Choosing the right incentive is crucial for your competition. It sounds obvious, but it’s surprising how many get it wrong, spending thousands on a single prize in the belief that value – in a financial sense – will lead to increased conversions.
It might surprise you to know this is simply not the case. In fact, our data suggests that a single, more expensive prize in the $5k – $10k bracket drives around 10% fewer conversions than a simple $50 gift certificate. So here are a few things to keep in mind before you drop your entire marketing budget on your next huge prize.
Perception trumps reality
Perception is everything, regardless of the facts. As a competitive species, we gravitate toward scenarios where we are most likely to win. So even if the odds of winning a car or holiday are the same as winning the $50 gift certificate, for some reason the perceived odds favour the less expensive prize.
Give it a go! In your next competition, try offering something simple, over something lavish and expensive and see for yourself.
Volume trumps value
Another interesting takeaway from our data is the impact prize volume has on conversion rates. Having more than one prize up for grabs, even if they are lower in value, has a huge impact not just on conversion rates, but also on referral conversion.
Thinking about it logically, this makes perfect sense. Although we are competitive, we love to share experiences. After all, there’s a reason social media is such a big business. So while a single prize plays on our competitive streak, multiple prizes play on our want and need to share experiences within our communities, and friendship groups.
Goals trump everything!
When it comes to any campaign, it’s important to keep your business goals in mind. The majority of our clients seek to drive conversions and optimize conversion rates. If that’s your goal, spend $500 on 10 gift certificates, rather than $5,000 on something outrageous.
You can read some of our case studies here!
Sometimes you might want to give away something lavish and outrageous, be it for PR or simply to improve brand perception, and prestige. Let’s face it, a $50 gift certificate won’t carry the same prestige as giving away a holiday, or a car.
If your business goal is to increase prestige, you’ll likely do better with a more expensive incentive. However, if you are dead set on a lavish, expensive giveaway, but worry about conversions, up the volume with some less expensive consolation prizes.
We hope these little golden tips help you understand how competitions can be run better. If you are still hungry for knowledge, get in touch with us at Peazie!