We’ve discussed before the factors that go into determining your promotion’s prizes. At the heart of every discovery session it always come 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. You feel your chances of winning are higher if there are 100 potential prizes as opposed to winning just 1 potential prize.
Additionally, offering more prizes lets brands explore different prize options. They can offer small trials of new products, custom branded merchandise, or mix up types of prizes, such as a unique excursion as a grand prize with gift certificates as secondary prizes.
The downside of choosing quantity is needing to adjust prizing budget allocation. Normally to support more prizes budget is taken from the Grand Prize, which can minimize its overall impact. The value of every smaller prize added in turn detracts from the value of the grand prize.
For example, instead of offering a $10k grand prize trip to Hawaii, you instead make the prize trip worth $5k to allow more second prizes. But this lowers the trip length and potential for 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 those who had never bought lottery tickets before did so in hopes of winning the massive prize.
The second benefit for offering one high-value prize is the exclusivity appeal. For clients aiming to engage their core customers, a single high-value prize can be easily customized for maximum appeal.
The easiest way to do so is including exclusive merchandise or experiences as part of the grand prize. In one of our past promotions for a movie release the winner won an all-expenses paid trip for two. This prize trip also included a special tour of a film studio, behind-the-scenes access on a shooting location, and the winner appeared as a background extra in a scene for a major blockbuster film.
In this example, the client knew what their customer base liked and the type of 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 circumstance the overall prize value inspires them to take a chance.
Increasing the overall appeal of the grand prize helps inspire consumer participation. However the lower number of prizes also creates a slight barrier to entry. Consumers can feel their chances of winning are too low. A t that point participation isn’t worth the time and 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 wider 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 accept the potential tax implications of high-value grand prizes. The chance a consumer will participate in a promotion if they don’t intend to accept the prize is slim to none.
How To Decide?
As with every marketing effort, you need to consider your program goals:
- Want high participating numbers? Offer a higher number of prizes and tier the prize values.
- Want to entice and reward your core customer base? Offer a high-value exclusive prize specifically tailored to your brand 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. A solid prizing strategy 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!