We are constantly asked by our clients what promotion incentives work best. Should they give away a lot of small things, or one big thing? What is the ideal value of an incentive or prize? Do small incentives work? Here is a short summary of what promotion incentives work to entice consumers to register for a promotion such as a sweepstakes or contest or loyalty program.

But first, we need to understand who your brand’s customers are and identify the types of marketing that work with those customers. There are two types of marketing that work with promotions: transactional marketing and relationship marketing. And these types of marketing tactics depend on the type of audience you are trying to reach.

Transactional marketing is when you provide something in return for a consumer performing an action. This type of marketing is a one-to-one relationship with an immediate benefit to the consumer. Typically, this is something along the lines of providing an incentive with the sale of a product, like a free gift or entry into a sweepstakes. Transactional marketing is good for getting new or returning consumers to try your product, build your email list, or increase sales in the short term.

Relationship marketing involves building a relationship with a consumer and isn’t focused on sales per se. The consumer might not get an immediate incentive, but as the relationship is built over time, the occasional small incentive can go a long way towards building that brand loyalty. An example of that is a brand that uses social channels or loyalty programs or UGC contests to build and talk one-on-one to their following, and occasionally giving those loyal followers incentives in the form of exclusive free products, recognition on social channels, or special offers.

With transactional marketing, the consumer is usually willing to do more to receive a large incentive, but is not usually willing to do much if the incentive is small. For example, if you are running a promotion and asking for a consumer to buy your product (or send in an AMOE) for a chance to win a car, you would get more entries than if the incentive was only a keychain for taking the same action (buy a product or send in an AMOE). A keychain just isn’t enough of a payoff for spending money or taking time to go to the post office. The chance at that bigger prize is the instant payoff the consumer wants from transactional marketing.

In relationship marketing, the consumer, when engaged with your brand already, will be willing to engage in the same type of promotions on social or within a loyalty program that you use for transactional marketing, but they might do more for a smaller incentive. However, if you set the bar high with your promotion tactic, such as asking that a long survey is completed, or a three-minute video be submitted, your best bet is to reach out to your engaged consumers and give them the chance of earning a large incentive. A small incentive may not be enough to get any quality submissions, even from your loyal customers.

Here are some examples of small incentives versus large incentives:

Small incentives that work well with engaged customers with relationship marketing:

• Coupons
• Low value items like T-shirts, stickers or pens
• Priority to buy tickets to an exclusive band sponsored event

Large Incentives that work well with 1) attracting new or returning customers with transactional marketing, or 2) retaining loyal customers and getting them to provide valuable user generated content:

• Cash and gift cards
• Electronics
• Trips
• Cars
• High Value Products or Services
• Free tickets to big sporting events

The bottom line when deciding what incentives to offer is to look at who the audience you will be talking to – are they your loyal buyers or are you trying to attract new customers? – and then ask yourself what type of tactic you are using and how much you are asking consumers to do to complete the request. Once you have established those things you can decide on an appropriate incentive that will achieve your goals.

If you need help developing a strategy for your next promotions, contact us! We can help you align your goals, identify your audience, and pick the right tactic and incentive to make it a success!

To read more posts by Marden-Kane, please visit our main blog page or subscribe to our email list.