The Canadian Home Income Plan (CHIP) wants elderly Canadians to get off their assets – namely, their already bought-and-paid-for houses.
Not the easiest selling proposition. After all, seniors grew up during the Depression. They have, for the most part, eschewed debt and, as a rule, are suspicious of anyone they suspect of being a smooth-talking sharpie trying to perpetuate some sort of flim-flam.
As a consequence, trying to get them to consider a ‘reverse mortgage’ – whereby CHIP pays the homeowner a lump sum or monthly income in return for a stake in the equity in their home – is about as easy as convincing a healthy teenaged boy he’ll suffer from impotence at some point in his life. It goes against everything they know to be true.
As Sian Owen, senior vice-president of marketing and customer services for CHIP, puts it: ‘We are selling a product that seems to run counter to everything we all work for – a mortgage-free home.’
So where to begin?
‘We look at our prospective customers with respect to the key events that influence their view of finances, and debt in particular,’ says Owen. ‘We then use that information to better help customers understand how a reverse mortgage can assist them with living today and enjoying greater financial freedom while remaining right in their own home.’
CHIP’s segmentation strategy is relatively straightforward, says Owen, based mainly on the age of the prospect.
Apart from that, it doesn’t really matter where the person is located, what they did for a living, or whether they prefer gardening to sailing or skiing. What all of these prospects have in common, says Owen, is the appetite for extra cash, and the desire to be able to stay in their homes for as long as they want. So that is precisely what the copy emphasizes: money to do the things you want – take a trip, buy a car, renovate your home, pay for in-home care – with guaranteed ownership and no repayments as long as you live there. The tagline for the campaign? ‘You’re right at home.’
CHIP does not tailor the product for the segment, Owen continues. However, the program has been designed in such a way that the older a homeowner is, the more equity they can draw against – up to 40%.
‘Additionally, we do not need to customize the product, because it is inherently flexible,’ she adds. ‘Seniors can use the proceeds of their reverse mortgages at their discretion. The senior may choose to invest half of the proceeds, use some to repair or renovate their home and use a small amount of the proceeds to afford the trip they have always wanted to take. We encourage seniors to consult with a financial advisor to select the best type of investment for their needs.’
To date, CHIP, a privately held company, has arranged more than $150 million in reverse mortgages. And Sachi Mukerji, president of Grey Direct, the Toronto-based agency that’s handling CHIP’s direct response advertising, says it’s a growing market.
‘If you look at the demographics, the population of Canada is aging quite rapidly,’ says Mukerji. ‘It’s also aging differently. There are more people today who have larger homes who are empty nesters. There are also more people who have paid off their debts and have big assets in the property they own.’
Mukerji says the $5-million account win, coming just weeks before Sprint Canada announced it was withdrawing its business from Grey Advertising (see sidebar), is one of the best the agency’s ever landed.
‘It’s not the biggest,’ he says, ‘but it gives us an opportunity to do what we are really good at doing, and that is direct marketing right across the board – multimedia, multi-layered direct response advertising. We’ll be building a brand while we build a customer base.’
CHIP wanted the marketing effort to be direct response, regardless of media. ‘We’ll use all media available,’ says Owen. ‘But we’ll rely most heavily on television and print to get our message out to our various publics, which includes seniors, bank employees and other financial advisors.’
She added that direct response TV will be ‘critical’ to the program’s success. The television and radio campaign started earlier this month, with print ads to follow in February. All feature a toll-free information number (1-888-749-9786) and Web site address: www.chip.ca.
‘We recognize that print really goes a long way with an aging population, because they read more than we do,’ says Brenda McNeilly, creative director for Grey Direct’s CHIP account. ‘There is a real credibility there.’
Direct mail will also be used, but Mukerji downplays its importance.
‘To be quite honest, we are having a few problems with direct mail,’ he says. ‘We aren’t getting the numbers we want. The targeting is so precise and has become so sharp in its set-up that we are just not getting the numbers.
‘So we are looking at loosening up and widening the base, or perhaps using direct mail initially to fulfill requests for information.’
Ultimately, Owen’s marching orders to Grey are clear: ‘We expect them to know and champion our customers, and to aggressively challenge the status quo in order that we optimize every dollar we spend.’
