Online Contests and Incentives

Permission-based database marketing has become a true winner in the online space, even amid all the industry turmoil. With most online marketers (or traditional marketers, for that matter) spending media dollars more cautiously, many have found good, cost-effective success in managing internal email databases.

Promoting online contests has become an effective way to build email list volumes, particularly at the business-to-consumer (B2C) level for low-commitment consumer goods. But, in many cases, maximizing registrations is not the best solution. Similar to the old-school thought of maximizing Web site traffic, where marketers simply received floods of traffic that jammed servers, building an email list will likely result in lower response rates from your mailings if maximizing list counts is your primary objective.

Getting users to register for mailing lists and opt-in email subscriptions has been the mandate of many companies’ marketing managers, many of whom have turned to online contests as an incentive for registration. Other components, such as a viral marketing piece, can also help drive response rates on database registration.

Of course, for some companies with less-defined target audiences, maximizing reach may be the key to successful marketing; thus, increasing database sizes makes sense. But for those with better-defined audiences, it would be better to accept lower conversions on your mailing list acquisitions in return for higher quality lists later on.

eMarketer published a report recently (May 2001) discussing trends and forecasts for email marketing. It identified a few key statistics that make it apparent that email list quality is critical for success. The study indicates that the average email user currently receives 15.2 emails daily and will receive over 20 by 2003. The study also estimates that the average recipient’s 1.8 permission-based daily email (from 2000) will grow to 4.4 by 2003 (I’d estimate higher).

The study also indicates a trend that more mature Internet users, typically those that have been online longer than one year, start complaining that they receive more email than they would like. Clearly, email clutter has become an issue, and response rates on low-quality mailings continue to decline, especially when the source is unknown.

But incentives can still play an important role in acquiring qualified permission-based registrations, so long as a few key points are recognized. First, use your registration form to filter out less-qualified users. The more comprehensive a registration form is to fill out, the less likely an unwanted contest seeker is going to spend the time chasing a prize. Of course, your list count will grow more slowly, but the quality will improve. At the same time, your database will be more sophisticated and offer more criteria for segmentation. Naturally, it will be easier to create database clusters with more fields of information.

Regarding the actual incentive being used, it is important to remember that you do not have to award huge incentives to succeed. However, you should use the incentive as a second screen for filtering unqualified registrations. Make sure that the incentive is relevant to what your ultimate offer is. Offering merchandise, service, or value-added upgrades for the services you sell:

  • Will help familiarize users with your company, its products, and services
  • Will help develop brand familiarity with a real user experience
  • Will filter out people who have no possible use for your service later on, keeping your database more responsive to offerings

It still amazes me to see the number of contests run by small to medium-sized enterprises (SMEs) that offer cash giveaways. A cash incentive is the No. 1 way to attract unresponsive contest seekers to a database, reducing the overall responsiveness of your group.

Of course, the old rules still apply more than ever. Double opt-in lists will have a higher level of quality than opt-out lists, and building relationships with customers will win you business in the long run. If a user cannot remember registering, then messages received are coming from unsolicited sources in the eyes of the consumer.

It will help in the long run to ask for a greater initial commitment from your users, as it will help identify the source of future mailings, help establish a brand, and filter out unwanted contest seekers. These strategies are going to be critical in order to compete, especially as users’ in boxes continue to expand.

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