specialty lines markets

Good outlook for prize promotions

Rebounding marketing budgets fuel interest in promotional activities

By Dave Willis

Although marketing budgets often are cut during tough times, smart firms know that economic downturns present special opportunities to set themselves apart. This fact helps explain a comparatively modest dip that the hole-in-one and related prize promotion insurance business saw over the past couple of years.

"Organizations recognize that, in tough times, marketing your product or service in a unique way can make the difference between an up year and a down year," observes Greg Esterhai, president of US Hole In One and Interactive Promotions Group, located in Philadelphia, Pennsylvania.

According to Doug Burkert, president of Richardson, Texas-based National Hole-In-One Association (NHIOA) and Grand Prize Promotions, "Although the economy affected the business in 2008 and 2009, capital is available today and underwriting appetite is driving continued competitive rates and terms. The state of prize indemnity insurance business is strong."

Esterhai concurs. "Although economic factors had some effect on prize indemnity over the past few years, the industry as a whole remains strong."

Where client organizations did pull back, they're returning. "After a couple of slower golf years, for instance, promotion activities that were put on hold are coming back," notes Brad Henderson, NHIOA advertising manager. "What's driving the increase is an improving economy and optimism amongst clients and prospects who want to find new customers through fun and exciting events."

Prize promotion and hole-in-one insurance appeal not only to businesses, but to nonprofit organizations, as well. "Charities are always working on raising funds any way they can," says Burkert. "They're constantly looking for new and innovative ways to not only raise money, but to engage donors. Having them at a charity golf tournament offers a chance for face-to-face interaction during an engaging activity."

He believes golf tournaments present a chance to not only generate revenue but also bolster relationships. "At a tournament, charities have a chance to really spend time explaining their cause," he says. "They can illustrate their benefits with a video, speech or beneficiary testimonials."

Strong pull

According to industry experts, the time is right for prize coverage. "Charities, auto dealers, golf courses and others need new ways to set themselves apart from their competition," says Esterhai. He has seen increased interest outside of the golf arena, as well.

"We're seeing more business coming in from competitive marketing directors who are trying to draw in customers and more creative fundraisers who are trying to attract new donors," Esterhai adds.

Marketing budgets are on the rebound, he notes, adding, "In many cases, marketing and fundraising professionals are more willing to explore new ways to promote their business or cause using prize insurance."

Over the years, insurance firms that got their grounding in hole-in-one insurance expanded into other areas. "We handle coverage for all sorts of sporting events—half-court shots, field goal kicks, center ice shots—as well as other probability-type contests like dice rolls, lucky money bag pulls, and crack the vault promotions," Esterhai explains.

Burkert's firm also offers diverse prize indemnity products. "Over the past couple of years, we've seen an increasing demand for online games, such as our safe cracker promotion," he explains. "This can be a part of a constant marketing mix where an organization gets to show a 30-second commercial and provide a chance to win a prize in exchange for a customer's attention."

Conditional rebate promotions are becoming increasingly popular, Esterhai says. "I think it is because of the national exposure many retailers receive when offering this type of promotion. Clients can get a full or partial rebate of their purchase if a certain event happens in the future—like six inches of snow on Christmas Day or the Phillies winning the World Series.

"These promotions work well because customers have reason to make a purchase during the promotion period," Esterhai continues, "and they have the added hope that their purchase might ultimately be free, if the stars align and the specific scenario actually happens."

Henderson has seen broader interest in other promotions, as well. "We've seen an increase in tournament event add-on prizes, including putting contests and million dollar shoot outs," he explains.

Promotions—including those where prizes are insured—are finding a new ally in social media. "New media is blossoming everywhere, whether on the cell phone in your pocket or on the Internet, with YouTube, e-mails, Facebook and more," explains Burkert. "Prize indemnity fits well with these; it's very flexible. We can show agents how these can help clients and prospects build up their databases and increase sales."

Adds Henderson, "Sponsorships and prize promotions are great ways to tap the amazing power of word-of-mouth advertising and reaching new customers."

Agent fit

Selling hole-in-one and other prize promotion insurance is, according to Burkert, "a great way to meet people—and bring in more business. Whether you are talking about a school or church or charity that does a golf fundraiser or a business that wants to drive traffic—directly or through charitable involvement—they all have other insurance needs. One of the ways to get access to decision makers is to help them with something not every other agent does."

Agents can also get client and prospect face time by handling promotion sponsorships. "They can help charitable organizations raise more by sponsoring a prize on their own or by getting a business to do so," Burkert adds. "Doing this can help agents build relationships and access people and information they need in order to serve the organization's broader insurance needs."

There's a flip side, as well. "With any business, a main goal of insurance agencies is to satisfy customer needs and save clients time searching for products they need," explains Esterhai. "If you already provide businesses with P&C or other insurance, there is only an upside to providing them specialty coverages, like hole-in-one or prize indemnity insurance.

"Your customers will appreciate not having to spend their time shopping around other agencies when they can take care of all their insurance needs in one place," he adds.

According to Henderson, coverage is easy to sell. "Agents who are not familiar with or using prize indemnity should get acquainted with the policies," he says. "The policies are easy to understand, and in less than a half hour's time, it's possible to establish a sales relationship with a prospect. Even if it is not the primary basis of the relationship, it is a great place to start."

Agents can sell the products with confidence. "Prize promotions give buyers a measurable return on their investments," says Burkert. "Whether it's a business looking to increase visibility or an organization looking to promote a charity, prize promotions fit the bill. ROI is what customers are looking for today. My advice to agents is: 'take advantage of the opportunities that you can.'"

Adds Esterhai, "The coverage is easy to buy. The entire process shouldn't take longer than a few minutes, and it can even be done online."