The term Unique Selling Proposition (USP) was developed by television advertising pioneer Rosser Reeves in the 1940s. The idea was to let the customer know up front exactly what made this particular product stand apart from the competition.
Rosser Reeves’ book, Reality in Advertising, explains three characteristics of a USP:
- Each advertisement must say to each reader: “Buy this product, for this specific benefit.”
- The USP must be one the competition cannot or does not offer.
- The USP must be strong enough to move the masses.
You might remember these famous slogans from big-named brands. Each one has a clear USP.
Anacin: Fast, fast, incredibly fast relief M&Ms: Melts in your mouth, not in your hand Head & Shoulders: Clinically proven to reduce dandruff FedEx: When it absolutely, positively has to be there overnight! Dominos Pizza: Fresh hot pizza delivered to your door in 30 minutes or less—or it’s free!
When marketing the reverse mortgage product, it might be useful to reconsider our own USP. How many times have we used or seen this phrase used in HECM advertising?
No payments ever, for the rest of your life, or for as long as you live in the home (as long as you pay taxes, insurance, and property charges).
It’s interesting to note that when Reverse Mortgage Funding conducted focus groups, many people responded negatively to “no payments ever.” They felt there must be a catch. They associated it with negative amortizing interest and the loss of equity. And yet, that is how our product has been advertised in countless print ads and television commercials. We know that more than 80 percent of retirees have no plans to get a reverse mortgage per last fall’s NRMLA poll. We know that despite 300,000 people turning 62 every month, an average of just 5,000 seniors closed on HECMs every month.
Maybe it’s time to change our USP. The biggest advantage of a HECM is that you control when you turn equity into cash and cash back into equity. No other loan lets you do this. Maybe we need to present the HECM as a “flexible payment mortgage.” It is up to you when you would like to make your mortgage payment.
Back in the pre-crash days, there were “Option ARMs.” Of course, they were misused and were not at all tailored or insured to deal with a market downturn. They only worked when the value of the home continued to increase. But they were popular because people liked the idea of paying each month what they wanted to pay based on their cash flow. Most seniors have a very unpredictable cash flow during retirement. There are vacations, medical expenses, the death of spouses, long-term care issues, taxes on investment withdrawals, market surprises, etc. Our incredible HECM product allows seniors to make payments when they wish to, regardless of what happens to their income, the market, interest rates and even the value of their home.
The protection, the safety, the flexibility and control of equity is something not found in any other lending or financial product. Maybe the time has come to change our USP. Lets move past the “no payments ever” slogan and replace it with something that touts this as a “flexible payment mortgage.” What do you think?
