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, the question of what to offer for prizes can be boiled 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. In fact, promotions that offer multiple chances to win, like instant wins or games, tend to see 40% more customer engagement than a typical enter-to-win sweepstakes promotion.
Additionally, offering more prizes lets brands experiment with different types of prizing or prizing combinations. Different prizing tiers could include options like new product samples, custom-branded merchandise, or themed prize packs, such a gift certificate & merchandise combo. Multiple prize options can attract a wider, more varied groups of participants. Having a diversified prize offering also helps make the promotion itself richer and more unique, which can drive awareness and interest.
The downside of choosing quantity is possessing an adequate prizing budget to offer multiple prizes and knowing how to allocate prizing budget for maximum effect. In order to support more prizes the budget has to be distributed more evenly, which typically includes reducing the monetary value of higher-tier prizes. The value of every smaller prize added ends up reducing the value of the grand prize, which can minimize its overall appeal and impact for users.
Let's say that you're running a promotion with a single Grand Prize, a 7-day trip for two to Hawaii with flights, hotels, and special experiences worth $10,000. However during planning stages you change your mind and decide that instead of offering a single $10k grand prize, you'l divide the budget in half: the grand prize trip will be worth $5,000 and the other $5,000 of the budget will be dedicated to offering 50 second-place prizes and 100 third-place prizes. You're able to offer more prizes in total and thus increase opportunities for customers to win, but reducing the budget of the Grand Prize trip will require trimming some of its appealing value. The trip is still the prize, but its duration drops from 7-days to 3-days and additional included perks like special excursions or bonus spending money for the winner also have to be reduced or eliminated completely.
Prizing Structure: Quality
There are two major pros for offering a single high-value prize: audience appeal and exclusivity appeal.
The most obvious benefit of offering one really cool, high-value grand prize is (no surprise here), your 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 in the US will rush to buy Powerball lottery tickets if the jackpot is a staggering $4.2 billion. Even individuals who never play the lottery will be motivated to buy their first-ever tickets in hopes of winning the massive, once-in-a-lifetime prize.
The second benefit for offering one high-value prize is the exclusivity appeal. For brands aiming to engage an established core customer base, offering one high-value prize means that the total prizing budget can be utilized to create a special, more customized Grand Prize with maximum appeal to their target audience. For example, a snack-food brand wanting to tap into a specific audience - say, customers who are major sports fans - and drive engagement and purchases among those customers could offer a grand prize trip to a major sporting event, such as the Super Bowl, World Series, or Stanley Cup.
One of the easiest ways to to customize a grand prize is including exclusive merchandise or experiences. In one of our past social media promotions centering on an upcoming new movie release, the Grand Prize winner won an all-expenses paid trip for themselves and a guest that was all movie-themed. The prize trip 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 promotion, the client knew what media 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.
The cons of offering one single grand prize is that it lowers the opportunities for repeat customer engagement with the promotion. If customers can enter a promotion like a sweepstakes or a contest a set number of times to win a single prize, there's not a lot of cause for them to keep engaging after they fulfill those requirements. This can be detrimental if your goal is to collect first-party data or drive customer engagement across digital or social channels.
On the other hand, offering multiple prizes and opportunities to enter and win - such through a daily instant win or an ongoing gift with purchase promotion - encourages customers to continue participating and engaging with the brand. The instant gratification of not having to wait to learn if you've won a prize and knowing you still have multiple chances to win in the future helps motivate participants to keep coming back for s long as the promotion is live.
So How To Decide?
As with every marketing effort, you need to consider your program goals when determining your prizing strategy. There are multiple factors to consider, but knowing how you want to end can help you decide what prizing combos will get you there.
- Looking for high participating numbers? Consider using 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 and followers.
Your program goals will help you determine the best 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 multiple 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 promotional campaign with a positive outcome.
If you're looking for guidance on the best way to choose prizes for your future promotions, reach out to us today!
*This blog was originally published in 2019, and was edited and updated in 2023.