Giveaway query?
Discussion
I am selling some units of a development that will be finished soon and have thought about offering a 15k prize draw for the first 4 people to exchange. Does anyone have any ideas about regulations for this sort of thing? was thinking 15k 1st person 5k 2nd and then some plasma giveaways??? Would be interested to hear views thoughts etc.
In this type of incentive ideas you have to work out whether the financial cost of what you are offering will pay back for itself in benefits to you.
Once this is confirmed you then have to consider what the perceived value is to the person you are trying to 'catch' with the offer.
I would recommend that a 4 to 1 chance of winning a sum will not give the benefit enough to the potential buyer to justify the cost.
Indeed in a housebuying situation, the buyer is most likely moving up the chain and funds may be pushed to the maximum. Even though a 4 to 1 chance is good they couldnt bank on having it, to it would therefore not really effect their buying decision - or certainly not enough to justify the cost - indeed although the money would be a great surprise for them when they move in, all that is is a £15k loss to you!
I would look at incentives that cost you less financially than the perceived value to the buyer. The greater this differential, the better. Indeed, you may even find that the incentives make you money!
For example, the first four people to complete could have their pick of any of the optional extras - decorating, lawns, etc at half price. That could save them thousands instantly and allow them to get their perfect house. If you are doing the extras at a 50% margin it has cost you nothing - at 60% margin your giveaway has made you money!
The best incentives are the ones which are definate. Cash in the bank, or an item you can hold, or a lifestyle they can aspire to. The plasma idea is good - but dont just offer to deliver the box to the door - get it installed on the wall with the cables sunk in for when they move in - that is a benefit that would push people towards it.
Once this is confirmed you then have to consider what the perceived value is to the person you are trying to 'catch' with the offer.
I would recommend that a 4 to 1 chance of winning a sum will not give the benefit enough to the potential buyer to justify the cost.
Indeed in a housebuying situation, the buyer is most likely moving up the chain and funds may be pushed to the maximum. Even though a 4 to 1 chance is good they couldnt bank on having it, to it would therefore not really effect their buying decision - or certainly not enough to justify the cost - indeed although the money would be a great surprise for them when they move in, all that is is a £15k loss to you!
I would look at incentives that cost you less financially than the perceived value to the buyer. The greater this differential, the better. Indeed, you may even find that the incentives make you money!
For example, the first four people to complete could have their pick of any of the optional extras - decorating, lawns, etc at half price. That could save them thousands instantly and allow them to get their perfect house. If you are doing the extras at a 50% margin it has cost you nothing - at 60% margin your giveaway has made you money!
The best incentives are the ones which are definate. Cash in the bank, or an item you can hold, or a lifestyle they can aspire to. The plasma idea is good - but dont just offer to deliver the box to the door - get it installed on the wall with the cables sunk in for when they move in - that is a benefit that would push people towards it.
First reaction is I think it's illegal (strictly speaking) - a draw (luck) for which contestants have to make a purchase (the apartment), and therefore a lottery. And I can't see a legal trick to make it pukka - the normal trick of "No Purchase Necessary" is rather fundamentally inappropriate.
Having said that, I don't think anyone would really make a fuss, provided you promoted it only at the point of sale (show house/sales office), rather than in the press and off-site. Which shouldn't be a problem, as the incentive is to complete swiftly, not to get them to look at the show house.
Some things you would need to consider:
- Clearly define entry conditions. First X to exchange.
- Clearly define the prize format (£15k at high street prizes. We source if possible. If upgrading an item (e.g. Candy freezer to Maytag) it's the marginal cost. Our decision on costings is final).
- The two above should be the small print. Make sure everyone gets a copy, whether on the back of the flyer, or handed out as a typed sheet. Tone needs to be serious, but not overtly legalese - the rules need to be very clear. For a guide to copy, pick up some promotional packs from Sainsbury's - there is fairly standard copy. The bottom line is that customers need to know everything significant that might stop them buying, before they buy (if you understand)
- Clearly show/publicise to buyers status (exchanges made, sales underway). Recognise that the promotion ends the moment you receive that fourth contract. In the small print, make provision for what happens if someone withdraws (fifth exchange enters draw instead, or if the draw has happened, they get the prize that was allocated) - trust me, if you don't plan for it, it will happen.
- Open and independent judging. Why not ask the winners to the prize draw for champers, to meet their new neighbours, and to "spec" their prize? Strictly speaking, you are supposed to maintain a list of winners that any member of the public can request.
I agree with Justin, offer goods rather than cash. Customers will see it as real value (things for the home), and it should cost you less than high street prices. I would spread the value more: £10k top, £3k bottom? £3k will provide real value (more than "just a plasma" ), £15k is an awful lot. Tips:
- All items must be installed by the time they move in.
- You will need a "Prize Manager" to spec, source, fix problems (can't get X, why don't we replace with Y?), and verify installation (the plasma screen needs to go exactly where they want it, not where sparky thinks it should go)
- Recognise that there will be problems. Items not available, layouts need to be decided or altered, and you're dealing with customers, who can never make a decision. So always deal in good grace.
- Be generous with the definitions of values. If you can get that £2k plasma for £1.2k trade, value it at £1.75k. That way, they see even better value, and won't be complaining that they have found it at £1.8 through Kelkoo (odds are at least one winner will be that tight).
