Need a way to add steam to your marketing program or invigorate employees? Contests can do it. This article describes what contests do best and how to organize them for maximum impact.

OVERVIEW

For drama, few things beat a contest of skill. Think the Olympics. Think Academy Awards. Both pit competitors who are tops in their field; both produce moments of breathless suspense.

Why not steal a little of that drama for your company? Whether you're looking to build excitement around a product, motivate employees, stir up some publicity, boost sales, cultivate loyal customers, or attract new ones, contests can be a powerful promotion technique. And they can be as simple as a small-scale contest for employees or as souped-up as a national consumer campaign.

DEFINITIONS

There's often confusion about how a contest differs from a sweepstakes or a lottery. Basically, the difference hinges on three factors: prize, chance, and consideration or purchase.

prize: anything of value awarded to winners, even if the value is nominal.

chance: an occasion where winners are selected by a random process.

consideration or purchase: what an entrant must do to participate in a contest; can be monetary or nonmonetary; for example, a customer must buy the sponsor's product and show proof of purchase with entry, or the customer must answer a number of survey questions in order to qualify for entry.

These three elements can be combined in the following ways:

lottery: a promotion in which all three of the elements are present; in the U.S. a lottery must be state-operated to be legal.

sweepstakes: a game in which consideration is eliminated; no purchase is required to enter.

contest: a game in which chance is eliminated; winners are chosen according to predetermined criteria of skills, such as writing the best essay or reaching a sales goal.

WHY A CONTEST?

Versatility is one of the strengths of contests as a promotional device. Contests can be aimed at consumers, employees, or dealer/distributors, and they can be sculpted to achieve a variety of goals, including the following:

Generate publicity. Contests are a great way to draw attention to your company or your brand. You can announce the results in the media, and winners are often quoted. The ceremony for awarding prizes is a natural for media coverage. One cosmetics company enhanced its public relations effort by sponsoring a contest for models. The media were eager to interview and photograph the beautiful winner, who was featured in the company's next ad campaign.

Produce a spike in sales. If consumers must make a purchase to enter the contest, sales can be expected to shoot up.

Reward loyal customers. Give customers who already love your product or company a reason to stay loyal and involved. Boating Magazine, for example, runs an annual Best Boat Name contest for readers (yielding such winners as Marlin Monroe and Seas the Day). The contest is fun, heightens a sense of community among readers, and makes for great copy.

Spur creative thinking. Contests can help spark creativity to name a product, come up with a slogan, or find solutions to problems. Example: The Castle Group, a Boston public relations agency, holds a Hit of the Week competition (a hit, in PR parlance, means obtaining press coverage for a client). Prizes, awarded quarterly, include theater tickets, cash, and an extra vacation day. The program sparks friendly competition among account teams and teaches junior employees how to think "outside the box."

Motivate salespeople, distributors, or dealers. A contest is especially effective for spurring sales representatives to push your product just a little harder. Example: A software manufacturer ran a three-month program for resellers around a boxing theme. Goals were to increase sales, boost the number of dealers stocking the company's products, and train dealer salespeople to sell the products. Prizes included tickets to a championship boxing match.

Create excitement around a brand. Draw consumer attention to your product by creating brand recognition, awareness of features and benefits, and the impulse to buy.

Drive traffic to a Web site. A contest can be used to collect e-mail addresses of entrants or simply get people to visit the site and see your marketing messages.

WHEN IS A CONTEST NOT A GOOD IDEA?

Contests can make a lively contribution to a wide variety of marketing programs, but they may not be the answer in the following situations:

When your budget is limited. If you're targeting consumers, contests are generally more expensive to run than sweepstakes, because processing and evaluating entries is more time-consuming and expensive.

