Few things generate as much excitement as the prospect of winning a big prize. Though consumers face long odds in any chance-to-win game, just the idea of winning a new car or a once-in-a-lifetime vacation generates excitement and gets people dreaming about the possibilities. After all—someone has to win, right?
Companies don’t run sweepstakes just to give things away, obviously. Every chance-to-win game hinges on an exchange that benefits both the consumer and the brand. In fact, these promotions can offer significant value to a brand—creating awareness, driving acquisition, and encouraging engagement. When chance-to-win promotions are done well, they can be a very cost-effective tool.
Let’s explore some of the most common chance-to-win games and strategize how they can benefit your brand and loyalty program.
The most common type of chance-to-win game is a sweepstakes-style giveaway. A slightly more sophisticated version of drawing a name from a hat, a sweepstakes randomly selects names from a list and awards a prize or set of prizes. Sweepstakes prizes range in value from a few dollars up into the millions. Sweepstakes reveal a correlation between prize value and participation. The higher the value of the prize, the higher the engagement. Just look at the lineups for lottery tickets at your local gas station when jackpots reach record-setting amounts.
The high prize values offered in a sweepstakes create interest and participation across a large audience. Many consumers are willing to share personal data for a chance to win a prize with a value in the thousands, hundreds of thousands, or even millions. This makes sweepstakes an appealing option for brands looking to drive acquisition. For example, many brands use data collected in sweepstakes to build email marketing lists.
Instant-win games are another common mechanism. In this type of contest, consumers are offered a chance to participate—and learn instantly—if they’ve won a prize. Classic examples include finding a prize under a bottle cap or inside a box of cereal. Today these promotions are mostly conducted online, and often use another game element of some kind—think spinning a wheel or picking a square to reveal a prize.
Prize values are usually much lower in instant win games than in sweepstakes, allowing more prizes to be awarded to many participants over a longer promotion. Instant win games can be better for engagement than sweepstakes because people can come back every day, or even multiple times a day, to try to win.
Both sweepstakes and instant-win promotions are cost-effective ways to raise awareness, increase acquisition, encourage engagement, and even drive incremental sales.
When and why would you want to run a chance-to-win loyalty promotion?
The most common way to use a chance-to-win game in a loyalty program is to create program awareness and increase acquisitions. A brand that is launching a new program—or a new version of a program—may run a sweepstakes to create excitement and engagement across a large potential audience and collect valuable data. An established loyalty program may opt to offer current members an instant-win promotion to deepen engagement and build connections with the brand.
Loyalty programs may also use contests to burn off member currency. In this approach, members redeem earned points or miles in exchange for an entry into a sweepstakes or instant-win game. If done well, they can be a highly effective tool for reducing a program’s points and miles liability.
A sweepstakes with a compelling prize can burn more value in currency than the cost of the prize. Take, for example, the sweepstakes entry options for Microsoft Rewards. With the popularity of the Barbie movie in summer 2023, Microsoft offered a chance to win a custom edition Barbie Xbox console. For 200 points, members can get one entry for a chance to win the exclusive prize. A single entry is worth only about $0.20, but the value of redeemed points quickly adds up with thousands of entries.
Contests can be fun for consumers and effective for the brands that run them, but they involve a lot of complexities behind the scenes. Don’t attempt to run a sweepstakes or instant-win contest without a partner who specializes in the coordination and legalities of prize promotions. Everything from registration and bonding to insurance, contacting winners, tax forms, and terms and conditions requires expertise to meet federal and state legal requirements. Many agencies specialize in this work; rely on one of them to help your brand through the process.
Communications are another essential aspect of a successful contest promotion. Because effective sweepstakes and instant-win contests require a high level of participation, a robust communications strategy to generate awareness and engagement is necessary to drive entries and ensure success.
Warren Wiens is vice president, strategic services for The Lacek Group, a Minneapolis-based data-driven loyalty, experience, and customer engagement agency that has been delivering personalization at scale for its world-class clients for more than 30 years. The Lacek Group is an Ogilvy company.