"It depends". I hate saying these two little words, but end up saying them almost every day. So much in Direct Marketing, as in life, depends. So when clients ask me 'Which is a better: a sweepstakes or a discount' (or a rebate, or gift with purchase, or a buy one get one free, you get the idea) I have to say 'it depends'. But a little info gathering helps point you in the right direction as "it depends" upon your objectives and the the size of your audience and budget. Let's break these down:
- Your Objectives. What are you trying to do? Sell a product or get leads? In general, discounts help sell products, sweepstakes get leads.
- Your Audience Size & Budget. How big is your target audience and you budget? Discounts can be expensive when your audience is national - and the costs scale with sales. Sweepstakes take one prize package and allocate it across your entire audience. Costs are fixed no matter how many people enter.
Sweepstakes are a great way to add an incentive to a program without spending a lot of money. The problem with them, of course, is that they are far less compelling to consumers than a guaranteed return (e.g. rebate, $ off, gift with purchase, etc.). In a chance to win vs a guaranteed to save face off, consumers will always go for the guaranteed.
In addition, sweepstakes can add complexity to your message that a discount doesn't do. That is one reason that when I run a sweepstakes, I always try to make the product the prize. This helps ensure that entrants are more likely to be interested in your product and not just win a trip to Hawaii (unless of course, your advertising for Suntrips).
And finally, there are many landmines with Sweepstakes - all of which are surmountable - but can be legally challenging. You cannot make a consumer spend $ or 'work' for a chance to win. If you do, it becomes a lottery and those are only legal for our State Governments to run. This is why there is "no purchase necessary"
Net. A guaranteed savings is always going to win a chance to win in terms of response. That's why there are so many more coupons and instant discounts than sweepstakes at retail (e.g. Think of Safeway or Macys). Rebates can be more expensive, but the good news is that you only pay the rebate to people who are in the program. You only pay if you are successful!
