By Terry Cunningham

PROMO Magazine, June 2001

“You must feel like Santa Claus!” a client recently told me, adding, “Awarding cool prizes to sweepstakes winners must be the best part of your job.”

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

How can this be? A consumer takes the time and effort to enter a given sweepstakes, is selected at random from among thousands of entrants, is informed that he/she is a winner, then either refuses the prize, or fails to fill out the rudimentary paperwork necessary to claim the prize. In several instances, it has become a mad scramble to meet the post-promotion deadline for filing a winners’ list with New York and Florida because, after numerous random drawings and prize refusals, we have yet to find a consumer who will accept the Grand Prize.

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

 

It’s A Generational Thing

 

In a recent on-line sweepstakes targeting young adults, we selected twenty potential winners of a $250.00 on-line 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 airbill, already filled out. The timing couldn’t be better, as the prizes were to be awarded prior to the holiday season. Well, five of the twenty consumers didn’t return their paperwork, despite follow-up phone calls and e-mails. When we selected five new winners, one of those consumers didn’t return the document. In the end, it took twenty-six selections to find twenty consumers willing to accept this “free-money” prize. In interviewing one of those who didn’t return the affidavit, I was told, “I didn’t want to go through the hassle of signing the paperwork and getting it notarized. It didn’t seem worth it, man.” Can you imagine a depression era consumer uttering such a phrase? I can’t.

 

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, the prize 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 this drawing would leap at the chance to accept the prize. We conducted four separate drawings in an attempt to find a consumer who would agree to accept it, but all refused, citing the fact that the state and federal taxes on the prize made it undesirable. Our fifth drawing (70 days after the original drawing date) was the charm. I interviewed one of the four “winners” who refused the prize, reminding him that his randomly-selected entry envelope was even festooned with hand-drawn dice, a glue-applied “Las Vegas” sign, and a clip-art version of Elvis. “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,” he informed me, “but they all told me to go jump in a lake.” Indeed.

 

On-Line Overload

 

The proliferation of on-line sweepstakes has expanded the base of sweepstakes entrants and sweepstakes hobbyists. After all, pointing and clicking one’s way into a sweepstakes drawing is much easier than filling out entry forms, 3” x 5” cards and entry envelopes; and there’s no postage involved! No wonder the web is replete with sweepstakes clearinghouse sites featuring links to every on-line sweepstakes on the Internet. Sure, clients can generate scads of on-line entries, but what about the quality of those entries? Are clients truly reaching their intended target? In an on-line sweepstakes that offered a collection of toys and a US Savings Bond, only seven of the ten 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 US Savings bond? “It takes too long to mature.” Another sweepstakes hobbyist admitted, “I don’t even remember this sweepstakes. I enter two hundred sweepstakes 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 that offers over 125,000 prizes. With the game drawing to a close, we have just reached a 1% 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, prize acceptance and quality of entrants? Here are a few ideas:

 

Offer Cash Value Substitution

 

Although this is not always an economical alternative, (since many prizes are given “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 the value of the prize exceeds the minimum federal tax reporting threshold - will often result in happier winners and reduced fulfillment costs.

 

Swim In Your Own Prize 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 thirty-four-cent stamp in order 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 costs associated with shipping unclaimed prizes back from the fulfillment warehouse.

 

Increase Consumer Interaction On-Line

 

On-line sweepstakes entries will tend to skew toward the growing number of sweepstakes hobbyists. This is not to say that these folks aren’t desirable targets of your promotion. They are, after all, consumers like you and me. However, if your goal is to create true interaction with your on-line site, there are many targeted, effective means of creating the intended result. I have a few tactical suggestions; that’s why my e-mail address is listed at the bottom of this article.

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

Terry Cunningham is President of Cottonwood Enterprises, Inc., a Sales Promotion agency in Bozeman, Montana that specializes in promotional game-of-chance administration. Terry can be reached via e-mail at terry@cottonwoodpromo.com.