- You might consider defining a list of acceptable upgrades that they can choose: Standard Cooker is NEFF 1234, upgrade options are Smeg ABC @ net prize value of £600 (nominal price of Smeg, less nominal price of NEFF), Smeg ABCX @ £750, etc. That way, everything is laid out and just tick-the-box. Having said that, allow some flexibility (I suspect winners would love to upgrade and customise their bathroom, and that's not an area where you can be so specific).
- Most importantly, when speccing the prize, think like a customer: think of bonus features that they would really want.
Final, but fundamental question. Is it the right sort of promotion for you? I don't think it will actually encourage people to exchange faster. Whilst a nice prize, in relative terms it's about equivalent to free mats with your new car. And because of the definition of entry, it's not as certain as "sign this form now, and you're in the draw".
However, what it will do is excite people. It's a nice talking point for the salesman. Site visitors will remember you, as you have a unique selling point. That may well be enough for you, promoters often forget that excitement alone can be sufficient justification.
The other side of that question is your type of buyer. I would say it's a very good idea if they are first time buyers, less so if they are million pound luxury apartments.
So in summary:
- Understand your buyers, and understand what the promotion will actually deliver.
- Define your prize structure to maximise appeal to the buyers.
- Recognise that it will create hassle. But if you try to reduce the hassle by simplifying the prize structure, you might reduce the appeal.
- Write very clear instructions, and make sure every potential entrant receives a copy.
Oh, and recognise that it's probably illegal.
Having said that, I don't think anyone would really make a fuss, provided you promoted it only at the point of sale (show house/sales office), rather than in the press and off-site. Which shouldn't be a problem, as the incentive is to complete swiftly, not to get them to look at the show house.
Some things you would need to consider:
- Clearly define entry conditions. First X to exchange.
- Clearly define the prize format (£15k at high street prizes. We source if possible. If upgrading an item (e.g. Candy freezer to Maytag) it's the marginal cost. Our decision on costings is final).
- The two above should be the small print. Make sure everyone gets a copy, whether on the back of the flyer, or handed out as a typed sheet. Tone needs to be serious, but not overtly legalese - the rules need to be very clear. For a guide to copy, pick up some promotional packs from Sainsbury's - there is fairly standard copy. The bottom line is that customers need to know everything significant that might stop them buying, before they buy (if you understand)
- Clearly show/publicise to buyers status (exchanges made, sales underway). Recognise that the promotion ends the moment you receive that fourth contract. In the small print, make provision for what happens if someone withdraws (fifth exchange enters draw instead, or if the draw has happened, they get the prize that was allocated) - trust me, if you don't plan for it, it will happen.
- Open and independent judging. Why not ask the winners to the prize draw for champers, to meet their new neighbours, and to "spec" their prize? Strictly speaking, you are supposed to maintain a list of winners that any member of the public can request.
I agree with Justin, offer goods rather than cash. Customers will see it as real value (things for the home), and it should cost you less than high street prices. I would spread the value more: £10k top, £3k bottom? £3k will provide real value (more than "just a plasma" ), £15k is an awful lot. Tips:
- All items must be installed by the time they move in.
- You will need a "Prize Manager" to spec, source, fix problems (can't get X, why don't we replace with Y?), and verify installation (the plasma screen needs to go exactly where they want it, not where sparky thinks it should go)
- Recognise that there will be problems. Items not available, layouts need to be decided or altered, and you're dealing with customers, who can never make a decision. So always deal in good grace.
- Be generous with the definitions of values. If you can get that £2k plasma for £1.2k trade, value it at £1.75k. That way, they see even better value, and won't be complaining that they have found it at £1.8 through Kelkoo (odds are at least one winner will be that tight).
- You might consider defining a list of acceptable upgrades that they can choose: Standard Cooker is NEFF 1234, upgrade options are Smeg ABC @ net prize value of £600 (nominal price of Smeg, less nominal price of NEFF), Smeg ABCX @ £750, etc. That way, everything is laid out and just tick-the-box. Having said that, allow some flexibility (I suspect winners would love to upgrade and customise their bathroom, and that's not an area where you can be so specific).
- Most importantly, when speccing the prize, think like a customer: think of bonus features that they would really want.
Final, but fundamental question. Is it the right sort of promotion for you? I don't think it will actually encourage people to exchange faster. Whilst a nice prize, in relative terms it's about equivalent to free mats with your new car. And because of the definition of entry, it's not as certain as "sign this form now, and you're in the draw".
However, what it will do is excite people. It's a nice talking point for the salesman. Site visitors will remember you, as you have a unique selling point. That may well be enough for you, promoters often forget that excitement alone can be sufficient justification.
The other side of that question is your type of buyer. I would say it's a very good idea if they are first time buyers, less so if they are million pound luxury apartments.
So in summary:
- Understand your buyers, and understand what the promotion will actually deliver.
- Define your prize structure to maximise appeal to the buyers.
- Recognise that it will create hassle. But if you try to reduce the hassle by simplifying the prize structure, you might reduce the appeal.
- Write very clear instructions, and make sure every potential entrant receives a copy.
Oh, and recognise that it's probably illegal.
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