How Do Consumer Sweepstakes Work? A Quick Guide

Consumer sweepstakes have helped brands attract and delight customers for the last 100 years. 

Whether it's a standalone campaign to boost engagement or the cornerstone of your sales promotions, sweepstakes offer many advantages over traditional contests. Everyone loves the thrill of being in with a chance to win something – it’s one of the great societal experiences.

However, sweepstakes are also an effective tool for acquiring and engaging customers across a range of B2C and B2B industries. Here's why.

Sweepstakes vs. Contests

What's the difference between sweepstakes marketing and contest marketing? It might seem like splitting hairs, but knowing this is crucial to running a successful promotion.

In a nutshell, a contest is a game of skill; whereas a sweepstakes is a game of chance. 

The key thing to remember is that, while sweepstakes are a type of contest, not all contests are sweepstakes. Contests come in many different forms, including gift-with-purchase, instant win, and social media contests. Another key difference between sweepstakes and contests is the winner selection process:

• Sweepstakes winners are selected at random from the pool of qualified entries. Some sweepstakes may be segmented by certain criteria, but every entry has an equal chance of winning. This makes them more appealing and easier to enter than contests. Use a comprehensive sweepstakes administration solution when starting any campaign.

• Contest winners are selected based on merit, either by a judge or by public vote. Unlike sweepstakes, contests ask people to compete in tests of skill to determine the winner. For example, a photo, video, or idea.

How Do Sweepstakes Work?

Consumer sweepstakes work by offering something valuable to your audience for little or no effort. Simple, right?

Well, not exactly.

There’s a lot of psychology that goes into a good sweepstakes, which explains why it’s such an effective tool in any brand's customer acquisition strategy. But as we’ll see, it all revolves around the idea of perceived value.

What is perceived value?

The customers' evaluation of the merits of a product or service, and its ability to meet their needs and expectations.

Customer’s Expected Benefit – Customer Perceived Cost = Customer Perceived Value

The Psychology of Perceived Value

From simple purchase and non-purchase sweepstakes to sophisticated omnichannel campaigns, there's a different type of sweepstakes for every occasion. But whichever one you choose, they're all built on the same psychological foundations.

You can create more excitement by bumping up perceived value using the following three levers:

• Urgency

• Scarcity

• Value

Urgency

Creating a sense of urgency spurs people into action. It compels customers to rely on their instincts, rather than their reflective judgement. This can provide a welcome change of pace in a world where we’re forced to make careful decisions every day.

One of the best ways to use urgency to create continued engagement is with a series of rapidly approaching deadlines. For example, "Last chance to claim!" or "Don't miss out". We love contests with a countdown clock.

Scarcity

“Limited edition”. “One night only”. “Exclusive”. These simple words can increase the perceived value of a prize. It’s supply and demand, pure and simple. When there’s less supply, there’s more demand.

You don't have to limit scarcity to a single value, either.  Flexibility is one of the biggest advantages of consumer sweepstakes promotions. A one-night-only event, for example, can create a feeling of exclusivity by limiting the number of tickets available.

Value

Nothing says great value like the word "free". For many, it's an irresistible hook. In his book Predictably Irrational, Dan Ariely observes that people change their behavioral patterns to be more compliant when something free comes along. It also increases the perceived value of something because the cost is zero.

Capture your audience's imagination with a great prize and common entry barriers (scanning a receipt, completing a form, sharing a social post) suddenly become much lower. A great prize is one that both resonates with your audience and aligns with your brand message.

Consumer Sweepstakes Advantages: How a Good Giveaway Boosts Customer Acquisition

Research suggests that customers respond better to softer marketing tactics that reward them for engaging with your brand than hard sales pitches. Contest emails, for example, have an average open rate of 8.8%. That's 5.5% higher than common email marketing campaigns. 

Deployed correctly, some brands see an average of over 34% of new customers acquired through consumer sweepstakes, contests, and similar marketing activities. But to achieve this, you can’t just give anything away.

"Rewards aren't just about giving customers cool stuff. It’s best done by giving customers more options, instant gratification, tailored offers just for them, and an emotional connection or a sense of fun and adventure."

– John Fauller, EVP, Product and Innovation

The only way to acquire the customers you want is to understand who they are and what they need. This won’t just help you pick the right reward, but also the type of consumer sweepstakes that will resonate best with them.

Of course, sweepstakes offer more than a simple and scalable way to attract consumers. They're also a great tool for engaging with and strengthening loyalty among existing customers.

9 Tips to Unlock Your Sweepstakes Advantages

How do you design a sweepstakes or contest that delivers? This will depend on various factors, including your objectives, industry, and audience. But here are the basics.

1. Make it Valuable

People might consider a Rolex valuable, but does it align with your brand demographics? Surprise and delight customers with more personalized interactions and relevant rewards to build true brand loyalty. For maximum engagement, consider giving customers the opportunity to earn bonus entries for extra rewards.

2. Make it Urgent

A consumer sweepstakes shouldn’t outlive customer interest and attention spans. Remember, urgency generates hype!

3. Make it Omnichannel

Increase participation by allowing entry via social media, text-to-win,  the web (either your brand website or a promotion micro-site), or your dedicated app. Everyone has their go-to method for participation; leave no one behind.

4. Make it Defined

Do you want to increase web traffic? Boost app downloads? Build your CRM database? The goals you define at the outset should inform every aspect of your promotion.

5. Make it Easy to Enter

If your goal is to increase traffic, then make the sign-up process easy. For example, a simple text to an offer code, triggering auto-entry into a consumer sweepstakes promotion, is extremely effective. If you want to focus on people who use your products day-to-day, then include a purchase element.

Snipp tip

Adding simple questions to a contest entry like "would you prefer a or b?" and/or other demographic-related questions can reveal more insights without the additional friction of sign ups.

6. Make it Viral

Allow participants to earn more entries by sharing the sweepstakes with their friends. This allows you to reward your most loyal brand advocates while reaching a wider audience.

7. Make it Scalable

With the right technology, you can use the early results from your sweepstakes to inform your wider campaign. You can then adapt to customer responses and deliver more engaging, cost-effective promotions that will please your end consumers. Not sure what to look for? Invest in a sweepstakes administration platform that covers all the bases – from activation and winner selection to legal. 

8. Make it Legal

Triple-check your target geography's sweepstakes laws and compliance. These vary from region to region,  but there are several basic requirements to consider. This includes providing a link to your privacy policy, writing clear terms and conditions, and giving participants an alternative means of entry (AMOE).

9. Make it Insightful

To enjoy the advantages of a consumer sweepstakes, you must have a mechanism for capturing and harnessing customer data. For example, our sweepstakes administration platform offers built-in data capture and analytics. This gives you actionable insights into customer behavior that you can use to inform future promotions.

Snipp tip

Looking for a shot of inspiration? Check out our sweepstakes case studies to see how we've helped global brands create their ideal consumer sweepstakes promotions.

Make Sweepstakes a Key Part of Your Customer Acquisition Strategy

A well-executed consumer sweepstakes can drive sales, improve brand awareness, nurture customer loyalty, and elevate your customer acquisition strategy. It can even help you capture valuable zero- and first-party data, providing greater insights into customer preferences, needs, and purchasing behaviors.

With so many potential benefits, you owe it to your brand and your customers to make sweepstakes a core part of your marketing strategy.

Want to know how to create a sweepstakes that keeps customers coming back for more? Explore our sweepstakes administration services and find out what Snipp can do for you.