Contests and Sweepstakes - Incentive Marketing Association

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8.5
Consumer Incentive Program Series
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Contests & Sweepstakes
FOCUS
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Guidelines for including
structuring and communicating
contest offers.
By Rodger Stotz, CPIM, Maritz Inc., and Bruce Bolger, CPIM, Selling
Communications, Inc.
Contest Guidelines
Contests can be as simple as a small-scale contest for employees or as
souped-up as a national consumer campaign. The following provides
some guidelines.
Have Enough Staff In Place. Having enough staff available and
trained to respond in a timely way to your Web site traffic is critical
You can alienate a prospect by failing to respond promptly to an email message or a request for information.
Respect Privacy. If you ask people to register, tell them what you
intend to do with their personal information, and keep your promise.
Consider Skills Based Interactions. For drama, few things beat a
contest of skill. Think Olympics. Think Academy Awards. Both pit
competitors who are tops in their field; both produce moments of
breathless suspense.
Why not steal a little of that drama for your company? Whether you’re
looking to build excitement around a product, motivate employees, stir
up some publicity, boost sales or cultivate loyal customers or attract
new ones, contests can be a powerful promotion technique. And they
can be as simple as a small-scale contest for employees or as soupedup as a national consumer campaign.
Definitions
THE INCENTIVE MARKETING ASSOCIATION
There’s often confusion about how a contest differs from a
sweepstakes or a lottery. Basically, the difference hinges on three
factors: prize, chance and consideration or purchase.
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Prize. Anything of value awarded to winners, even if the value is
nominal.
Chance. An occasion where winners are selected by a random process.
Consideration or purchase. What an entrant must do to participate in
a contest; can be monetary or non-monetary. For example, a customer
must buy the sponsor’s product and show proof of purchase with
entry, or the customer must answer a number of survey questions in
order to qualify for entry.
Combining Prize, Chance
and Consideration or
Purchase
These three elements can be combined in the following ways:
Lottery. A promotion in which all three of the elements are present. In
the U.S., a lottery must be state operated to be legal.
Sweepstakes. A game in which consideration is eliminated. No
purchase is required to enter.
Contest. A game in which chance is eliminated. Winners are chosen
according to predetermined criteria of skills, such as writing the best
essay or reaching a sales goal.
Goals Of Contests
Versatility is one of the strengths of contests as a promotional tool.
Contests can be aimed at consumers, employees or
dealers/distributors, and they can be crafted to achieve a variety of
goals, covered next.
Generate Publicity. Contests are a great way to draw attention to your
company or your brand. You can announce the results in the media,
and winners are often quoted. The ceremony for awarding prizes is a
natural for media coverage. One cosmetics company enhanced its
public relations effort by sponsoring a contest for models. The media
were eager to interview and photograph the beautiful winner, who was
featured in the company’s next ad campaign.
Produce A Spike In Sales. If consumers must make a purchase to
enter the contest, sales can be expected to shoot up.
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Reward Loyal Customers. Give customers who already love your
product or company a reason to stay loyal and involved. Boating
magazine, for example, runs an annual Best Boat Name contest for
readers (yielding such winners as Marlin Monroe and Seas the Day).
The contest is fun, heightens a sense of community among readers and
makes for great copy.
Spur Creative Thinking. Contests can help spark creativity to name a
product, come up with a slogan or find solutions to problems
Example Contest
The Castle Group, a Boston public relations agency, holds a Hit of the
Week competition (a hit, in PR parlance, means obtaining press
coverage for a client). Prizes, awarded quarterly, include theater
tickets, cash and an extra vacation day. The program sparks friendly
competition among account teams and teaches junior employees how
to think outside the box.
Value In Sales
Incentive Efforts
Contests and sweepstakes have their role in programs designed to
motivate salespeople, distributors and dealers as well. For example, a
contest can be quite effective in spurring sales representatives to push
your product just a little harder. Consider the case of a software
manufacturer that ran a three-month program for resellers around a
boxing theme. Goals were to increase sales, boost the number of
dealers stocking the company’s products and train dealer salespeople
to sell the products. Prizes included tickets to a championship boxing
match.
Additional Uses
Additional uses for contests include:
Creating excitement around a brand. Draw consumer attention to
your product by creating brand recognition, awareness of features and
benefits, and the impulse to buy.
Driving traffic to a Web site. A contest can be used to collect e-mail
addresses of entrants or simply get people to visit the site and see your
marketing messages.
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When To Avoid
Contests
Contests can make a lively contribution to a wide variety of marketing
programs, but they may not be the answer in the following situations:
When your budget is limited. If you’re targeting consumers, contests
are generally more expensive to run than sweepstakes, because
processing and evaluating entries is more time-consuming and
expensive.
When you want the largest possible number of entries. In most cases,
a contest will draw fewer contestants than a sweepstakes, because
more effort is required to enter.
Critical Issues
When creating a contest, pay close attention to the following six
issues.
1. Criteria
It is essential that criteria for determining winners be spelled out
clearly, both for judges and for entrants. In a photo contest, for
example, what constitutes a prizewinner: unusual subject manner,
technical perfection, artistic merit, suitability for publishing?
