Value Proposition: Choosing The Right Contest Prize

Value Proposition: Choosing The Right Contest Prize

Guest post by Steven Kovar, co-founder of ViralSweep.

The value proposition is the most important piece of running a sweepstakes or contest. The success of your promotion greatly depends on the prize that is being given away. If the prize does not align properly with the audience that you’re targeting, your promotion will underperform.

“Let’s give away an iPad!”

No. Stop it. Stop right there.

Is an iPad really relevant to what your business does? There’s a 99% chance that an iPad has nothing to do with your business, and while it may be a prize people want, it will not bring you the targeted audience that your business needs.

When choosing the right contest prize, it has to be a mix of something that is relevant to your business and something that your customers really want. If it is entirely one or the other, your promotion will not perform as well as you may be hoping.

Remember, the prize is the number one thing that will impact the volume of entries your promotion receives—an amazing prize is like steroids for giveaways. It’s worth noting: if you have major barriers to entry for your promotion (long entry form, requiring Facebook login, etc), your promotion’s total entries will suffer.

Here are two example promotions: one correct, one incorrect.

Correct:

Business: Online boutique that sells clothing for pregnant women

Here are a few ideas of prizes this store could offer:

  • Gift certificate to the store
  • An entire outfit
  • A specific piece of clothing
  • An unreleased or new piece of clothing from their collection

To really make an impact, they could offer:

  • An entire wardrobe for every stage of pregnancy
  • A year’s supply of diapers plus matching clothes for mother and child
  • A nanny + date night once a month for a year after the baby is born

These type of prizes work for this particular store because they are all related directly to the store, its products, and the desires of their audience. Since the offering is specific, they will be able to build a list of qualified leads (in this case, pregnant women) who are interested in their products.

When it comes to the prize, the winner should get to choose the exact size and color they want. A common mistake we see which drastically affects a promotion’s results is when a store offers a specific color or clothing size for the prize. Remember to be sensitive to your audience; the prize needs to appeal to everyone in your target audience, so don’t restrict the prize to an exact size or color.

Incorrect:

Business: Local hair salon that services women only

The salon owner thinks that offering an iPad will excite her current and potential customers, which will drive them into the salon to purchase her services. The owner launches a promotion on Facebook, giving away an iPad. They begin promoting the giveaway online and in the salon by telling people to like the salon on Facebook and enter their iPad giveaway.

There are so many things wrong with this approach, yet we see these types of giveaways every day. Giving away an iPad on the salon’s Facebook page without any type of geographic restrictions on the promotion means that they will be getting entries from people who are not in the same area as the salon. It doesn’t really matter if they specified in the rules that the promotion is only open to a specific location; most people don’t read the rules.

Asking people to “like” their Facebook page to win an iPad will just mean they will get a bunch of likes, with no substance behind who those people actually are. So what if they get 2,000 likes; not many of those people will turn into actual customers that go into the salon.

The salon is only for women, so naturally they want to attract women with their promotion. Unfortunately, an iPad giveaway will also attract the bald guy Bob who doesn’t care about the salon and just wants to win an iPad. Offering a prize that involves coming in to the salon would be a great improvement (and most likely much less expensive).

Let’s say the promotion receives 1,000 entries. Great, that’s a big list of people the salon can now email about the salon’s services, and maybe even offer them a coupon. The problem is that the people who entered were most likely just interested in winning an iPad and didn’t take the time to actually leave Facebook and look at the salon’s website. Very few customers, if any, will come into the salon, and most will unsubscribe from the mailing list because they were only interested in the iPad.

In order to make this promotion a success, the salon owner should offer a prize that is related to her business. For example, offering a free haircut or free highlights will attract the right type of audience. The promotion should be run on the salon’s website so people become familiar with the salon and its services, and the salon should driving traffic to its website from all of its social channels. Even though the volume of entries may be much lower, they will be qualified leads which means that when the salon owner reaches out to them via email, they will be much more engaged and responsive.

The weak value proposition

So you’re going to give away a prize that is relevant to your business. That’s a great start! The prize is a $10 gift card that people can use in your store. Err, that’s not so great…

This is a weak value proposition because it’s not going to be worth people’s time. At least, most people won’t perceive it as being worth their time, even though every customer would undoubtedly say yes if you asked whether they’d like $10 off of their purchase.

If you couple a weak value proposition with a complicated entry process, you’ll be left scratching your head, wondering why your giveaway was so… blah. The value of the prize needs to be worth people’s time and get them excited, but not be so big that your company could suffer if the promotion does not do well.

Creating a strong value proposition

So you’re planning your promotion and you need to decide on a prize that will make your contest or sweepstakes attractive to your customers. Answering the questions below will help you reach a decision on the right prize to choose.

