There are several factors that play a part in determining what prizes are included in digital promotions. Between budgets, timing, themes, consumer trends, figuring out the right prizing can take some legwork.
At the heart of every discussion and discovery session it inevitably comes down to one central dilemma: quantity or quality?
Prizing Structure: Quantity
The strongest argument for quantity is simply attracting a larger audience. The psychology behind consumer participation shows the more chances you have to win, the more likely you are to participate in a promotion. You feel your chances of winning are higher if there are 100 potential prizes instead of just 1 potential prize.
In addition, offering more prizes lets brands explore different prize options. They can offer small trials of new products, custom branded merchandise, or limited-edition speciality items. They can also offer several types of prizes: a grand prize trip excursion, with gift certificates as secondary prizes.
The downside of choosing quantity is adjusting budget allocation. What typically happens is budget is taken from the Grand Prize to support more secondary prizes. However lowering the Grad Prize budget means minimizing its overall appeal. The value of every secondary prize added detracts from the value of the grand prize.
For example, instead of offering a $10k grand prize trip to Hawaii and 10 second prizes, you instead make the prize trip worth $5k to allow for 100 second prizes. But this lowers the trip length and added incentives, such as special excursions or spending money for the winner. You offer more prizes and thus the opportunities to win, but you lower the overall value of all prizes collectively.
Prizing Structure: Quality
There are two major perks for offering a single or few high-value prizes.
The most obvious benefit of offering one really cool, high-value grand prize is -- customers have the opportunity to win one really cool, high-value grand prize! A large-value grand prize can appeal to a massive audience. It’s why so many people bought lottery tickets in hopes of winning the 4.2 billion Powerball. Even individuals who never buy lottery tickets did so in hopes of winning this massive prize.
The second benefit for offering one high-value prize is the exclusivity appeal. For clients aiming to engage their most valuable core customers, a single high-value prize is easily customized for maximum appeal.
The easiest ways to customize prizes includes offering exclusive merchandise or experiences within the grand prize. In one of our past promotions for a major theatrical movie release, the grand prize was an all-expenses paid trip for two.
But not just any ol' trip. THIS prize trip included a special tour of the film studio, behind-the-scenes access to a live shooting location for a day, and the winner appeared as a non-speaking background extra in a scene for the major blockbuster film. Quite an attractive prize for any film enthusiasts.
In this example, the client knew what their customer base enjoyed and the types of prize incentives that would garner maximum participation. So they created a specialized prize that their customers would find irresistible.
By making one prize as appealing and exclusive as possible, you’re increasing the customer’s drive to enter. In the right circumstances, the overall prize value inspires consumers to take a chance.
Increasing the overall appeal of the grand prize helps generate consumer participation. However the lower number of prizes also creates a slight barrier to entry. When consumers believe their odds of winning are too low, they also believe participating isn't worth their time or effort.
A single prize also risks not having mass market appeal. Grand prizes which can be used by anyone, such as cash prizes, attract a wide audience. Grand prizes that are more specialized - such as an international trip or a vehicle - are more restrictive. Not every customer is in a position to accept those types of prizes.
Additionally, not every customer is able to handle potential tax implications of high-value grand prizes, meaning they would have to reject the prize even if they won. The chances a consumer will participate in a promotion if they can't accept the prize is slim to say the least.
So How To Decide?
As with every marketing effort, you need to consider your program goals:
- Looking for high participating numbers? Offer a higher number of prizes and tier the prize values.
- Want to attract and reward your core customer base? Offer a high-value, specialized prize custom tailored to your brand's fans & followers.
Your program goals will help determine the style and format of your prizes. There are several combinations of prizes and prize values that can add impact to your promotion. If you have several goals, establishing a priority list can help your team define the best prizing strategy. Great prizes combined with the right promotion type will help you produce a successful campaign with a positive impact.
If you're looking for guidance on the best way to choose prizes for your future promotions, reach out to us today!