Chapter 12

The Seduction of Giveaways

giveaways power

At face value, giveaways and contests seem like a powerful way to build a following, build brand awareness, and drive traffic to your online store. You’ve probably heard stories of ecommerce store owners who gave away a $50$100 item and collected thousands of new fans and plenty of sales to cover the cost of the promotion.

So you’re contemplating giving away one of your products. Maybe it’ll get you some traction on Instagram and drive traffic to your site. Or maybe you want to go big and give away a pricey item (like an iPad) to draw some major attention.

Many ecommerce store owners think this way. They figure if they’re willing to eat the cost of an item every week or so, they can amass a huge following and cover the costs through their sales.

But giveaways aren’t that simple.

Here’s why.

1. They Attract People Who Only Want Free Stuff

Be honest.

You’ve probably entered a giveaway in the past just because you liked an item, even though you had zero intention of ever buying anything from the host brand. You may even have a junk email account you use to sign up for free stuff like that. (No need to feel ashamed. Many of us do it!)

But you might be surprised to learn that there are entire forums, Facebook groups, Twitter feeds, and communities of people who find and enter giveaways. These folks enter everything they come across, but have no interest in the brands giving away the products.

It’s tempting to give away a popular item (like a FitBit) to get as many entrants as possible. This tactic works, but you end up with thousands of entrants who don’t care about your brand or anything else you sell. When you send your first email to your new email list, you’ll end up with low open rates and a lot of unsubscribes.

So the trick to building a valuable customer base with a giveaway is actually a two-step process:

  • Give away a non-generic product only your type of customer would want (so you don’t attract everyone and their cousins).
  • Set a barrier to entry so you actually get something out of it. (You might ask for their email address or request that they share the giveaway on Twitter.)

2. They Require More Work Than You Think

Setting up a giveaway page and tweeting out a link isn’t enough. If you don’t attract enough entrants, you won’t get much–if any–return on your investment.

Obviously, you must notify the winner as soon as you draw the prize. If you don’t, you could have some angry customers accusing your brand of cheating them. But you also need to communicate with the rest of the entrants, so they don’t feel like the entire ordeal was a scam.

If you partner with other brands for a major giveaway (occasionally a great way to leverage the audiences of other brands if you don’t have an audience of your own), there’s even more work involved:

Creating copy and images for them to share, constructing landing pages (possibly multiple landing pages on different sites), and setting up Facebook ads, not to mention all the communicating.

It’s also smart to send a “loser” email: An email that reminds entrants about the giveaway, breaks the news they didn’t win, but gives them a “bonus prize” for entering.

The smartest bonus prize for you to give out is a coupon code with a discount.

A percentage of your entrants may have wanted to buy the giveaway prize (or another item from your store), but they wanted to wait and see if they won first.

3. You Could Devalue Your Own Products

If you encounter some success with a giveaway, you’ll probably be tempted to run a few more. Over time, you might go bigger and give away bigger packages or more expensive prizes.

But if you do this too often, you risk devaluing your own products.

You don’t want to become the brand that’s constantly giving stuff away. Otherwise, would-be buyers will hold off to enter your giveaways, rather than purchase your products. (The same phenomenon happens if everything is constantly on sale.)

Social media marketer Nik Metcalf puts it well:

If you are frequently doing giveaways–and I mean like once a week–you’re going to build an audience that expects giveaways once a week. So instead of building an audience that loves your product and loves your brand and loves what you post, you’re building an audience full of people who just want your free stuff. […] This is where the problem comes in: When you post your other pieces of content, they’re not going to engage with it. They don’t care about your content. They follow you because you give away free stuff.

Never Run a Giveaway Out of Desperation

Giveaways can be useful tools for expanding your following and exciting your customers, but they can’t be your primary strategy to drive traffic. If you give away a product because you’re desperate for sales, you’re likely to rush the process and cost yourself time and money.

Here’s a few ways you can use giveaways successfully:

  • Target people who fit your buyer personas. Focus on the quality of the entrants, not the quantity. Don’t promote your giveaway to forums, Facebook groups, or Twitter profiles specializing in contests or sweepstakes.
  • Don’t give away products too often–no more than once a month.
  • Organize everything before you make any announcements. (You want all your ducks in a row, so everything goes off without a hitch.)
  • Encourage virality by awarding each entrant with more chances to win for sharing on social media, emailing to friends, or promoting their affiliate code. (You might need an app to facilitate all that.)
  • Announce the winner exactly when you say you will. Do it publicly so people know you kept your word. (Just don’t forget to notify the winner privately.)
  • Send all entrants an email at the end of the giveaway, thanking them for entering. Offer them a consolation prize, like a coupon.

Most importantly, never host a giveaway because you’re desperate for sales. There’s rarely a clear causation between giveaways and orders on your website. Use giveaways as a tool to build a following of interested people you can market to later on.

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