Blog / Marketing incentives

5 ways to use sweepstakes to win new customers

By Amy Rigby|5 min read|Updated May 24, 2024

If you want to grow your email list fast, boost conversion rates, and lower your cost per lead, don’t sleep on sweepstakes. One company acquired leads for $0.05 each, thanks to a single giveaway. And if you can get your sweepstakes prize donated by a partner company, which we’ll talk about below, and promote it to your existing email list, you could knock that cost per lead (CPL) down to $0.

Unlike guaranteed incentives (such as a coupon for $5 off), sweepstakes don’t ensure a reward for everyone, but they do usually have a higher-value reward (think a $500 gift card to one lucky winner). That’s what makes this type of promotion so exciting for consumers.

How sweepstakes work

A sweepstakes is a game that offers a prize to a winner who’s chosen at random on a predetermined date. It combines the power of urgency (a deadline), value (a prize), and scarcity (only one or a few will win) to become a potential demand generation powerhouse.

To host a sweepstakes, also known as a giveaway, you need:

At least one prize
At least one method of entry that does not require a purchase
To randomly select the winner

That last part is key: a sweepstakes is a game of chance, so you must pick a winner at random. If you’re picking a winner based on skill (e.g., the person who submits the most compelling essay), that’s a contest, not a sweepstakes.

It’s also worth mentioning that a sweepstakes is not the same thing as a lottery or raffle because a sweepstakes cannot require participants to pay for entry.

Benefits of sweepstakes

A sweepstakes is an appealing promotional tool for brands because it:

Generates lots of leads fast. Because of the perceived value, urgency, and scarcity, sweepstakes generate more leads more quickly than other promotions.
Great for businesses on a budget. Sweepstakes have a relatively low CPL. That’s because a sweepstakes only has to provide one prize, whereas a promotion like a discount code has to provide the reward to everyone who applies it.

You can lower your CPL even more by partnering with another company that provides the prize. So, for instance, if you’re a photo editing software company, you might partner with a photography store that donates a camera for your sweepstakes. You could then host a giveaway that promotes both of your brands, without spending a dime on the prize.
Boosts conversion rates. Here, a “conversion” might mean an action like a subscriber opening your email or a website visitor submitting an entry form. Because a sweepstakes offers the chance of winning something of value, prospects are more likely to complete actions that are relatively low lift.

ShortStack found that emails with subject lines confirming entry into a giveaway or contest have a 46.9% open rate. A considerable improvement on the typical average email open rate of 34.2%.
Generates revenue. How can a sweepstakes generate revenue when it can’t require a purchase to enter? Inevitably, some of those leads will still go on to buy from your brand. JewelScent hosted a giveaway that generated over $15,000 in revenue in two ways:
After entering the giveaway, participants saw a screen with a discount code, clicked “Visit Now,” and bought something on the site.
Giveaway-related marketing (such as email and social media) also prompted purchases. JewelScent sent a consolation email offering a 10% off promo code to those who didn't win.

5 ways to use sweepstakes to win new customers

1. Grow your email list by offering prospects a chance to win by subscribing

Setting up your sweepstakes so that subscribing to your email list is the method of entry is a smart move for two reasons:

It’s a small ask. All they have to do is enter their email address.
You can capture a lead and, even when the sweepstakes ends, continue warming them through email marketing until they convert to a customer.

AppSumo grew its email list by 528,238 subscribers in four years by hosting 25 giveaways. Many of those leads went on to become customers, averaging $0.83 of gross profit for every new subscriber. In one giveaway where the prizes were two MacBook Airs, AppSumo paid $2,400 for the laptops and acquired 48,187 new subscribers—that's a CPL of $0.05.

2. Encourage sweepstakes participants to refer friends to boost their odds of winning

Position your brand for virality by adding a refer-a-friend option. Participants earn additional entries for every new person they refer to the giveaway. This incentivizes sharing, because every new referral increases their odds of winning the randomized draw, adding even more leads to your pipeline.

One edtech company ran a referral contest that offered 100 points for every new referral and gained over 57,000 new email leads, 28,944 of them being referrals. That means half of entrants referred at least one new person.

Shoppers are more likely to trust their fellow consumers than trust your brand. That’s why word-of-mouth marketing (WOM) spreads so rapidly. Fan the flames of WOM by weaving user-generated content (UGC) into your sweepstakes strategy.

You have two options:

Make UGC the primary means of entering your giveaway. For instance, you could create a branded Instagram hashtag and ask followers to post photos of themselves using your product. Remember, though, for it to be a true sweepstakes, you’d still need to select the winner at random.
Make UGC a bonus option for earning additional entries. Submitting UGC can also be a bonus method of entry, earning entrants extra points that increase their odds of winning.

In your terms and conditions, include language that ensures you’ll own the submitted media and be able to use it in future campaigns.

4. Give loyal customers an exclusive chance to win

Make your loyalty program members feel like MVPs by running sweepstakes marketed for them. This can increase the likelihood of new memberships, too. Loyalty program members typically spend more than non-members, making the leads you gain from this sweepstakes strategy particularly valuable.

For example, P&G hosts weekly sweepstakes as a perk of its loyalty rewards program. Members can redeem their points for one entry into the giveaway of their choice.

5. Integrate sweepstakes into win-back campaigns

What’s better than winning new customers? Winning back old ones. When a customer hasn’t engaged with your brand in a few months, running a sweepstakes may infuse the novelty needed to pique their interest again.

Marketers typically use win-back campaigns to reactivate email lists, getting lapsed subscribers to open up messages again. Campaign Monitor analyzed data from more than 3.9 billion recipients, and subject lines with terms that indicated novelty (such as "update," "new," and "introducing") were among the 15 power words that boosted open rates.

So to get back old customers, promote your giveaway to your email list, and be sure to use one of those power words to convey the novelty and excitement of the sweepstakes.

Conclusion

Sweepstakes generate a lot of leads and excitement for a low cost. They’re a promotional tool worth trying at least once.

For the most bang for your buck, sweepstakes are hard to beat. Because, at best, you only need to provide one reward to a random winner, sweepstakes are relatively low cost. And if you can get a partner company to donate a prize, even better.
Be sure your promotion stays compliant with laws. Sweepstakes in the U.S. are regulated by various federal and state laws. Rules and regulations vary depending on location, so consult a legal professional to ensure your promotion is compliant.
Not every participant will win, but you can offer everyone a consolation prize. When you send the email notifying the entrants who didn’t win, throw in a consolation prize to lift their spirits and win new customers. Consider offering a promo code for a discount on their next purchase.
Unsure of what kind of prize will entice more entrants? Gift cards are a safe bet. Market research company Drive Research ran a study to find out which survey incentives respondents preferred most. The top two most appealing incentives? A $100 Visa gift card and a $100 Amazon gift card. Respondents cited these rewards’ flexibility as desirable; they could use them anywhere and choose what to purchase.

If you need to deliver sweepstakes prizes at scale, Tremendous can help. We make it easy to track and send incentives to anyone, almost anywhere. Plus, recipients can redeem their reward in over 2,000 ways, including as a Visa prepaid card.

Published May 24, 2024

Updated May 24, 2024