Complete Guide to Prize Indemnity Insurance

Prize Indemnity Insurance - Maximus Go Big Promotion

Written by spokeinsure

Spoke Insure are a specialist team of brokers helping companies pull off some of the biggest promotions, events, and films across the world. Spoke are part of a global specialist network that have insured 160,000+ events, promotions and films.

27 April 2022

How To Run A Competition in Australia using Prize Indemnity Insurance

So, you want to grow your business through an amazing promotion. Promotional campaigns have the potential to skyrocket your brand and your business — so we totally get the allure of these.

We’re really big on promotions for a few reasons. The right promotion, planned in accordance with your goals, doesn’t just have the ability to drive engagement and sales — it can reposition your brand.

The right promotion is fun too — fun in a way that resonates with your ideal target audience and sets you apart from a sea of competitors.

With a well-planned promotion, you can achieve both brand loyalty and business growth.

So, how do you pull off the perfect promotion? Well, there are a few things to consider:

  • Your goals for the promotion — what are you hoping to achieve? An increase in sales? A bigger social following?
  • The type of promotion — what kind of promotion will achieve your goals? Is it realistic for your business?
  • Prize indemnity insurance — what happens if someone wins the big prize? Have you taken out a prize indemnity insurance policy?
  • All the nitty-gritty bits — how will you pay for it? How will you market the promotion? How will winners be contacted?

Don’t stress though, we’re about to take you through it all.

 

Why run a promotion? What should your goal be?

The first step in running a successful promotion is working out why you’re doing it. As in, what’s the goal?

To identify your goal though, you’ll need to know what sort of things you can achieve with a promotion as well as why you’re opting for a promotion over a classic marketing campaign.

Work within a fixed budget, knowing larger prizes are covered by prize indemnity insurance. Of course, you want to take a slice of it for your business.

Our favourite thing about promotional competitions is that they’re so safe. You can work within a fixed budget, understanding exactly what you have to cover and which larger prizes will be covered by your prize indemnity insurance policy.

Engage your clientele with your brand, suppliers & sponsors

Engagement is a perk that comes with almost any promotional campaign. These campaigns are usually playful, fun, and engaging by nature — so it’s hard to go wrong.

Customers are incentivised to engage with you or your content for the incentive of the prize. But there’s often the two-fold benefit of additional engagement from the interest your promotion has stirred up.

Take this sport-based promotion as an example. Land Rover has run a promotion where at a Wallabies rugby game, they’ve given a lucky entrant the opportunity to win a Discovery Sport. The entrant has to kick the ball into the boot of the car to win it.

Not only has Land Rover drummed up customer engagement by running the competition for the chance to kick, but they’ve also created engagement and emotional investment in what happens — will he win it or won’t he?

That’s a whole stadium of additional engagement.

Expand your social media presence

We’ve all seen these. Go into the draw to win XYZ — just follow our page, like this post, and share it.

It’s a simple premise but with the right prize, offering the right kind of value, this can come with astronomical value for your business.

This is an especially smart promotion if the prize you’re offering qualifies the customer. As in, you’re receiving entries for the competition from people who already want or need your product.

Capture data & further develop your marketing tools

As businesses and marketing progress, data is becoming more and more valuable.

Promotional competitions can be used as an incentive for sharing data. Think customer feedback, contact details for further promotions, and valuable insights into your target market.

This data directly impacts your future marketing campaigns and arms you with valuable knowledge about your target market.

Achieve measurable ROI

A well-planned promotion with an on-point structure will deliver a measurable return on investment.

Whether via the entries, the trackable shares, or tracked purchases, you can trace your promotion back to the start. It means you know exactly where you’ve succeeded in your promotion and what that translates to in dollars.

Change your social status & messaging

Especially with games of skill and random promotions like weather games, you have an opportunity to change how your audience sees you.

We don’t just mean growing your brand and following either — although, promotions are proven to do just that.

What we mean is, you can change or cement how your brand is seen. Take Red Lion Hotel’s promotion as an example.

They simply put out a call, letting locals know that as long as the temperature was above 45 degrees, the beers were on them.

It’s a fun promotion that motivates people to visit their venue in the moment. However, a generous promotion like this creates brand loyalty too.

The promotion stirred up media attention too — of course. This all trickles into a perception that Red Lion Hotel is a place for locals to enjoy and that they don’t take themselves too seriously.

Exactly what you want from a local pub.

Engage clientele from competitor establishments

Brand loyalty is dwindling and consumers can be nabbed from their favourite brands — no matter how long they’ve stayed true to them.

Encourage your target market to jump ship with an offer they simply can’t refuse.

 

So, what are your goals?

Do you want to increase your social media following? Encourage an increase in sales? Rebrand as a youthful and cool brand that doesn’t take life too seriously? Define your goals now, so you know exactly what kind of promotion you need to run to grow your brand how you want to. You might want to look at the list of benefits and potential goals in the section above and define one key goal for your promotion with some other sub-goals. Your sub-goals are those flow-on effects where you think, “Yeah, that’d be nice too!”

