Have you ever entered a prize draw in a mailshot? Like speeding, buying pornography or avoiding taxes, nobody will admit to doing it, yet a surprising number actually do.
According to the Direct Mail Information Service, 20 per cent of consumers have entered a prize draw as a result of a mailshot at some point.
Yet ask those same consumers in a focus group about their treatment of a sweepstake offer and they will deny all interest. “When we have done research among our subscribers, they say they don’t like them and wouldn’t enter,” says David Sneesby, marketing director at Which? His company is one the best-known users of prize draws in its direct marketing activity and knows better than most how effective they are.
In fact, of the 1 million-plus subscribers to Which?, “the vast majority come in through prize draws. It is no good asking people whether they are interested, because they’ll always say they’re not”, adds Sneesby.
Psychologists call it cognitive dissonance; a state in which the individual fails to recognise that behaviour and belief have become separated. So we all think we can resist a little flutter, but we still send back the entry form.
Which? has extensively tested its prize draw against alternative methods to make sure it is not overlooking a shift in public taste. But as Sneesby says: “The more we promote the product as part of the offer, the lower the response.” And as a the company needs to sell magazines to support the work of the Consumers’ Association, it goes with what works.
That means big, bold prizes – currently 350,000 in cash to one winner. “It is an unashamedly high-key prize draw. We always promote the promotion on the outside of the mailer,” he says.
What turns a sales promotion into a sales tool is that it gets people to open the mailpack. Once they are involved with the contents, the benefits of a subscription can be explained.
In addition, prospects are offered a three-month free trial, so they have two cherries to bite. This creates a high volume of uptake, which Sneesby says then gives a good conversion rate to subscription. “The pay-up rate is high. By the time they get to pay, they have had three-month’s free,” he explains.
The usual argument against such powerful incentives is that they can attract a lower value customer. In publishing, this would usually mean respondents who do not renew after the first year. But while acknowledging there is an issue with attrition, continuity subscription levels are substantial.
And in any case, the prize draw’s response rates make simple financial sense: “A high pay-up rate out of a high volume is better than a higher pay-up rate on a tiny volume. It is a numbers’ game,” says Sneesby.
If the prize draw mechanism were really as despised as many believe it to be, then its use would be limited only to the most desperate. That it is used by highly successful publishers such as Which? and Reader’s Digest (the biggest-selling magazine in the UK), suggests the critics are missing the point.
But if you really want validation that prize draws work, look no further than the charity sector. The Association for International Cancer Research (AICR) pioneered the use of sweepstakes in fundraising direct mail 18 years ago, and is still keeping the technique fresh. Its latest mailing campaign achieved a staggering 35 per cent response, and averages four per cent for mailings to new donors and 25 per cent from existing donors.
What a sweepstake provides can be easily summarised – stardust. “AICR funds research all over the world. So the only story it can ever tell donors is that it gives money to men in white coats to look down microscopes. You can’t change that month-by-month in donor mailings,” says Adrian Batt, marketing director at Direct Marketing Services (DMS), which has worked with the association on its mailings from the outset.
Ringing the changes with a prize draw does create interest and can refresh the offer. The agency has tested variations on cash prizes, cars and holidays, as well as a combination of all three. Batt says that combination prizes are often the most effective way of attracting response. “One reason is that, if you talk about a single prize, as they read the letter, they can just sail through it. But if you offer a choice, and ask, ‘which would you choose?’, they stop and think. Then you have got them hooked,” he says.
Even among charity donors, however, actions speak louder than words. Car prizes are chosen more often than cash by AICR respondents, but almost without fail, the winner ends up opting for the cash alternative. Another benefit of varying the prize is that it can help to shift the demographics of those who reply.
At Claritas, which builds lifestyle databases from Consumerlink surveys attached to guarantee cards and from mailing out questionnaires, response is incentivised with a prize draw. Dawn Orr, director of database marketing and micromarketing, says: “When we have been looking for a different type of responder, for example in a motoring survey, the prize draw was a car and that attracted males in a certain age group.”
On most of its surveys, the prize is cash. “That does consistently seem to bring uplift across all demographic groups,” she says. The company has tested offering a range of small prizes as opposed to one big one, but there was very little difference in the response rate.
Having a huge prize on offer can be an advantage, especially since the National Lottery has moved the threshold of what is considered high stakes. For most consumers, flying on Concorde is the ultimate aspiration.
So earlier this year when British Airways offered a whole Concorde-worth of seats in its campaign to boost flights it was no surprise that response rates were high.
“We thought long and hard about the promotional mechanism; what would work and be high profile,” says Chris Freeland, group account director at TMW, which handled the BA campaign below the line alongside M&C Saatchi. “We came up with the prize draw as the best route because consumers know it’s easy. There are no catches, particularly as it is linked to purchase. They don’t have to do very much, so there are no strings attached.”
For the promoter, the one big string which often holds them back from running a prize draw is the need to offer a free entry route. (Any draw which demands product purchase to enter is deemed an illegal lottery since buying the product is equal to purchasing a ticket. To cover this, all prize draws allow a “plain paper entry” or local rate phone call response mechanism.)
Experience of non-purchase varies widely. Sneesby says there is significant uptake among his magazine’s target market, evidently lured by the size of the prize. At Claritas,
Orr says hardly any consumers bother to return the questionnaire uncompleted just to qualify for the prize draw.
In the business world, you might expect direct mail targets to be more hard-headed. Not so, says Tim Beadle, managing director of business-to-business agency PCMC. “Our research shows prospects are looking for a bit of humour and levity – anything that lifts them above the daily grind,” he says.
Prize draw mailshots can stand out against the deluge of drab marketing literature to which prospects, especially those in the IT community, are exposed. “The average IT manager gets five to ten mailshots a day. I don’t know anybody who gets that amount at home,” says Beadle.
With most IT products being undifferentiated, and certainly not exciting to look at, injecting some sparkle with a prize can do wonders for response.
But care needs to be taken about what is offered – the issue of bribery can rear its ugly head. “We always offer prizes that are business-related,” he says. In a recent mailing for 3Com’s Superstack 2 remote access 1500 networking product, the offer incorporated a “win one free” incentive which led to a considerable uplift in response.
Beadle takes the contrary view to most consumer direct marketers that, “small works better”, when it comes to prizes.
He admits that this is “bizarre”, but in a recent campaign where the first 1,000 respondents were offered a free pen, 2,500 wrote in. The same mailing was tested without the pen incentive and pulled one-third of the response.
It is this contrariness in human nature which keeps direct marketers on their toes. They have to keep testing to see if what worked last time still works now. The odd thing about prize draws is that they show no sign of fading out, whatever cynics might think.
As Sneesby explains: “The techniques we use are the ones we’ve proven to be the best. They are the best because people respond to them. They work, because they appeal to human interest. People just don’t want to admit it.”