Set Yourself Up for a Win
When you know the rules of the game, developing a sweepstakes promotion doesn't have to be a gamble
Thanks to such mailers as Smithsonian magazine, Reader's Digest, Xerox, Consumers Union, Sky Guide, Harlequin, Craftmatic, Scholastic and Verizon, sweepstakes usage in the Who's Mailing What! Archive has remained steady over the last decade, ranging from a low of 1.8 percent in 2002 to a high of 2.5 percent in 2004.
Sure, this is a relatively smallOK, quite smallpercentage, but the consistency with which a dedicated few mailers turn to this response-boosting tactic tells us one thing: It may not be as pervasive as personalization, as show-stopping as dimensional mail, as trendy as repositionable notes, or as fun as freemiums, but for mailers who are able to make it work, a sweepstakes program can be a real winner.
However, for those of youthe vast majoritywho haven't tested a sweepstakes or who haven't used one since the legal landscape changed with 2000's Deceptive Mail Prevention and Enforcement Act (DMPEA), terms like consideration, Surety Bonds, disclosure and fines can be quite intimidating. But they don't have to be. Armed with the right information, you can greatly improve your odds of winning.
Unlike Consumers, You Have to Pay to Play
The first step in determining if a sweepstakes is right for you is to identify your goals for the program. What is the purpose of including a sweepstakes in your mail plan? Are you looking to reach out to new markets and build your housefile, as Overseas Adventure Travel and Webster Bank have done through acquisition sweepstakes programs? Win back lapsed subscribers, as Golf Digest and Time both have tested? Motivate additional donations from your member file, like Philadelphia-based public television station WHYY? Create a sense of urgency, as National Arbor Day, Martha Stewart Living and Early Childhood Teachers' Club often do through fast fifties?
Depending on the objectives you set, instituting a sweepstakes can be as simple as adding an insert to your existing control or as complex as creating a whole package dedicated to your promotion. For example, Sesame Street ABCs book club has mailed a voucher package both with and without its "Gold Star Prize" sweepstakes just by making some minor changes to its voucher and BRE, while Capital One developed an entire multichannel campaign to promote its 2004 "No Hassle Island Giveaway."
Establishing exactly what you want a sweepstakes mailing to accomplish will enable you to set reasonable expectations of both the costs and ROI of the program.
In addition to the expense of developing and producing promotions to support your sweepstakes program, there are a number of other costs you will have to take into account, such as legal reviews, program administration and the prizes themselves.
Marla Altberg, president of Ventura Associates, an agency that specializes in sweepstakes, advises that you should expect to spend from $5,000 to $15,000 for the administration of a sweepstakes, and that these fees are set.
The cost of prizes, on the other hand, will vary greatly, depending on the prize structure you select, which can range anywhere from 50 handbags to five cruises to a $1 million cash giveaway. This structure should be determined both by your budget and by the goals you have set for your program.
Peter Stein, vice president of business development for New York City-based consultancy The Horah Group suggests tying the sweepstakes into your product offering; not only will this improve response within your target audience, but it will deliver respondents with a natural affinity toward your product, and therefore a greater lifetime value.
Altberg agrees, citing a sweeps promotion targeted at blue-collar workers for cell phone company Nextel where the prize was a trip to race car driving school. The promotion worked so well the first time out that Nextel ran it again.
For Saks Fifth Avenue, developing sweepstakes promotions for its high-end Saks First and Saks Fifth Avenue customers means prizes that can't be purchased over the counter. Heidi Potthoff, business development for Saks, explains that, instead, Saks bases its prizes around an experience. One such promotion included a trip to London where the winner was invited to tour the Jimmy Choo factory and pick out three pairs of shoes and a bag. "The values are extremely high," asserts Potthoff.
Sweepstakes with such high prize values typically don't require an extensive number of smaller prizes, advises Altberg, because the value of the main prize will be enough of a draw for prospects. If the prize value is small, however, then you will want to increase the number of prizes so that the odds of winning are greater.
Altberg also suggests that cash, shopping sprees and groceries are prizes with universal appeal. "Everyone has to eat and everyone loves to shop," she muses.
Letter of the Law
If you decide to roll the dice on a sweepstakes program, there is one place you should not take a chance: the legal requirements. According to the DMPEA, a mailing in violation of the act's rules can be pulled from the mail stream, and fineswhich are based on the quantity of your dropcan be assessed.
The No. 1 rule governing sweepstakes is that the prizes must be awarded based on chance and that considerationwhich includes purchase, contribution, payment or performancemay not be required as a condition of entry or affect the entrant's chance of winning.
