Eyes on the prize

Entrepreneur, Feb, 1999 by Melissa Campanelli

Looking for a fun way to drive traffic to your Web site or bring long-lost customers back into the fold? A sweepstakes or giveaway could be the ticket.

Cliff Sharples, 34, is a big fan of e-mail marketing. To reactivate some dormant customers and sell more products last summer, he decided to kick his marketing efforts into high gear. Sharples is CEO, president and co-founder of Garden Escape Inc., an online retailer of home and garden products in Austin, Texas. His site sells more than 14,000 products, including plants, seeds, supplies, and garden-inspired home decor and gifts, and also offers professional advice and garden design software. Founded in 1995, Garden Escape has done a fair amount of advertising for its Web site (www.garden.com), including targeted banner ads on well-traveled sites and e-mail fliers sent to visitors requesting information. About 370,000 people visit the Web site each month.

As part of a larger effort to bring even more traffic to his site, Sharples opted for a promotion aimed at the 50,000 inactive names in the company's Web site database, a list that included people who had visited the Web site once and registered but then never returned or bought anything. He launched a straightforward e-mail promotion that offered a $20 credit toward the purchase of anything from Garden Escape. According to Sharples, the promotion generated one of the most successful response rates the company had ever received from an e-mail marketing campaign.

While the success of the campaign may be attributed to the fact that the company was essentially giving away money, most clients spent more than the $20 offered. Many of them indicated the promotion prompted their reassociation with the site, Sharples says. And these customers have continued to make purchases since the promotion ended last August.

REACHING THE MASSES

Incentives similar to Garden Escape's work because they prompt Web users to visit a site and purchase products. But there are other ways to launch successful promotions. If your goal is to drive large amounts of traffic to a site and collect names, for example, a full-fledged prize giveaway is one possibility. Though studies show people sometimes fill out registration forms with bogus information, if the giveaway is something they value, they're more likely to provide accurate data.

Before you get started, however, it's just common sense to run any sweepstakes or giveaway concept by your lawyer to make sure you don't run into legal pitfalls or unexpected tax liabilities.

San Francisco-based 911 gifts Inc. launched a three-week sweepstakes last July, giving consumers the chance to win a PalmPilot electronic organizer. 911 gifts, a company that sells gift items from its Web site (www.911gifts.com), was trying to drive up subscriptions to its Gift-Alert Service, an e-mail service that sends personalized messages to subscribers reminding them about friends and relatives' birthdays or anniversaries and offers gift suggestions from the company.

The promotion was advertised using banner ads on major Web sites, such as Yahoo! and AOL. It offered every Web visitor who clicked on the banner ad and signed up for the service the chance to win a free PalmPilot. 911 gifts entered everyone who responded to the ad into the sweepstakes. Once a week for three weeks, the company had a drawing to give away a PalmPilot. The campaign cost the company just $1,000 for the PalmPilots, plus minimal marketing costs, and 911 gifts achieved its goal: It added subscribers.

"We increased click-through by twofold and sign-up by three- or four-fold," says Arno Harris, the company's vice president of marketing and business development. "But everyone who signed up [requested] one-third the number of reminders that people usually sign up for. So while we were getting better volume, we weren't necessarily getting as high a quality subscriber."

IT'S FREE!

Harris says this is typical of giveaways and sweepstakes. While they attract a wide range of people to your site, many may not be that interested in the service or product for sale - they may just want the free stuff. Harris doesn't regret doing the promotion, however. "We accomplished what we wanted to do," he says. "We drove up subscriptions and increased the number of people who subscribe to the service, and we get to e-mail those people. And actually, the number of e-mails people have signed up for over time has increased."

One other marketing tactic the company employs occasionally is discount-based promotions for products sold on its site - similar to the promotion Garden Escape launched last year. For example, it recently ran a promotion on AOL's home page that offered $10 off an electronic golf scorekeeper the company sells. According to Harris, this type of promotion works well because it encourages the person who clicks through to actually make a purchase.

"I think [the PalmPilot] promotion was a great way to get leads and a strong way to get people to take a look at what we offer," Harris says. "But if you're selling vacuum cleaners and giving away a Porsche, there aren't many people out there who are going to be interested in your vacuum cleaners."