 

Different Promotion Types & Whether They’re For You

Here are a bunch of different types of promotions that can be run using prize indemnity insurance. We’ve broken these down with the pros and cons of each, so you can work out which type is best for your specific goals.

 

Games of Chance

Games of chance are all about luck. It means no real skill is required to win the prize — just good luck.

Here’s a fun example of a game of chance with $1 million on the line.

The Pros

Games of chance are usually a great way to drive sales. You can offer your customers an incentive to purchase your product with a game of chance promotion. When they purchase a certain product or use a certain membership for a purchase, they’ll go in the draw to win big.

 

The Cons

Games of chance can be really fun and engaging. However, given it’s a game of chance, winning that major prize (the one that’s covered by prize indemnity insurance) isn’t guaranteed — which can dilute that incentive a little bit. On the flip though, this gives you a promising opportunity to offer a generous consolation prize… Making it a no-brainer for your target audience.

Wheel Spin

A randomly selected customer is given the opportunity to spin a wheel for a chance to win a huge prize. These are usually pretty fun, given that each segment of the wheel offers a totally different prize.

Envelope Draw

One envelope has a huge prize in it. You select a contestant at random and they get to pick from a bucket-full of envelopes — with hopes of picking the right one.

Dice Roll

A randomly selected contestant gets the chance to roll dice from a cup. They have the chance to win a huge prize if the dice lands on the right number or a combination of numbers.

Draw ‘N Match

One of your lucky customers is selected and given the opportunity to draw cards and match them to other cards. If they match a certain number of pairs, they win a huge prize.

Sports Score Predictions

One contestant is selected and given the opportunity to guess the score of a sporting game. If they guess the score correctly, they can win a huge prize.

 

Games of Skill

A game of skill is a game that requires some kind of skill to win it. These are usually sport-based. So, kicking a ball to hit a target, serving a tennis ball through a target, or kicking a ball to hit a cross bar – all protected by, you said it, prize indemnity insurance.

An example of a game of skill is Toyo Tyres’ Kick for Cash. Contestants get the chance to win $100,000 by kicking a footy into a stack of four tyres. Watch a GWS Giants fan have a crack below.

The Pros

Games of skill are really great ways to leverage sponsorship deals. These are usually sport-based and typically take place at big sporting events. So, it makes sense for a sponsor of a team, code, or stadium to take that sponsorship further through a big promotion.

Games of skill offer an opportunity to drive sales in the promotional period leading up to the game and then a further opportunity of additional advertisement. These promotions are highly engaging and offer you the opportunity to reposition your brand.

 

The Cons

Games of skill can be a lot of fun and create an opportunity to really engage with your customers but there is a con… The con with games of skill is that they can have lower entry rates, due to there still being an effort required on their part — as opposed to games of chance.

It means these aren’t always the best if product sales and data capture are a couple of your bigger priorities.

Kick for Cash

A Kick for Cash promotion is just like in the video above. The contestant is drawn at random and asked to kick a ball either a certain distance, through a target, or at a target.

Cross Bar Kicking Challenge

A randomly selected contestant is given the opportunity to kick a ball and hit the cross bar for the chance to win a big prize.

Target Throw

One contestant is selected at random and given the opportunity to throw a ball through or into a target to win a big prize.

Target Kick

A randomly selected contestant is offered the opportunity to kick a ball through or into a target for the chance to win a huge prize.

Full/Half-Court Basketball Shot

A randomly selected contestant is given the chance to score from half or full court distance to win a massive prize.

Golf Hole-In-One Prizes

Brand sponsors run a promotion where a large prize is on offer when someone hits a hole-in-one on their sponsored hole. These promotions are perfect for corporate or charity golf days.

 

Weather Promotions

Weather promotions can be a lot of fun, especially if they’re relevant to the weather. We touched earlier on Adelaide’s Red Lion Hotel promotion, pouring out free beers for the community as long as the temperature stayed above 45 degrees.

It’s a great promotion because hot days and beer go hand-in-hand.

These are a fun way to be different, reposition your brand, and drive sales by creatively using prize indemnity insurance.

The Pros

Weather promotions are a fun way to increase sales, encourage visits to your venue, and engage with your audience.

Particularly promotions that are based around “the worse it gets, the better our offer.” It sends a message that you’re in it with them.

 

The Cons

Weather promotions can become distasteful if based around severe weather events — like cyclones and floods. So it’s important to keep those events in mind if you’re offering discounts for rainfall.

Watch the Weather

The Watch the Weather game is a promotion based on the weather. As an example, if the temperature exceeds 40 degrees on boxing day at the MCG, then all ticket holders receive a $20 voucher to spend in the Cricket Australia shop.

 

Consumer Redemption Promotions

Consumer redemption promotions (or Trade Promotions) are all about the customer getting something for less or for free when they make a purchase. These are usually based on a predetermined mechanic, like buying something during a promotional period to win a guaranteed prize.

