Annuity Co-Op Marketing Idea ?

myinsurebiz · 07-23-2009, 04:15 PM

This isn't an offer (yet) - but an idea me and another guy are chewing on.

Marketing is my forte' - but I've come to hate selling since I started selling insurance. But - that's ok - since I've got other income streams.

The idea isn't new - we actually just cloned it from another group successfully doing it.

We may partner with small community banks in mid-size cities and have them offer a high yield 6 month CD @ 4.5% interest to residents in the targeted cities via print ads and direct mail efforts.

When the person calls to inquire - we set the appointment for them to drop by the office or if necessary - to visit their home or office.

At the appointment - we'll ask the prospect how much they were looking to drop into the CD. When they say $50,000 - we'll tell them that the CD program is only good for up to $10k - BUT - let us show you how you can get a better return on the rest by dropping the other $40k into various fixed or fixed indexed annuities . . .

This concept is working HUGE for the group we cloned the idea from - very huge . . .

Out of 10 prospects a week - they are averaging 4 CD's and 2 Annuities. They are going it slow at first.

The Annuities are averaging around $50k.

The only costs are the ads and the % difference between the 4.5% and what the banks going rate is - which seems to be around 1.75%.

Upside potential seems to be HUGE.

The bank gets a new customer. The bank would also share in the commissions by becoming a licensed agent / agency themselves.

Any thoughts?

Tom

moonlightandmargaritas · 07-23-2009, 04:22 PM

Originally Posted by myinsurebiz

We may partner with small community banks in mid-size cities and have them offer a high yield 6 month CD @ 4.5% interest to residents in the targeted cities via print ads and direct mail efforts.

At the appointment - we'll ask the prospect how much they were looking to drop into the CD. When they say $50,000 - we'll tell them that the CD program is only good for up to $10k - BUT - let us show you how you can get a better return on the rest by dropping the other $40k into various fixed or fixed indexed annuities . . .

Any thoughts?

Yeah, tricking them is always a great strategy Mr. Integrity.

myinsurebiz · 07-23-2009, 05:04 PM

Is that trickery Paul?

I mean - should we tell them upfront that $10k is the max?

If they ask how much they can put in PRIOR to coming for the appointment - granted it should be disclosed. But - is it trickery to not state a max?

Just curious . . .

Tom

healthagent · 07-23-2009, 05:21 PM

If the mailers and print ads make no mention of annuities and only promote the CD yet the sole intent is to sell annuities to seniors who answer the ad it's unethical at best and likely an insurance marketing violation.

I'd run that kind of marketing past the annuity carriers and the DOI.

moonlightandmargaritas · 07-23-2009, 05:22 PM

Originally Posted by myinsurebiz

Is that trickery Paul?

I mean - should we tell them upfront that $10k is the max?

If they ask how much they can put in PRIOR to coming for the appointment - granted it should be disclosed. But - is it trickery to not state a max?

Tom, there's some TV commercials running right now here in the Tampa Bay TV market for something called "Ally Bank". I believe (but don't take it to the bank) that they are the "reincarnation" of GMAC Bank.

In the commeicial, a "TV announcer-type", along with two about 6 or 7 year old little girls asks one of the girls if she would like to have a pony.

Naturally she says, "yes", and he gives her a little plastic pony. He asks the second little girl if she would like a pony, and of course she says "yes" too.

This time a real, honest to god pony comes trotting out.

The first little girl says, "hey, you didn't say I could get a real pony!" The "TV announcer" guy says, "you didn't ask."

If you are quoting a rate and a term, if you don't state the max it IS trickery.

All this kind of stuff does is get the relationship off to a start of distrust.

What's wrong with this? "We currently have a maximum CD investment of X dollars. If you have more than that you'd like to invest, we have some additional ideas you may want to consider when we talk. No obligation of course."

Quick-hit, one shot sales are built on tricks. Long-term (and much more profitable) long term relationships are built on trust.

healthagent · 07-23-2009, 05:41 PM

Swanson Automotive was all about the sale. How many sales did we get today! There was zero focus on building relationships and the entire place was about money.

Towson BMW was all about building releationships with clients and not about "how many cars did we sell today."

If you drive through Towson today you'll see the BMW dealership thriving. If you drive through Glen Burnie you'll see the Royal Farm, which is where Swanson Automotive used to be before the bulldozed the place after they went BK.

insuranceexec · 07-23-2009, 06:32 PM

Tom,

While I appreciate your enthusiasm for marketing; let me ask you, How many annuities have you sold?

The main problem with marketing is that one can not do it effectively unless they themselves have actually sold the product in mention.

