million dollars? After all, professional place kickers usually miss from the 50-yard line.
This was Tom's big break. He'd finally gotten his foot in the door. He was already counting on getting the whole account as he watched the contestant line up the impossible field goal. It probably won't even make it to the goal posts, Tom told himself. The ball left the contestant's foot and traveled almost in slow motion. It seemed to take forever to reach its destination. It's off line, Tom assured himself but he knew it wasn't, even as the wishful thought offered him momentary respite.
The dream of landing the whole account turned into a nightmare that included a million-dollar hit to a client's (probably former client's) bottom line on the resume Tom was soon going to need.
The scene is only slightly different when George joins his client to watch a similar effort. However, this time when the kick clears the cross bars, there are high fives all around. The extra publicity generated by the million-dollar payout is icing on the cake, thanks to the fact that George did all of his homework. His client had promotional indemnification coverage.
Since 1986, SCA Promotions, Dallas, Texas, has been helping companies "amplify limited budgets for impact," says Don Silberstein, SCA senior vice president. "We help our clients put together a promotion that really has a compelling aspect to it--like a prize of a life-changing amount of money--but we stay within their budget by transferring the risk of payout." And when Don says a "life-changing amount," he knows of what he speaks. SCA guaranteed payment of a prize of $1 billion that visitors to a certain Web site had a chance to win. For most people, a billion dollars is still a lot of money. Needless to say, a lot of people visited that site while the promotion was running.
Tanya Mathis, market development specialist, and Don Silberstein review a promotional coverage idea.
All told, SCA has provided coverage for more than $12 billion from 50,000 different promotions. The company has paid out more than $79 million.
Helping the top line; protecting the bottom line
"What makes this unique from other types of coverage is that we deal with the profit centers in the insured's business, helping them maximize their marketing and sales effort," Don points out. "But we're protecting against losses that could impact the bottom line."
He explains that there are three basic areas of coverage in the promotional field:
1. The single event. "A lot of these are sports-related, like the now traditional 'hole-in-one' coverage," Don says, adding that the field really has moved on "to reflect changing times and situations. It's really become an incredibly large field as companies vie for opportunities to come up with something new and compelling in conjunction with events that already have national interest. That's why there are quarterback tosses and field goal contests at the major bowl games and basketball shots from half court at all-star games and various championship matches. The list goes on."
2. Over-redemption. This occurs when the response to a particular offer exceeds the expected response rate. Coverage picks up at that point. As Don explains, the coverage protects the marketing department and the bottom line. "When the CFO comes into marketing and asks for a hard number on the expense side, he or she doesn't want to hear: 'It depends.' When the company has this protection, they can give the CFO a hard number."
3. Performance incentives. Many promotions involve sponsorship of a particular athlete, combined with performance incentives that are paid if the athlete wins a certain event or achieves a certain level of performance. The sponsoring company doesn't want the resultant volatility, so it purchases coverage to fix its costs. "We also work with the client to develop a marketing program that will take advantage of their affiliation with the athlete so that they still receive marketing benefits even if the sponsored athlete doesn't cross the finish line first."
A new area for agents
Don says the insurance agents who work with SCA "really seem delighted to learn more about opportunities to work with the profit centers within a client's company. Usually, they spend most of their time with people who are concerned with expenses and the bottom line, rather than those who are dealing with bringing in income."
The questions and concerns become subtly different. Instead of hearing: "How are we going to pay for this?" agents hear: "How do we make this work?" It's a fine distinction, but a pleasant one. "Clients stop looking at you as a necessary expense and start looking at you as a revenue-enhancer," Don says.
He continues by pointing out that promotional coverage is quite different from traditional property/casualty coverage. "There aren't the traditional renewal characteristics. However, a success will fund additional programs. This is an area that can grow and continually develop new sources of revenue for the insurance agent while helping the client become more successful."
Don says SCA has "an extraordinary amount of experience working with insurance agents. We depend on them for our business. They are people who are trusted in their communities and have the respect of each of their customers. When they make a recommendation, it will be seriously considered. And when that recommendation results in increased revenue for their clients, it's a perfect win-win situation."
"What we bring to the table is an expertise in the promotional area. We can generally deal with a lot of obstacles to create a workable program," Don says. "We will work with the agent and his or her client to help determine what type of promotion makes the most sense. A lot depends on what the client wants to accomplish. We have to determine what segment of the market they want to reach with the promotion. For example, there are market segments that are not reachable with coupons or similar offerings, but may be reached if this strategy is blended with a huge prize that will get them to take action."
Don adds: "This is very much an educational process. Some promotions are understood, like the hole-in-one, for example. Others may be developed as a means to achieve a particular goal that is unique to the client and that fits the client's budgeting criteria. We may be working with a capitated type of budgeting to get the sought behavior or it may be period budgeting--basically, we'll spend X to accomplish Y. We're very P&L oriented and work with agents and their clients to help the clients optimize against their budget numbers."
He concludes by pointing out the importance of working across channels and across media. "Today, there is nothing like the Internet. It can help accelerate a promotional program at very low cost. It also helps to reach an increasingly diverse audience. Single homogeneous messages are much less compelling today because of this increasing diversity. The Internet allows convergence of mass marketing and one-on-one marketing. We have the tools to help clients use that to their advantage." *
For more information
SCA Promotions, Inc.
Phone: (214) 860-3769
E-mail: dons@scapromo.com