Promotion Insurance

 

The Pros

These promotions are proven to seriously drive sales.

 

The Cons

These promotions have the opportunity to perform “too well”. Pssst. That’s where prize indemnity insurance comes in, but we’ll get to that.

Collect ‘N Get

Customers collect receipts from eligible products purchased to win a gift card.

Gift with Purchase

Customers purchase a product and get a gift for free.

Buy One Get One Free

The customer buys one product and gets another one free.

Cashback Offers

Customers buy a product and enter online to get some of their cash back.

Instant WIN

The customer buys a product and enters for their chance to win an instant prize.

 

Factorial Promotions

Factorial promotions are just like they sound — promotions based on factors. They usually have to correctly predict a predetermined number of factors to win a prize.

The Pros

These promotions usually direct the customer to buy a product, provide some data via your website, and can leverage sponsorships.

 

The Cons

While these promotions are still fun, the entries are privately completed and there’s less of a spectacle around the winner, unlike a Game of Skill promotion. It means it’s not ideal for fan or audience engagement.

Predict Top X Finishing Spots in Sport

Entrants select certain factors in the correct order to win a major prize. For example, correctly select the finishing order of all teams on the AFL ladder.

If you’re ready to get stuck into a promotion, we definitely recommend checking out our article, Complete Guide to Incentive Marketing.

 

Let’s Talk Prize Indemnity Insurance

All of these different kinds of promotions come with a bit of risk. That’s where prize indemnity insurance comes in.

Prize indemnity insurance companies like Spoke Insure handle that risk for you, allowing you to leverage a modest budget and as a result, increase your value as a business.

No company actually has the spare budget floating around to be offering million dollar cash prizes.

Yeah, not even those multi-national companies you see pushing these promotions on the regular.

All you have to do is come to us with your promotion idea and we’ll walk you through the logistics of running that promotion.

We’ll have our mathematicians crunch the numbers and we’ll come up with the odds of winning your promotion. You receive a set policy price covering the prize indemnity insurance that you pay to us.

Then, if someone wins that massive cash prize, the prize indemnity insurance policy is ready to pay it out.

Basically, you pay us a small premium to take on all the risk of your promotion for you. It means you know exactly how much your promotion will cost you, without the stress of the outcome of the promotion.

 

What is Prize Indemnity Insurance?

Prize indemnity insurance is specialist insurance for promotional campaigns in which everyday companies award attractive and expensive prizes to one or more contestants who enter a promotion, should they win a preset chance-based or skill-based prize game.

It is an insurance policy which transfers the substantial financial risk involved with having to pay out a large prize award.

Typical insured prizes includes cars, vacations or large cash payouts. Prize indemnity insurance is also known as promotion insurance.

There are different kinds of prize indemnity insurance options available to cover you:

 

What to consider before you launch your promotion

Other than of course, your prize indemnity insurance, there are a few things to consider before you launch your promotion.

Having a clear idea of exactly how you want to run your promotion and what you want to achieve will give you a greater chance of success.

Your Goals

Have a clear idea of your goals. What are you hoping to achieve?

Here are a few ideas:

  • Sales
  • Leads
  • Subscriptions
  • Customer Ratings
  • Social Media Engagement (likes, follows, comments)
  • Referrals
  • Downloads
The Odds of Winning

You should have at least a rough idea of what the odds for your competition will look like. Don’t worry, we know math can be intimidating, so we have our own mathematicians here to help you crunch the real numbers.

But consider your promotion and the likelihood of winning. You’ll have a hard time taking out a prize indemnity insurance policy if one in five entries is bound to win a $50k cash prize.

So, remember to be realistic in your ideas.

The Prize

What’s the prize? A lump sum of cash? A boat? A car? A year of your product for free?

It’s important to note that 74 per cent of people prefer cash. You could offer a car valued at $100,000 or a cash prize of $50,000 and most people will still prefer the cash option.

Your Budget

How much do you have to spend on your campaign?

Remember, the prize indemnity insurance policy doesn’t cover all the winnings. You may have to foot the bill for those smaller consolation prizes or free products of yours.

Oh, and you’ll need a sturdy marketing budget (to get your promotion in front of consumers) so people actually enter the promotion.

How will you communicate?

How will customers find out about your competition?

Will you be updating product packaging? Updating your website? Running a national TV and radio campaign?

Entries and interest will be essential to the success of your promotion, so it’s important it’s marketed well.

Anything else?

Our brokers are always happy to walk you through these kinds of details when we consult with you but here’s a list of other things you might want to think about.

  • Different states have different legislations
  • Some states have stricter rules around alcohol promotions
  • Cash is king — 74% of people prefer cash prizes
  • Integrity is important — entrants need to know the prize exists and will be awarded
  • Make it fun — for you, your brand and your audience

 

Book your free 30-minute consultation

Book your 30-minute free prize indemnity insurance consultation to discover what your business could do with the help of prize indemnity insurance.

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