However, Altberg points out, you can request consideration; you just also have to feature an alternate means of entry that does not require consideration. In a direct mail sweepstakes, the easiest way to do this is to include this option on the reply device with language such as, "No, I do not wish to subscribe to Widget Weekly magazine, but please enter me to win a free designer handbag." This "no" option must be weighted equally with the "yes" option.
The DMPEA also requires that the following copy be printed on the entry form/reply device, in the sweepstakes rules, and prominently throughout the package: "No purchase is required to enter or win. A purchase does not improve your chances of winning."
In addition, your package must contain one full version of the sweepstakes rules, and these disclosures must be "clearly and conspicuously" displayed and "readily noticeable, readable and understandable" by an "average" member of your target.
From a design standpoint, these rules and disclosures can be the elements that pose the biggest challenge for sweeps mailers. Through his years of designing sweeps mailings for such clients as Columbia House, American Express Publishing and International Masters Publishers, John Ruggiero, creative director for Provoke! Inc., has found that the best way to deal with the legal terms is to execute them in the most uninteresting way possible: "We put them on a simple flyer, printed in black and white or gray and white. It will be less colorful; it might be folded more times than other pieces. We make it so that it's the thing people want to read least."
The DMPEA also requires that every sweepstakes package clearly feature:
*An address or toll-free phone number where recipients can opt out of receiving future sweepstakes promotions. These requests must be processed within 60 days of receipt and must be retained for five years.
*A name and business address where the sponsor can be contacted.
*The estimated odds of winning, based on the expected number of entries.
*The quantity and value of each prize.
*The payment schedule for any cash prizes.
On the other hand, mail packages cannot:
*say or suggest that prospects who do not respond may be excluded from future sweepstakes offers;
*say that the recipient has won a prize when he has not; or
*contradict or limit the sweepstakes rules.
Of course, the DMPEA is not the only set of laws governing sweepstakes; state laws also apply, explains Altberg. If the total prize structure is over $5,000, you will need to register your sweepstakes with the state of New York 30 days before the start of the program and the state of Florida seven days in advance. You also will need to obtain a Surety Bond, which is an insurance policy in which your carrier guarantees the total prize value
if you are unable to pay for the prizes. Proof of this insurance must be filed along with your registration. If your sweeps will be available through retail locations, registration also will need to be filed with the state of Rhode Island.
If the thought of navigating all of the legal requirements makes you cringe, you may want to consider hiring a sweepstakes consultant to guide you through the process. You also will want to make sure to run everything past either your own legal team or one that specializes in sweepstakes.
For your first time out of the gate, recommends Potthoff, stick to the basics. "If you are doing a national [mailing], keep it simple. That's my best advice. If you are only mailing in one state and you really know the state laws and legislation, then you can delve a little deeper into the offer. Otherwise, keep it simple."
Altberg agrees, and adds that keeping your promotion short, simple and easy to understand will aid in response as well.
Rolling the Dice
When it comes time to place that sweeps promotion in the mail, you'll of course want to make sure that it's getting into the right mailboxes.
While sweepstakes are primarily used for acquisition, they can be used successfully with renewals or lapsed donors, posits Ruggiero. They also can be effective with upselling and cross-selling within your housefile. "I would say that probably anything is worthwhile to test to your house list because you have that relationship set up," advises Stein.
In addition to outside lists you would normally test, Stein also suggests sweeps files, opportunity-seeker lists, infomercial respondents and other hotline names. These files may present a greater likelihood that respondents are just in it for the prizes, so within these lists, you'll also want to look for selects that offer affinity with your product or service to improve the chances that you'll be able to convert responders into loyal customers.
Stein also suggests that as you test these lists, you also test what style of sweeps works best for your product or service. Will a very promotional package work? Or do your prospects respond best to an effort that plays up your product over the prizes? Would a sweepstakes give your control a lift? Or will the promotion get lost in your message?
Andif you can afford itthe best way to assess this, he asserts, "is to just test it all. Have a non-sweeps control cell and a cell that ties in the sweeps and then test a whole new package."
Another method for testing whether a sweeps program will work in your target audience is to buy into a co-op program, suggests Altberg. Starting at about $10,000 for both administration and prize fees, co-op programs offer high-value prizes at a lower cost by spreading out the costs over a number of mailers and relying on prize insurance.
The important thing to remember is that even with the element of chance, your sweepstakes mailing is, above all else, a direct mail package, and all of the usual rules still apply. "Do format tests, outer envelope tests, price tests, offer tests. ... Even in a sweeps environment, you are still making the consumer an offer," stresses Ruggiero.
If a sweepstakes promotion is a bet you are willing to make, take the time to develop a program that meets your goals, your prospect's and customer's interests, and the law's requirements, so that both you and your respondents find yourselves in a win-win situation.