More prizes = more entries
Although you may think that a single massive prize is going to draw the crowds, the reality is that the more prizes on offer in a promotion, the higher the number of entries you will receive. It may seem odd, but many smaller prizes are more effective than a single large one at maximising engagement and participation.
Commenting on the finding, Jeremy Stern, CEO of PromoVeritas said, “Brands should be pushing the number of prizes on offer as consumers feel that this will give them an increased chance of winning, and it is this that will motivate them to participate.”
Cash is no longer king
The type of prize that you offer also has a major impact on participation rates. Gift vouchers are overwhelmingly the most popular type of prize. Promotions with gift vouchers on offer receive more entries than money, holidays and event tickets prize types combined. Vouchers probably win because although they are highly flexible, and feel like cash, they are also tangible, and unlike cash, won’t get lost in the weekly spend. They will provide a treat, or a particular item. Notably, football-related prizes were bottom of the league and the least-favoured prize of all – a lesson for brands looking to use these for a promotion designed to have broad appeal.
Commenting on the findings, Jeremy Stern said, “We may think that cash is best, but it usually ends up paying routine bills or a mortgage, whereas vouchers can generally be used for an enjoyable luxury. And they can provide the perfect amount of freedom without the anxiety of too much choice.”
Bigger isn’t always better
It would seem a reasonable assumption that the higher the monetary value of a prize, the more entries it would receive. However, the data shows there is surprisingly little correlation between the value of a prize and participation. The most effective value is actually between £1,000-£5,000, with prizes between £5,000-£10,000 coming second. Strangely, prizes £50-£500 came third, receiving more participation than prizes worth more than £10,000. The lesson for marketers is that usually there is no need to spend more than £10,000 on an eye-catching prize to draw attention. When allocating your budget, remember that more prizes is better so though prizes between £50-£500 perform less well than £1,000-£5,000, it may still be better to offer 10 x £500 prizes rather than one worth £5,000.
Don’t overlook the Affluent Achievers
An analysis of PromoVeritas’ extensive database of entrants against the CACI profiling system, showed a strong relationship between someone’s level of wealth and their participation in a prize promotion. Specifically, the wealthier a demographic (to a point), the more likely they were to participate in a prize promotion. These findings challenge the conventional assumption that affluent groups are less likely to engage in promotions since they’re already wealthy, while those more stretched, would look to boost their income by winning prizes. So, prize promotions can be an effective way to engage with and gather data on those with high levels of disposable incomes. Luxury brands and those catering to high-end markets could benefit from using prize promotions as a key pillar of their marketing strategy.
“These findings are especially interesting in the light of the cost-of-living crisis”, added Jeremy Stern. “One might have thought financially stretched groups would use promotions as a means to alleviate their struggles. Instead, the data suggests that wealthier groups are using promotions to maintain their lifestyles while cutting back in other areas.”
Match the prize with your brand persona
Picking the right prize for the right consumer target (that aligns with your brand) is key. Analysis shows that while ‘Affluent Achievers’ will be drawn to cash prizes and gift vouchers, ‘Comfortable Communities’ (typically middle-class empty nesters) are much more likely to enter football-oriented prizes – which typically don’t receive much engagement. Those who are ‘Rising Prosperity’ – a demographic characterised by improving financial fortunes – are mostly drawn to winning tech and food and drink prizes.
Commenting on the overall findings, Jeremy Stern concluded: “Our analysis will present surprises to marketers and brands. Many of the insights seem counterintuitive; wealthier people are entering prize draws more than those facing financial adversity, and having very expensive prizes can actually lower participation and free cash is less of a draw than gift vouchers despite their apparent restrictions, even at a time when everyone is feeling the pinch. There are many insights here for marketers, we’d say that the key is landing on the right prize budget and balancing both the value and quantity of prizes on offer. Offering different tiers of prizes at varying levels would seem to provide brands with the best of both worlds. One medium-sized prize and then lots of lower value prizes that add trust and believability.”
Be brave, but be safe
Promotions can be a great brand differentiator and cost-effective marketing tool, but they also carry risk. Risk of fraud, abuse, too many of the wrong thing, unexpected costs and complaints about fairness and integrity. This can all lead to reputational and financial harm. So always make sure that your brand and team is protected, that you have used a professional promotions specialist such as PromoVeritas, to oversee the terms and conditions, the messaging on product packaging and POS (point of sale), the promotion mechanics and the independent winner selection. Regular lawyers just won’t know about what can go wrong, and crucially, how to prevent disasters. Run things right.
Stern summarises “Promotions remain one of the most cost-effective marketing tools, but brands must adapt to the socioeconomic climate and consumer needs. Marketers approach to promotions must be versatile and data-led to ensure promotions are effectively customised.”