For employee contests, clear-cut criteria are especially important.
Employee-of-the-Month contests are great, but unless specific
guidelines are determined for how the winner will be chosen (say,
exceeding quality goals or taking on a significant project outside
regular duties), employees will be quick to suspect that the contest is
rigged.
It’s always a good idea to structure criteria so that the same person
doesn’t win every time. With salespeople, for example, peg the contest
on the percentage increase over last year’s sales, not total sales.
2. Prizes
Offer something appropriate for your target audience and make it
exciting.
3. Judges
Aim for a cross section of expertise appropriate to the theme of the
contest.
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4. Legal Issues
Consumer contests are subject to regulations that employee programs
are not. For consumer contests, it is essential that you consult an
attorney or promotion expert to ensure you are not unwittingly
breaking the law. There are numerous arcane laws at both the state and
federal level concerning contests and sweepstakes, and they change
frequently. Get legal advice before proceeding.
In general, published rules for consumer contests must include:
 Description of prizes
 Approximate value of prizes
 Odds of winning
 Where a list of winners may be obtained
 Duration of contest
 Restrictions, such as age or country of residence
5. Budget
Major budget items for a contest include administrative costs,
advertising and support materials, and prizes. Here are some tips about
each area:
Administration. Don’t forget travel expenses and fees for judges,
processing of entries, back-end activities such as building a database
of entrants and costs associated with awarding the prizes, including
notifying winners and staging an awards ceremony. If you decide to
hire an outside agency, expect to pay a minimum of $5,000-$15,000
for program creation plus out-of-pocket expenses.
Advertising and support materials. For retail contests, this will
include such items as point-of-purchase displays, shelf-talkers and
hangtags on products. Then there’s the cost of creating and placing ads
to publicize the contest. For dealer/distributor and employee contests,
costs will include newsletters, special mailings and possibly teaser
gifts to build momentum.
Prizes. Don’t forget to include shipping costs, which can be
formidable if you’re awarding hundreds of second- and third-place
prizes.
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Sweepstakes
Applications
Sweepstakes have many applications, including:
 Build databases
 Draw attention to advertising
 Add fun to an incentive program
 Add value to a consumer offer
 Draw attention to a direct mail piece
 Prompt people to fill in a business reply card
 Prompt people to fill in a warranty card
Sweepstakes Rules
Certain aspects of a sweepstakes must be called out. These include:
 Where official entries can be obtained.
 Alternatives to submitting proof of purchase.
 Eligibility requirements.
 Specify that mechanically reproduced entries may not be
submitted.
 Deadline date for receiving entries.
 If a skill contest, spell out the judging criteria.
 Odds of winning.
 Whether a winner may elect cash instead of merchandise.
 Mailing address for submission of entries.
 States in which the promotion is void.
 Stating whether affidavits will be required of winners.
 How to obtain a list of winners. Provide the address to which
requests should be sent.
For best results, be sure you submit the program rules to an attorney
for review and final approval.
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Sweepstakes
Administration
Administering a sweepstakes involves the following key requirements:
 Comply with the state statutes requiring registration and the filing
of a surety bond.
 Determine who will perform the judging. (Using an independent
judging organization reinforces credibility.)
 Arrange for verifying and notifying winners. Secure affidavits of
eligibility and release.
Sweepstakes On
The Web
Web sweepstakes work best when they encourage people to interact
with your site. Take advantage of the interactive nature of the Web
with games and contests that require visitors to explore your site and
learn about your products and services. The following tips will be
helpful.
Demand Something From The Visitor. They don’t work when they
demand little from the visitor. Just type the word sweepstakes into any
search engine, and you’ll see the problem. These sweeps are far too
easy to enter, so the value they return to the marketer is slight.
Define Your Objectives. Determine what you want the sweepstakes to
accomplish. Are you simply trying to attract visitors? Are you
promoting a product or service? Do you want to build a mailing list?
Make It Interactive. You can do more with the Web than with any
promotional medium—if you use the technology to its fullest. In
addition to games and other traditional ploys, you can incorporate
everything from video and sound clips to Web treasure hunts.
Think Short Term. Short-term sweepstakes work best. The Web is a
very fast medium, and sweepstakes that offer a payoff in the distant
future aren’t compatible with it. Besides, you want to encourage repeat
visits. Conduct regular sweepstakes that pay off within a month.
Modest Prizes Work. You don’t need to offer a Porsche. Some of the
more successful continuing programs give away modest prizes every
two weeks or so.
Limit Entries. Limit the number of entries that can be made from a
single address. Prohibiting people from playing more than once a week
discourages hackers from clogging your site with repeat entries.
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Cross Sell. Take advantage of hyperlinks and other methods of crosspromotion. Hyperlinks, which allow someone simply to click on an
icon to jump from one Web site to another, make the Web an ideal
promotional medium. Many sites will sell you advertising, and
strategic tie-ins are becoming increasingly common.