When you want the largest possible number of entries. In most cases, a contest will draw fewer contestants than a sweepstakes, because more effort is required to enter. Sometimes, though, the involvement devices inherent in every contest can draw more entries, says Lisa Manhart, vice president and management supervisor of Ventura Associates, a New York City promotion agency. She cites recipe contests as an example. "People love to show off what they know," she says. "A recipe contest will often attract more entries than a straightforward drawing."

CRITICAL ISSUES

When creating a contest, pay close attention to these six issues:

Criteria. It is essential that criteria for determining winners be spelled out clearly, both for judges and for entrants. In a photo contest, for example, what constitutes a prize-winner: unusual subject manner, technical perfection, artistic merit, suitability for publishing? For employee contests, clear-cut criteria are especially important. Employee-of-the-Month contests are great, but unless specific guidelines are determined for how the winner will be chosen (say, exceeding quality goals, or taking on a significant project outside regular duties) employees will be quick to suspect that the contest is rigged. It's always a good idea to structure criteria so that the same person doesn't win every time. With salespeople, for example, peg the contest on the percentage increase over last year's sales, not total sales.

Prizes. Offer something appropriate for your target audience. In the Boating Magazine example above, prizes were logo T-shirts and boating caps. And make it exciting. Caribbean cruises are passé these days, says Ventura Associates' Manhart, but cruises to Alaska are in demand. A console TV might be yawn-inducing, but a new flat-screen TV is something special.

Judges. Aim for a cross-section of expertise appropriate to the theme of the contest. In the United States Postal Service example outlined below, judges for a children's stamp-design contest included education experts, elementary-school art teachers, and professional stamp designers.

Legal issues. Consumer contests are subject to regulations that employee programs are not. For consumer contests, it is essential that you consult an attorney or promotion expert to ensure you are not unwittingly breaking the law. There are numerous arcane laws at both the state and federal level concerning contests and sweepstakes, and they change frequently. Get legal advice before proceeding. In general, published rules for consumer contests must include:

• description of prizes
• approximate value of prizes
• odds of winning
• where a list of winners may be obtained
• duration of contest
• restrictions, such as age or country of residence.

Outside providers. How much time can you devote to creating, administering, promoting, and fulfilling your contest? If the answer is, not much, it's wise to outsource. Another gauge of whether to look for outside help: What are the business risks of goofing up? If you put on a poorly-designed contest for your five-person department, hopefully your colleagues will forgive you. But if you plan to invest a lot of money in prizes and promotion and you're targeting a crucial audience, the downside risks alone warrant hiring a consultant or a promotion agency.

Budget. Major budget items for a contest include administrative costs, advertising and support materials, and prizes. Here are some tips about each area.

• Administration. Don't forget travel expenses and fees for judges; processing of entries; back-end activities, such as building a database of entrants; and costs associated with awarding the prizes, including notifying winners and staging an awards ceremony. If you decide to hire an outside agency, expect to pay a minimum of $5,000-$15,000 for program creation plus out-of-pocket expenses.
  
  
• Advertising and support materials. For retail contests, this will include such items as point-of-purchase displays, shelf-talkers, and hang-tags on products. Then there's the cost of creating and placing ads to publicize the contest. For dealer/distributor and employee contests, costs will include newsletters, special mailings, and possibly teaser gifts to build momentum.
  
  
• Prizes. Don't forget to include shipping costs, which can be formidable if you're awarding hundreds of second- and third-place prizes.

CASE HISTORIES

Consumer promotion. At the United States Postal Service (USPS), market research showed that stamp collecting was on the decline among children. Many kids viewed it as a staid, boring hobby. To change that perception, USPS recently mounted the Stampin' the Future Worldwide Design Contest, in which kids were invited to design a stamp.

The contest, administered by Ventura Associates, was promoted via display materials in post offices nationwide, and educational materials were distributed in classrooms. USPS says the contest was a success. More than 120,000 entries were received, and feedback indicates that the youngsters were excited to have a chance to design a stamp and that they perceived stamps and stamp collecting as fun.

