How Companies Benefit from Prize Indemnity & Over-Redemption Insurance
Your eyes blink. You can win. You’ve played fair, and you’re ready to reap in the benefits. It’s been a grind, but you’re not going to give up. You will win. However, you’re not playing a board game, you’re listening to the radio. Who can even guess what will happen next?
Platform Radio Group (name not real) is running a national campaign using all of their 1000 odd regional channels in the US offering their listeners a chance to win $1,000,000! While 175 winners will be taken to a grand final event in Las Vegas, each winner will receive 15 envelopes containing 3 winning $ signs. Each contestant will open any 3 of their 15 envelopes. One or two $ signs will win smaller prizes. Three out of three $ signs will win $1,000,000!
At the end there are 175 potential winners and two $1,000,000 prizes are won by two incredibly lucky winners! Needless to say, an agency provided prize insurance to cover to Platform Radio Group against a nominal premium.
Belgica (not the real name), a popular food company has renewed one of its core brands. For the promotion of this new brand, the company has posted 500,000 coupons publicly. Customers are required to cut out and present these coupons to avail the new product for 1 eurocent instead of the usual price of 2 EUR. Belgica expects 10% of their customers to use this offer, i.e., a sales volume of 50,000 units that will be priced at 1 eurocent each. However, the promotion exceeds all expectations and the customers redeem 48% coupons, that is the equivalent of 190,000 units more than the company expected to sell. In financial terms this equals to 378,100 EUR worth of unplanned costs (loss of revenue). But the company is smart to foresee this eventuality and covers this promotion with a redemption insurance. This cover requires the insurer to compensate any lost revenue (1.99 EUR) per product, exceeding 10% of the coupon limit. Ultimately, the Insurer compensated all losses amounting to 378,100 EUR!
McAfee gave customers One Million reasons to visit their new micro site. The ‘Win a Million’ headline was used to build awareness, encourage response, increase registrations and capture data of potential business and home users. Promoted across multiple platforms including taxis, promotional leaflets, print advertising and online marketing it proved hugely engaging. After registering on the micro site customers were given up to three attempts at the Retro Space Invaders Game. The Million Dollar headline prize was also supported by smaller ancillary prizes and a leader board on the micro site kept people up to date with their progress. Originally launched to a UK audience the success of the promotion prompted a pan-European roll out in six languages!
It is true that such fun competitions were a possibility only in Europe and US till recently. Now, 5th Consulting provides companies in the UAE and the Middle East with the ability to run competitions with exciting and attractive high value prizes as part of their marketing and promotional campaigns. The prizes, which can be up to and in excess of a Million Dirhams or Dollars would normally be beyond the reach of most budgets, however for a fraction of the cost 5th Consulting will minimise the exposure and guarantee the prizes as and when they are won. All of our contests are based on a mixture of skill and probability. This means every contest could have a winner, just like the TV Show Who Wants to be a Millionaire. Whether someone wins the prize will depend on an element of skill or even chance. Knowing how often the contests are likely to be won allows us to take the risk away from the client. All of this for for a fixed cost, usually a fraction of the potential prize fund.
Prize Insurance and Fixed Fee solutions have enabled companies to offer large prizes, rewards and incentives normally beyond their budget. The Stories Book Store (not their real name) gave customers £260,000 worth of reasons to buy their Valentines gifts with a Love Story Promotion. Anyone visiting the store in the build up to Valentines was given the chance to win £5,000 a week for a year. For the chance to win, customers completed an in store registration form. They were given a list of 12 all-time great love stories and invited to select their six best reads from the list. If the customers’ six matched that of the judging panel they would walk away with £5,000 a week for a year! The promotion, run in over 200 stores throughout the UK was a great traffic driver and produced thousands of entries, capturing valuable customer data.
Visitors to real estate Show Homes can be given the chance to win instant prizes from iPads to an Audi A5 as well as purchase incentives on the range of new homes. After viewing the Show Homes, visitors can be provided scratch cards. The scratch to win section will enable customers to scratch off the panels in an attempt to find matching prize symbols. Anyone finding matching symbols could win an instant prize from am iPad to a Television, Spa Day or new Audi A5. Customers can also qualify for additional sales offers, which they could redeem on the purchase of a new home. The range of prizes and sales incentives can prove to be a tremendous draw, increasing Show Home visits across the promotional period.
Sports contests can be used by sports clubs and sponsors of clubs and sporting events to create excitement and generate brand awareness. Skill based competitions allow contestants the chance to win life changing prizes by replicating the skills of their sporting idols. Randomly selected fans can be given the chance to win contests like the “Cross Bar Challenge” during the half-time. Match day contests provide a great opportunity for local sponsors to get their name in front of the crowd and create additional revenue for the club. Alfred Dunhill, sponsor of The Open golf championship ran a Putt for a Million contest during The Open to generate awareness amongst potential customers in London city. The Telegraph newspaper randomly selected six of their readers to take part in a “Hit for a Million” competition during a Test Match at The Oval. The promotion designed to attract new Telegraph readers was promoted during the summer with lucky finalists attempting to win big in front of a capacity crowd.
Prize indemnity insurance makes it easier for companies to afford to offer high-value prizes to entice new customers and build customer loyalty. Such contests help to create excitement and increase awareness of a company’s brand.
Prize competitions are a valuable marketing tool, attracting the target sales market and potential sponsors. Prize Indemnity insurance protects the insured against their contractual liability to award a prize in the event of a win in an insured competition. 5th Consulting’s Prize Indemnity offerings are developed to fit the individual needs of clients. We have the expertise to insure prizes that are chance or skill-related. We write statistical prize indemnity risks where the probability of a loss can be mathematically ascertained as well as non-statistical prize indemnity. Have a look at how we have helped brands like Jotun and Britannia here.