[note]

1) What niche is my business in? (fashion, electronics, jewelry, sports, etc).

My niche is ______________.

2) Who is our ideal customer that we want to target?

Our ideal customer is (Male/Female)
Our ideal custom is between the ages of (13-17) (18-25) (26-31) (32-40) (40-50) (50-60+)
Our ideal customer is (Single/Married/Married with kids/Divorced/Widowed)
Geographic location: Anywhere or Specific location: _________
Income level: (N/A) ($30,000-$50,000) ($51,000-$75,000) ($75,000-$100,000+)

3) What is our budget for the prize?

Our budget is ____________.

4) We’ll have _________ winners.

If the prize value is below $50, we would suggest having multiple winners. Having multiple winners will help to increase the volume of entries your promotion receives because people have a greater chance of winning.

5) What is the prize we will give away?

The prize is ______________.

6) Is the prize something that people will care about?

The prize and its value needs to be something that people get excited about. Offering a prize that feels “cheap” will turn people off. If your prize’s value is on the lower end of the spectrum, have multiple winners to increase the attractiveness of the promotion.

7) Does this prize align with our target audience, and ensure that we will build a list of qualified leads?

If yes, you’re done.

If no, re-evaluate the prize choice before running your promotion.
[/note]

In the end, you should come up with a plan that looks like this:

Niche: Fashion
Budget: $500
# of Winners: 2
Ideal customer: Female, ages 18-25, single or married, income level of $51,000 and above.
Prize: Up to $250 to spend on any pair of pants from our store
Is prize relevant to customers? Yes
Is the prize relevant to our business? Yes

This simple format should help in coming up with a strong value proposition. You can even reach out to a few people to see if the prize you’re considering interests them. Another idea would be to survey your audience by presenting them with several possible prizes and whichever one gets the most votes you can use in your giveaway.

Think outside the box and create a promotion that inspires or motivates your target customer—something more than just giving away your own product. In the example of the hair salon, it could be salon service and a night out for the customer to flaunt their new hairstyle. Turning your product into an experience is a great way to get your audience to think about how they would use your product and why it could be valuable to them.

  • Pat Alexander

    Great article and this makes perfect sense for retail firms. The challenge for insurance agents is that they sell an intangible product. It is illegal for them to offer a discount on an insurance product as a prize. I see many of them give away gas cards, some iPads, some tickets to professional sports events, etc. to build a following. Yet I am concerned that the following may only be for the contests. These followers largely won’t do anything to build their business. Any ideas for service organizations such as these?

  • Guest

    Sure, Pat. Great question!

    Insurance—at its core—isn’t about policies, or confusing jargon, or geckos…

    It’s about peace of mind.

    Knowing that, when something happens, things are going to be alright. So then, consider what sort of sweepstakes prizes will help the winner achieve the piece of mind also associated with your product?

    If you sell home insurance, consider giving away a security alarm installation, or something that helps remove the burden of maintaining a home like a year of lawn care service. Selling auto insurance? A new set of tires, or maybe a year of oil changes and detailing. What can you provide that gives your winner a positive experience related to what you sell?

    If you sell insurance, it definitely won’t be an iPad. You’re definitely on the right track there!

  • Sure, Pat. Great question!

    Insurance—at its core—isn’t about policies, or confusing jargon, or geckos…

    It’s about peace of mind.

    Knowing that, when something happens, things are going to be alright. So then, consider what sort of sweepstakes prizes will help the winner achieve the piece of mind also associated with your product?

    If you sell home insurance, consider giving away a security alarm installation, or something that helps remove the burden of maintaining a home like a year of lawn care service. Selling auto insurance? A new set of tires, or maybe a year of oil changes and detailing. What can you provide that gives your winner a positive experience related to what you sell?

    If you sell insurance, a good prize definitely won’t be an iPad. You’re definitely on the right track there!

  • Pat Alexander

    Thank you so much for responding and providing such great ideas. We have been stuck.

  • Rathi Gupta at Heyo

    I love this. It is very true because I have often seen contests on Facebook for brands I do not even follow or frequent. However, if I see a prize that would potentially interest me, I will sign up for the contest or share the page link without thinking about anything beyond receiving the prize. Once I do not get the prize, I often delete the link off my page. I feel that I am not alone in doing this!!

  • Service providers definitely have a trickier time with contest giveaways. All the more reason to be inventive! Steven, really like the ideas you shared. Reminds me to brainstorm with others who can help look at my contest giveaway options with fresh eyes!

  • Thanks for this informative article, Steven. Your tips and examples are really helpful for understanding contests and how to avoid mistakes.

  • Henry

    Ok, what in a situation where you start running a giveaway just to attract traffic on your site for revenue purposes in other words the website was just built for giveaway. Do you think it will be profitable?

  • Wicked Butterfly

    This is great information!