The prize structure meshed with the objectives of the promotion. The top four winners will have their designs reproduced as postage stamps, and they will also receive a computer and two expense-paid trips to the award ceremonies. Finalists in the contest won a CD-ROM encyclopedia program, and all participants received a thank-you package.

Dealer/distributor/franchisee. For the last two years, Restaurant Developers Corp., a major franchiser of fast food chains in the Midwest, has mounted a clever contest to encourage superior customer service at its 85 Mr. Hero outlets. The contest for 1999 is called X-Games, because it focuses on extraordinary service, exceptional quality, and creating an exciting atmosphere in stores.

Over six months, the stores will try to accumulate points based on three critical criteria: sales-dollar increase over last year; two quality-assurance visits by corporate staff members, and 12 visits by a "mystery shopper," someone from an outside firm hired to pose as a customer and evaluate the restaurants' food and service.

Each month, the store owner with the highest total score for that month will receive $2,000 to be distributed among employees as he or she sees fit. At the end of the contest, the store with the highest overall score gets $10,000. Second and third prize will be $2,000 and $1,000, and bonus prizes of $1,000 will be given to the winners who excelled in each of the three critical criteria.

Last year the contest improved customer service, generated enthusiasm among store owners and employees, and most important, increased customer traffic and profits.

FIND A SUPPLIER

To find a supplier, go to #9520, Supplier Finder.

ASSOCIATIONS

Promotion Marketing Association offers numerous seminars, many specifically dealing with contests. Members also receive free legal advice. The organization sponsors the Reggie awards for outstanding promotions. Call 212-420-1100; fax 212-533-7622; e-mail mailto:pmalink@pmalink.org; go to BOOKS

Sales Promotion Essentials, by Don E. Schultz, William A. Robinson, and Lisa A. Petrison, provides the basics on how to use ten major sales promotion techniques. 196 pp. NTC Business Books. $19.95, through Amazon.com $15.96.

Dartnell Sales Promotion Handbook, edited by Tamara Brezen Block and William A. Robinson, is a good reference book for anyone in the business. It details all aspects of the sales promotion industry, including contests and sweepstakes. 910 pp. Dartnell Corp. $29.95 (paper), from Amazon.com $23.96.

1001 Ways to Reward Employees, by Bob Nelson. A fun, snappy compilation of ideas. 271 pp. 1994. Workman Publishing Co. $10.95, through Amazon.com $8.76.

How to Recognize and Reward Employees, by Donna Deeprose. A thoughtful exploration of why many reward programs don't work. 107 pp. 1994. AMACOM. $10.95, through Amazon.com $8.76.

PUBLICATIONS

Promo, monthly, print and online. Designed for people who make promotion marketing a regular part of their jobs. Many articles are geared to people who work for agencies, but it's also useful for any company that uses promotion marketing. $65/yr. (international $165/yr.). Call 888-892-3613; fax 609-786-4415; go to http://www.promomagazine.com

Incentive, monthly, print and online. Provides information on all aspects of the incentive field, including contests. A useful special issue is The Incentive Buyers Guide, a supplier directory for merchandise, travel, and other sales incentives. Incentive is free to qualified buyers, otherwise $55/yr. Call 212-592-6263; go to http://www.incentive-mag.com

Potentials, monthly, print and online. Covers a range of subjects related to promotion marketing, with an emphasis on sales incentive products. About half of the editorial space is dedicated to photos and descriptions of new products, and the rest has articles on promotion marketing. Free to qualified users, otherwise $24/yr. Call 612-333-0471; go to http://www.potentialsmag.com

ONLINE SERVICES

Contest Companion provides links to contests in several broad categories, including photo, essay-writing, and trivia contests. Go to http://www.contestcompanion.com

Huron On Line is another directory of current sweepstakes and contests from major companies. Go to RELATED SMN ARTICLES

For information related to contests, see #6050, Sweepstakes on the Web.