You Can’t Give This Stuff Away!

You must feel like Santa Claus, awarding all those cool prizes to sweepstakes winners,” an admiring client recently told me.

Actually, Santa’s been getting a lot of his presents shoved back up the chimney lately.

A consumer takes the time and effort to enter a sweepstakes, is selected at random from among thousands of entrants, is informed that he is a winner, then either refuses the prize or fails to fill out the rudimentary paperwork necessary to claim it. In several recent cases, it has become a mad scramble to meet post-promotion deadlines for filing winners’ lists in New York and Florida because, after numerous drawings and prize refusals, we have yet to find a consumer who will accept the grand prize.

What’s going on here? I’ve recently interviewed consumers who have refused a sweepstakes prize or failed to respond to prize notification letters. As a result of these interviews, I’ve developed the following theories:

It’s a Generation Thing: In a recent sweepstakes targeting young adults, we selected 20 potential winners of a $250 online sporting goods gift certificate, notified them by phone and e-mail, then sent prize acceptance affidavits to their confirmed home address — complete with a return air bill already filled out. The timing couldn’t have been better, since the prizes were to be awarded before the holidays.

But five of the 20 didn’t return their paperwork, despite follow-up phone calls and e-mails. When we selected five new winners, one didn’t return the document. So it took 26 selections to find 20 consumers willing to accept the prize. One of the original “winners” explained, “I didn’t want to go through the hassle of signing the paperwork and getting it notarized. It didn’t seem worth it, man.”

It’s the Taxes, Stupid: When the grand prize of a deluxe trip for four to Las Vegas was not claimed in a recent on-pack game, it was to be awarded in a second-chance drawing — the historical domain of the sweepstakes hobbyist. Since the Las Vegas trip was the only prize scheduled to be awarded in this drawing, one would assume that any consumer who entered would leap at the prize. We conducted five separate drawings over 70 days before finding a consumer who would agree to accept it. The first four all refused, citing the fact that state and federal taxes on the prize made it undesirable. “I tried to get three buddies to pay me the amount of the taxes I’d incur in exchange for joining me on the trip,” one winner informed me, “but they all told me to go jump in a lake.” Indeed.

It’s Online Overload: The proliferation of online sweepstakes has expanded the base of sweepstakes entrants and hobbyists. After all, pointing and clicking into a sweeps is much easier than filling out entry forms, 3″ × 5″ cards, and envelopes — and there’s no postage involved.

No wonder the Web is replete with clearinghouse sites featuring links to every sweeps on the Internet. Sure, marketers can generate scads of entries that way, but what about the quality of those entries? Are clients truly reaching their intended target? In one sweeps that offered a collection of toys and a U.S. Savings Bond, only seven of 10 winners selected in the first random drawing accepted the prize. “I don’t have any kids, so I don’t need toys,” replied one entrant. What about the bond? “It takes too long to mature.” Another admitted, “I don’t even remember this sweepstakes. I enter 200 a month. I wait to see what prizes I’ve won, then decide which ones I really want.” Ugh.

This phenomenon is not limited to sweepstakes. We are administering an in-pack instant-win game offering more than 125,000 prizes. With the game drawing to a close, we have just reached a one-percent redemption rate.

Does this mean that sweepstakes, games, and contests have lost their luster as a marketing tactic? Hardly. We’ve conducted dozens of such promotions in the past year and, in terms of product sales, retail display count, Web site hits, or any other tangible measurement, the vast majority of clients have been delighted with the results.

But how do you increase the level of prize redemption and quality of entrants? Here are some ideas:

Offer cash alternatives: Although this is not always economical (since many prizes are provided “in trade” by promotion partners or are sourced from the client’s own inventory), offering the retail value of the prize in cash — particularly when its value exceeds the minimum federal tax reporting threshold — will often result in happier winners and reduced fulfillment costs.

Swim in your own pool: When formulating your prize pool, ask yourself this question: If I were a member of the target audience, would I consider this a “must-have” prize, or would I be hesitant to waste a 34-cent stamp to claim it? When is comes to on-pack or in-pack games, it is no coincidence that high-end or “cool” prizes are redeemed at a much higher rate than low-end prizes. Sometimes, “more” doesn’t translate into “better.” The perceived benefit of loading up a prize pool with low-end prizes is often outweighed by higher surety bond costs and the additional expense associated with shipping unclaimed prizes back from the fulfillment warehouse.

Increase interaction: Online sweeps entries tend to skew toward the growing number of hobbyists. This is not to say that these folks aren’t desirable targets. They are, after all, consumers. However, if your goal is to create true interaction with your site, there are many targeted, effective means of creating the intended result.

Now if you’ll excuse me, I have to return to my role as Santa Claus.

Terry Cunningham is president of sales promotion agency Cottonwood Enterprises, Inc., Reach him at [email protected].