Monday, June 28, 2010

Money Down The Drain

Woo-hoo. Wanna make a splash with consumers? Develop a mail-in sweepstakes offer and promote it via a national FSI or develop an in-store promotion where customers can enter a drawing at the store. Consumers will get excited about winning a vacation cruise, a Wii video game player, an iPod Touch or other fabulous prizes. This is good for the brand because the contest builds consumer excitement and the halo effect of the contest builds brand equity over time. Does this sound all too familiar?

A few years ago I ventured into a Target store in Fountain Valley, CA. I just happened to pop in to look around the store with nothing to buy. The drawing for the Target Red Vespa scooter immediately caught my eye so I stuffed my entry into the box and and left the store. A few months later I received a phone call. It was the Target Store congratulating me as the winner of a brand spankin‘ new red Vespa scooter. I vaguely remembered placing my entry and to this day have no idea who sponsored the contest.

My Vespa story is a real life example of what happens all the time. The reality is that contests and sweepstakes are a total waste of money and do nothing to build brand excitement or loyalty.

In all my years working with brands and promotions, I cannot think of one consumer sweepstakes that did anything to increase product sales. Brand groups never talked to each other and each made the same mistake over and over. As a sales rep, we would put entry boxes at the store and they would go missing by the time we had to pick them up. There was never enough lead time to hit all the stores and the buyers at the main office hated contests. One buyer made a comment that I will always remember. He said, “why can’t you create promotions where everybody wins?... contests create winners and losers and customers resent that.” It did not occur to me until years later how right this buyer was.

I saw a disturbing pattern with contests and sweepstakes. I’m talking about the contest winners. None of the winners ever bought or used our products! Since contests or sweepstakes by law don’t require a product purchase, savvy professional contest entrants would "game" the system. It's a lot easier to win one of these contests than the average person realizes. There’s an organized movement of professional contest entrants who actually do know this and share information about contests in newsletters, message boards and through affinity groups like Yahoo! Groups. Hundreds or perhaps thousands of people who enter every single contest they encounter in order to win prizes.
 By stuffing the entry boxes these winners have made a lucrative hobby out of unsuspecting CPG companies.


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