Capitalize On The Opportunity. Make sure your site tells the right
marketing story and does it in an engaging manner. If your Web site
isn’t any good, sweepstakes can’t help much.
Know What The Competition Is Doing. What are your competitors
doing in the sweepstakes arena? Check out their Web sites to find out.
List The Rules. List your rules and your privacy policy prominently.
Is your sweepstakes only open to U.S. residents? If so, say so.
Be Creative. Give your promotion a name or title. This is just a good
merchandising technique.
Don’t Get Greedy About Information Requests. Be careful about
asking for too much information. People are worried about their
privacy on the Internet, but they will give you their name and address
in exchange for a chance to win a prize. They are less likely to part
with information that’s more personal, such as income level.
Promote It. Promote your sweepstakes. Mention your sweepstakes in
your newsletter, billing statements, catalog and e-mail.
List Winners. List previous winners on your Web site. This helps
convince people that your sweepstakes is legitimate.
Running A Web
Based Sweepstakes
As with any sweepstakes, follow state and federal rules closely. The
best advice for running a sweepstakes is to consult with an attorney
who knows your business before you announce the sweepstakes on
your Web site. Additional advice can be obtained from suppliers well
versed in running sweepstakes. Here are two quick rules to keep in
mind:
 On your site, provide for an alternate means of entry, such as a
postcard.
 Include language that allows you to abort the sweepstakes in the
event of data corruption or a virus.
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Define Your Target
Customer
Focus on the segments of the universe most likely to be responsive.
For a B2B site, specify the appropriate industries and company size. Is
location a factor? One of the pluses of online selling is that you can
sell to customers regardless of where they are. But does that make
sense for you? Do people need to be in a certain geographic area in
order to be able to use your product or service?
For a B2C site, you need to specify such things as household income,
number of family members, ages and genders of adults and children,
professions and hobbies. The more you know about your target
customers, the more likely it is that you’ll be able to reach them.
Track Your Return On
Investment (ROI) For Each
Channel
As with any direct marketing vehicle, you need to know whether your
online marketing is working. How many leads does it generate? What
is the cost per lead? How many sales result from the leads? What is the
value of each sale? What is the potential value of each customer? You
can outsource this work or purchase software programs and do the
analysis yourself.
Promote Offline
It may sound contradictory, but industry observers say it’s vital to
support your chosen online marketing channels with traditional offline media. Put your Web address on your stationery and business
cards and in print ads and direct mail pieces. You can even send a
mailer that reproduces a page from your Web site. Each repetition
helps drive more traffic to your site.
Consider Opt-In E-Mail
Lists
These are lists of people who have asked to receive information about
a particular product or service. For example, when people fill out a
form online, say, to request an e-mail newsletter or register a product
they have purchased, they can indicate that they would like to receive
information on similar products or services. (Recipients may also opt
out, that is, ask that their names be removed from the mailing list.)
Because people have given their permission for marketers to send such
mailings, this is also referred to as permission marketing. When you
send e-mail to people on these lists, you’re not spamming; they’ve
asked for the mail. If you choose the list as carefully as you would any
other direct marketing list, you’ll have a well-qualified target group.
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Purchased e-mail lists can be expensive. However, they eliminate the
cost of printing and mailing. And the response rates are estimated at
between 5% and 20%.
Form Partnerships
This is one of the most promising routes for marketers who have taken
the trouble to define their customers. There are different types of
partnerships. A reciprocal link, for example, is a barter arrangement in
which you link to a site that, in turn, links to yours; both partners
benefit, and neither pays a fee. B2B marketers might link to sites in the
same industry or to other, complementary businesses. There are also
fee-based relationships, known as affiliate or associate programs.
Again, your ad or offer appears on a site that is likely to be of interest
to your customers or prospects. When those people click on the ad or
offer, they are taken to your site. You pay a fee to the affiliate site for
each lead or sale generated by the click-through. One of the bestknown affiliate sites is Amazon.com, which pays a commission to
other sites whose surfers click through a link and buy from
www.Amazon.com.
Focus On Quality, Not
Quantity
The more targeted a partner site or e-mail list, the smaller the number
of returns (leads or sales) will be. However, the leads or sales should
be of high quality and thus likely to turn into long-term, profitable
customers.
Limit Your Use Of Search
Engines
Even if you can get your site listed by a search engine, which is never
a certainty, it’s a scattershot method. Search engines are appropriate
only if your customer universe is very large and diverse. But it’s
nearly impossible for a search engine to focus on a specific target
prospect.
Don’t Expect Too Much
From Banner Ads
Yes, many companies use them. But because they’re ubiquitous,
surfers are less likely to pay attention to them. In The E-Commerce
Question and Answer Book, Anita Rosen notes that only 1% of the
visitors who land on a page with a banner will click on the
advertisement to obtain further information. Just a few months after
the book was published, the click-through rate reportedly was sharply
lower. Banner advertising is relatively expensive, costing between
$10,000 and $45,000 for an ad that runs for three months, says Rosen.
She notes that it is also labor-intensive: To be effective, an ad should
be refreshed every two weeks.
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