Most "marketers" have never been in the trenches and do not understand the actual "art" of selling.

I personally never looked at what I did as selling. I was merely finding the client the best possible solution for their problem.

As Moon mentioned; this is the difference between a long term relationship, and a quick buck. What are you truly after?

I personally think it is appalling, but then again; what do I know? (Rhetorical Question) LOL

As it was discussed; contact your DOI and see what they have to say about it. I hope this helps.

Charpress · 07-23-2009, 07:25 PM

Are there seriously any banks that would buy into this?

Virtually all the banks we have locally are the big operations, like Chase. I can't imagine them touching this with a very long pole. They never do squat before running everything past the lawyers (off in some mysterious place) and everyone else up the food chain.

Before taking any more time, see if you get a bank involved. I bet you don't.

insuranceexec · 07-23-2009, 08:34 PM

Originally Posted by Charpress

Are there seriously any banks that would buy into this?

Virtually all the banks we have locally are the big operations, like Chase. I can't imagine them touching this with a very long pole. They never do squat before running everything past the lawyers (off in some mysterious place) and everyone else up the food chain.

Before taking any more time, see if you get a bank involved. I bet you don't.

Even if the bank would buy into it; what about the DOI allowing it?

arnguy · 07-23-2009, 08:47 PM

Sounds like a "smoke and mirrors" marketing tactic to me, Tom.

healthagent · 07-23-2009, 08:55 PM

Not a shot any bank would buy into this. If Tom wants to test it out, go hit around 10 banks tomorrow, let me know how it goes.

GreenSky · 07-23-2009, 10:42 PM

Well I think it's a great idea. Especially when the first lawsuit hits and Tom loses the trailer.

Rick

dgoldenz · 07-23-2009, 11:18 PM

The old bait and switch....what are you, a used car dealer?

jmhopkins40 · 07-24-2009, 12:46 AM

Originally Posted by arnguy

Sounds like a "smoke and mirrors" marketing tactic to me, Tom.

i ran a concept just like this past 10 banks "well known". 7 out of 10 approved and participated. DOI's in 4 states had no legal objections as it was not federally regulated like senior medicare supp apmt issues

I HAVE SEEN many genius ideas regarding medd supps and seniors to get in the door....then pre-targeting LTC and annuities sales also. MOST ALL GOT APPLAUSE ON THIS SITE.

BOTTOM LINE.....Did you ultimately do a LEGAL service for the client that leaves them better than they were when you met them WITHOUT lyiing to them or using high pressure closes on the weak and old.

THE HIGH PRESSURE closes on the meak and old is common practice and praised by many that makes comments on this and other sites....SOME EVEN SELL THEIR TACTICS ON THIS SITE!!!!

padthaiforlunch · 07-24-2009, 04:16 AM

Originally Posted by Charpress

Are there seriously any banks that would buy into this?

Virtually all the banks we have locally are the big operations, like Chase. I can't imagine them touching this with a very long pole. They never do squat before running everything past the lawyers (off in some mysterious place) and everyone else up the food chain.

Before taking any more time, see if you get a bank involved. I bet you don't.

Nothing new about this. Some internet banks will give you overrides on the CD and offer a high rate since they have no front office. You sell it out of your place.

I believe there is already an FMO out there who uses this as their special marketing tool to get you more annuity sales. Forget how much they want for it.

indaville · 07-24-2009, 11:14 AM

If you have to ask "is it ethical" it probably is not.

That being said, I think if you had more disclosure about your true intent on the ad/mail piece then you might be ok. I have seen ads in our local paper offering higher CD rates than most, but when you read the ad you see that they also deal in annuities. That type of ad in my opinion is ok because the customer knows what they are getting when they set the appointment.

Matt

myinsurebiz · 07-24-2009, 11:34 AM

Originally Posted by insuranceexec

Tom,

While I appreciate your enthusiasm for marketing; let me ask you, How many annuities have you sold?

The main problem with marketing is that one can not do it effectively unless they themselves have actually sold the product in mention.

[COLOR=Navy]I'm not the selling agent. We have agents in our group OR those that partner with us for our marketing program are the selling agents.

I'm just going to set up the program and handle the marketing and administration.[/COLOR]

Originally Posted by Charpress

Are there seriously any banks that would buy into this?

[COLOR=Navy]I have deals ready to go with small community banks in several mid-size cities.

We focus on these because there is less red tape and they are eager to get new customers.

We aren't scamming or bait and switching. We offer a 4.5% 6 month CD and that's what they get. Should a prospect "inquire" about a maximum, etc - certainly full disclosure would be made.

