|
flevyblog
The Flevy Blog covers Business Strategies, Business Theories, & Business Stories.
|
Editor's Note: Take a look at our featured best practice, Net Promoter Score (NPS) (47-slide PowerPoint presentation). This presentation covers the Net-Promoter-Score (NPS) and 10 Deployment Best Practices to ensure a successful implementation. The Net Promoter Score is a customer loyalty metric developed by (and a registered trademark of) Fred Reichheld, Bain & Company, and Satmetrix Systems. It was [read more]
* * * *
We all love getting something for nothing and it is often said that the best things in life are free and that free food tastes better than food that you’ve paid for. Most of us would agree with these sentiments. Free giveaways or free prizes from contests might seem counterproductive for a business that is looking to make money, but they are an excellent way of encouraging new customers to give your company a go. They will also give existing customers a reason to stick with you.
There are a number of things you need to consider before you embark upon this venture though. You need to make sure that you are acting with purpose and that the prizes that you plan to give away are ones that your customers will actually want and appreciate, otherwise, you run the risk of putting them off and ultimately reducing the number of people who engage with your business.
When a prize giving campaign, and the accompanying competition, are well thought out, however, the gains that you stand to make from increased business far outweigh the money you will need to spend on organising the competition and arranging suitable prizes. In this article, we take a look at some of the ways that offering prizes to your customers can help to increase business, bring in new clients, and keep old ones loyal.
Studies have repeatedly shown that when a company offers its customers free giveaways, they feel more inclined to spend money with that company. When the possibility of winning a prize is offered, then customers may be willing to consider purchasing products and services that they otherwise wouldn’t be interested in.
Even the possibility of a prize adds value to existing products, therefore, offering purchasers of particular products and services the opportunity to enter into a prize draw will make them willing to spend more and it is a very effective way of drumming up interest in a new product or service.
Operating a competition with an exciting prize will generate interest amongst those who are already familiar with your company. Also, because of word of mouth, it is also an effective tool for attracting new customers and clients. The prizes that you offer do not have to be top of the range tech products to generate a decent amount of buzz. As long as you organise and run the competition properly, and as long as you are offering prizes which will be of interest to a relatively large number of people, then you stand a good chance of bringing in new business.
Running a competition is all about having fun for everyone involved, but you also need to protect yourself against the unexpected. You should always take out cancellation indemnity insurance or prize indemnity insurance, to protect businesses against the contractual liability to pay out in the event of a win. These types of insurance will protect you from any legal action should you be unable to fulfil your end of the bargain, for example, if uptake of the competition is unexpectedly high.
Running competitions and offering free prizes is an excellent way of raising your company’s profile and having fun at the same time.
You can download in-depth presentations on Customer Retention and 100s of management topics from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.
For even more best practices available on Flevy, have a look at our top 100 lists:
These best practices are of the same as those leveraged by top-tier management consulting firms, like McKinsey, BCG, Bain, and Accenture. Improve the growth and efficiency of your organization by utilizing these best practice frameworks, templates, and tools. Most were developed by seasoned executives and consultants with over 20+ years of experience.
