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    BOGO (or “What fraternals can learn from retailers”)

    My wife works for one of America’s largest retailers. And over the years I’ve learned a good bit from her about the retail industry and the challenges it faces. Think we’re in a tough business? Check out these daily obstacles to success:

    • Cut throat competition
    • High employee turnover
    • Significant losses due to internal and external theft and fraud
    • Razor thin profit margins
    • Cyber liability

    And the list goes on. Retailers have to constantly keep current customers coming back while bringing new ones in the door in order to survive. And there is one marketing tactic that many companies use to both retain and attract customers. It’s beautiful in its simplicity and it’s called BOGO – “buy one, get one.” Everyone can understand the concept. You purchase one item and you get another for “free.” And while most of us inherently understand that nothing is ever free, BOGOs still make us feel like we’re getting a great deal.

    bogo1

    That got me to thinking… Why can’t fraternals apply a twist on the same tactic to their marketing campaigns?  I’m not suggesting that when an individual purchases a fraternal insurance certificate the society provides them a second one at no charge. I’m quite certain that this would violate basic actuarial and anti-rebating principles and result in widespread bankruptcies. (Not to mention jail terms.)

    What I’m thinking is a “Buy One, Give One” campaign that highlights the community service aspect of our unique business model. That’s right, for every certificate purchased a fraternal could make a contribution to a specific charity. Better yet, the society could provide a list of organizations that it supports to the member and let the member direct where the contribution will be made.  This accomplishes several objectives (at least from my simplistic perspective):

    • It establishes a direct link between the financial and fraternal sectors of the organization – one that agents can effectively market and one in which members (both current and new) can feel good about.
    • It can give members a much more “hands-on” ability to direct where the fraternal’s financial contributions are made.
    • It can open the door to additional volunteerism by opening the eyes of members to the connection between the society’s financial services and community services activities.
    • It provides “immediate gratification” for new (and younger!) members, allowing them to make a difference in their community as soon as they join.

    I suspect that some of you must already be doing something like this. If so, I’d love to hear about it (and I suspect other readers would, too). So tell me if and how your society is borrowing a page from retailers’ playbook and implementing the “Buy One, Give One” concept in your society’s marketing campaign by posting a comment here…

    6 Responses

    1. Beautiful twist on the bogo concept!

    2. Hey, thanks for sharing the idea Joe! This is Nate from Catholic United Financial. We run a fraternal program called the R.E.new Fund. It’s an important part of our mission to support Catholic education, so when a new member purchases life insurance, that new member can direct a $25 donation on their behalf to the Catholic school or religious education program of their choice. Since starting the program as a pilot in 2011, we’ve given over $65,000 to about 330 schools and religious education departments.

    3. Thanks Joe. I think it is a great idea and similar to ideas we have suggested to clients. However, the idea sometimes meets opposition from society lawyers or compliance officers concerned about “illegal inducement”. Their strict view is that nothing not specified in the contract may be offered. I would like to hear some compliance officers’ opinions. Where do they draw the line about what may be offered? Would it vary by state?

      • Grant, while there are a variety of rules limiting what can be offered, generally, I think most States do allow for a $25 ‘gift’. Also, since the gift is made to a school or RelEd program, it would seem less of an ‘inducement for/rebate to’ the purchaser. (I’m thinking the ‘valuable consideration’ resulting from the CUF donation would amount to no more than the potential offset on the purchasers income taxes if the donation was made in their name and they included it in their list if deductible contributions.)

        Perhaps the legal or compliance folks who offer opposition could identify the rules they are concerned about breaking, it might allow the discussion to proceed more successfully.

        And Thanks, Joe, for opening up another conversation on how to remain relevant.

    4. Great thinking! Sounds a little like Tom’s Shoes – buy one, give one. Love the concept.

    5. Glad I struck a nerve. Compliance issues aside, I think this concept has some “there there” — and connecting the dots between financial and fraternal in a clear and understandable way for prospective members should top every society’s strategic goals for 2015…jja

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