A Winning Cross-Promotional Strategy
As a small business owner, you probably don’t have a large marketing budget, even if you are using the Reverse Focus turnkey system.
So let’s consider creative partnerships. Retail stores use cross-promotion all the time: buy this product, get that one at 20 percent off. Think of yourself as Business 1. What is an ideal “Business 2” for you? One whose customers or clients are also your target market?
Come up with a complementary service for your reverse mortgage business and you’ve found a potential partner. Approach this business for a cross-promotional sponsorship, and watch your business blossom from referrals.
Here’s how a local food service business turned pizza into dough:
The owner of a pizzeria knew hotels would be a good fit for ongoing customers; people always eat out when traveling, and if they don’t know the area, they will rely heavily on recommendations or advertising to find appropriate restaurants and places that deliver.
What does every hotel visitor receive upon check-in? A room key card. So the astute pizza owner approached the company that produced room key cards for local hotels, and said he wanted to advertise on key cards at local hotels.
Within two weeks, he had a deal with two local hotels, from which he now receives the bulk of his nightly orders.
How could this happen so easily? The room key card company finds advertisers, such as the pizza shop, then offers free room keys to hotels. The advertisers pay the key card cost, the hotel gets free room keys, the pizza shop gets superior targeted advertising — and the key company gets more orders. It’s a win for all parties involved.
How Can This Work for Your Reverse Mortgage Business?
To put this referral system to work as a marketing practice:
- Make a list of businesses/organizations whose clients are also your ideal prospects. Financial planners, CPAs, elder law attorneys, senior centers, theatres, resorts/spas, audiologists…the list can be as expansive as your imagination and local market.
- Of the best possibilities from this list (those that are local and have high traffic or high repeat business), which ones give away or sell low-cost items to their customer base?
- Select one business, and approach them for a promotional sponsorship: you will pay for the giveaway item in exchange for advertising.
- Business 2 (your complementary business partner) gets their customer item for free, in exchange for letting you (Business 1) advertise on it. In practice, this looks like: a theatre distributing playbills that say, “Printing compliments of (your business name at the bottom), or a senior center providing visitors with wall calendars imprinted with your business name and logo.
It’s a win-win-win. Business 2 gets free, essential merchandise. You build your reverse mortgage business. The company that makes the item gets more referrals. And everybody smiles all the way to the bank.
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7 Comments
Oh the “regulators” will have a field day with this. It shouldn’t take them long to identify this strategy as a kick back or prohibited “referral fee”, or some illicit, untoward “undisclosed business relationship” that needs to be fined or penalized.
Run this by your legal counsel AND CFPB and your State Regulator first or be prepared to suffer the consequences.
Jim,
We must always be aware of possible RESPA violations when trying to build a cross promotion strategy. Another possible option is an agreement to mutually promote each other’s businesses respectively.
Hi Shannon,
I wouldn’t begin to hazard a guess in this oftentimes murky, vague and ambiguous regulatory environment.
I’ll be curious to see the response from all the regulators to inquiries about this and I look forward to following your efforts to clarify what’s acceptable and what isn’t.
Thank you Jim. Mirky is an apt word to describe the present state of regulations for mortgage professionals.
We have seen some of this partnering in the past, particularly with annuity and long-term care insurance salespeople. The result was not positive for the industry.
Then there is the image issue. In LA we have a great restaurant that has been around for years. One of our mayors owned it at one time. At first glance why not partner with a restaurant which has been around for years and has a great reputation in the community? The answer is, almost all employees are felons. While it is great that there is a place which is helping in the reformation of inmates, that image probably does not go well with originating HECMs.
When was the last time you can remember that MetLife partnered with a pizza restaurant or a doughnut shop to sell financial products? Just remember that every time you partner with someone else, their image is rubbing off on you as well as your image on them. It is these intangibles which can have a long time impact on your business.
My former CPA firm looked at getting started in auditing publicly traded companies. To get started we looked at affiliating with a small firm already doing that work. As we were in the midst of completing the agreements, we found out in our due diligence that most of his clients were convicted financial services felons who could not find work in that field any longer. While some wrong doing might not hurt the reputation of his firm, it could easily do damage to our own. Within hours of discovery, we terminated all affiliation with that firm.
While the reaction of regulatory bodies is very important, so are any adverse outcomes to “partnering.” While it is hard to gain and maintain a great reputation, it is very easy to lose it.
I should add that the opinions expressed are not necessarily those of Reverse Mortgage Solutions or its affiliates.
Hi James ~
You make an excellent point about due diligence. The pizza example is of course inappropriate for the reverse mortgage industry; it was for illustrative purposes only. The non-profit arena, however, might lend itself to a viable cross-sector partnership, if a HECM professional chose to sponsor a cause they care about, e.g., a fundraiser for an age-related health condition.
An ad for a partnership-building business event in my local business magazine states, “There’s nothing in business today that provides as much economic and social benefit, on as many levels, to as many stakeholders, as a strategic partnership between the non-profit and for-profit sectors when focused on the greater good.”
Hope this adds clarity to the post.