How to Choose the Right Prize for Your Contest or Sweepstakes

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Why do people register for contests and sweepstakes?

Unless they really like filling out registration forms, the motivation (as you might have guessed) is the prize.

I see you rolling your eyes at the screen. I know it seems obvious. But it is important to note.

Choosing the right prizing is one of the most important decisions you’ll make during the planning process for contest or sweepstakes promotions.


You can’t pick prizes just because they’re “cool” or fit really well with your brand.  Prizing has to be a strategic decision based on:

a) what you want customers to do in exchange for chances to win, and

b) what motivates your target customer base.

What Do You Want in Exchange?

Prizing exists to be a value exchange with customers. It’s the motivational tool to get customers to take the actions that further your goals; whether that’s joining your mailing list, sharing on social, or making a purchase.

Each of those actions has a different barrier to entry, and requires a different reward value for customers to take action. An action like “make a purchase” requires a bigger reward (typically more chances to win) than something like “join our mailing list.”

Check out the video below for more info about why you need to create value exchanges with customers for your promotion to be successful.

What Appeals to Customers?

Unless you are a niche retailer, there are some general best practices you should follow for prizing — specifically, with regards to type, value, and structure.

Prize Type: Show Me the Money

When it comes to prizes, cash is king.

Consumers prefer cash prizes by an overwhelming margin: our 2008 study found that 72% of consumers preferred cash, compared to just 15% who chose travel (the next most popular option) — and that preference hasn’t changed much in the last 10 years.  [1]
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Practically speaking, a cash prize allows the winner to create their own prize by using the cash for whatever they might need or want. Travel prizes might fuel our mid-workday escapist fantasies—but a travel prize generally comes with some kind of hassle factor (new cabana wear, the need to get time off work...). Plus, enough cash buys a vacation at the time and place of the winner’s choice.

Prize Value: Don’t Break the Bank

Interest in your prizing doesn’t increase equally with value. Research shows that there is a diminishing return on prize value after about $10,000 dollars. [2]

The difference between a $10K prize and a $50K prize in terms of consumer interest is negligible.

That said, you can’t cheap out too much.

50% of consumers won’t participate in a contest if the prize value is lower than $50 — and 32% won’t bite unless it’s at least $100. [3]

Prize Structure: More is Always Better

It’s not just the type and value of your prize that you should think about. You also want to consider prize structure.

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Generally speaking, consumers prefer the chance to win multiple high-value prizes AND multiple low-value prizes. So it’s typically a good idea to have one or more grand prizes, as well as a few low-value grand prizes or instant win prizes.

Consumers believe they could actually win (or that they are more likely to) when there are multiple prizes, which is why this prize structure is so effective.

The Bottom Line

Because prizing is what motivates consumers to register for your promotion, it can have significant impact on your ROI.

Choose prizes that are flexible (like cash), and are valuable enough to motivate customers to act in ways that benefit your brand. Then give customers multiple chances to win.

And remember, you don’t need to break the bank on prizes. You just need to be strategic with what you choose.


Sources:

  1. 6 Ways to Motivate Consumers Using Interactive Promotions, Launchfire 2008.
  2. 2018 Prizing Report, Helloworld 2018.
  3. 6 Ways to Motivate Consumers Using Interactive Promotions, Launchfire 2008.