We aren't out to hurt anyone - just get in front of people who have resources that would be a great fit for our fixed / indexed annuities.[/COLOR]

Originally Posted by arnguy

Sounds like a "smoke and mirrors" marketing tactic to me, Tom.

[COLOR=Navy]Why?

They will get the 4.5% CD - we just limit the amount they can out in. Then - being a good citizen - show them how a high yield fixed or indexed annuity may be a good fit for them to safe keep their money.[/COLOR]

Originally Posted by healthagent

Not a shot any bank would buy into this. If Tom wants to test it out, go hit around 10 banks tomorrow, let me know how it goes.

[COLOR=Navy]Should we decide to move forward and make the concept work ethically and morally - you know I'll shout it from the roof tops.[/COLOR]

Originally Posted by jmhopkins40

i ran a concept just like this past 10 banks "well known". 7 out of 10 approved and participated. DOI's in 4 states had no legal objections as it was not federally regulated like senior medicare supp apmt issues

I HAVE SEEN many genius ideas regarding medd supps and seniors to get in the door....then pre-targeting LTC and annuities sales also. MOST ALL GOT APPLAUSE ON THIS SITE.

BOTTOM LINE.....Did you ultimately do a LEGAL service for the client that leaves them better than they were when you met them WITHOUT lyiing to them or using high pressure closes on the weak and old.

THE HIGH PRESSURE closes on the meak and old is common practice and praised by many that makes comments on this and other sites....SOME EVEN SELL THEIR TACTICS ON THIS SITE!!!!

[COLOR=Navy]Exactly . . .[/COLOR]

Originally Posted by padthaiforlunch

I believe there is already an FMO out there who uses this as their special marketing tool to get you more annuity sales. Forget how much they want for it.

[COLOR=Navy]Yes - there are a few. We just took the best components from all of them and are compiling them into one concept.

We are going to start small - in a mid-size city in Tennessee. Work out the kinks, then offer our "System" to others that market annuities and have a need to meet with quality clients that are seeking methods to safe keep their money.[/COLOR]

Tom

insuranceexec · 07-24-2009, 12:06 PM

Tom,

Assuming all is exactly like you said, and is above board.

The average cost per lead would still be greater than $137 each

That is applying the percent difference of 1.75%; which is actually being paid by the bank.

And the 4.5% that the banks have agreed to allow you to advertise at.

(Mathematicians please note: 6 month CD; so the APY is 1/2)

Then you throw in the cost of the ad. I can see $145-$150 easily, per lead.

That is a pretty expensive lead. Do you agree?

myinsurebiz · 07-24-2009, 12:20 PM

Yes - it's expensive - but - also very rewarding.

If we use the competitors success numbers - this would be the break down:

3 Ads @ $400 each for the week = $1,200

Direct Mail Expense - (none - we utilize my 0 cost program) - p.s. - the competitor doesn't use direct mail.

CD Difference %. We will be getting the bank to do 1.75% - which leaves us with 2.75%.

If they put in $10k - our 2.75% cost would be approx $137.50 for each of the 4 projected CD sales.

Executive Office Space is $200 for that week.

Receptionist is $500 for that week.

Telecommunications System is $20 for that week.

So - total cost to us to sell 2 - $50k annuities is approx $2470.

Annuity Commissions - 2 - $50k Annuities:

Using one of our middle insurance carriers - they pay us a 6.5% commission.

Our Gross Income would be - $6,500

Minus the $2470 in expenses - leaves us a net profit of - $4030.

The selling agent gets 50%, the Funder gets 25%, the Marketing Team gets 20% and the Bank gets 5% (if licensed).

The selling agent can also be the Funder and now receive 75%.

All splits are after expenses.

Tom

Originally Posted by insuranceexec

Tom,

Assuming all is exactly like you said, and is above board.

The average cost per lead would still be greater than $137 each

That is applying the percent difference of 1.75%; which is actually being paid by the bank.

And the 4.5% that the banks have agreed to allow you to advertise at.

(Mathematicians please note: 6 month CD; so the APY is 1/2)

Then you throw in the cost of the ad. I can see $145-$150 easily, per lead.

That is a pretty expensive lead. Do you agree?

Charpress · 07-24-2009, 12:30 PM

Local bank ad for 4% CD, the fine print (extemely fine print):

"You must have an account with us and must apply for and be approved for our credit card. You must charge at least five times per month on our card. You must, etc etc. If in any month you do not meet these requirements, then your CD rate will be .5% retroactive to the date of investment."

Sounds good to me.

Seriously, this has been running here lately in a very large ad with 4% and CD in about 72 pt type and the fine print in about 6 pt type. I bet they bring in quite a few people.