| ing promotions planning, the question inevitably arises: | | | | online promotion strategy that impact what sort of |
| how should we structure our prizes? As with any | | | | prize structure will be most enticing to your target |
| good question, the answer is: it depends on your | | | | audience. Two of the most critical are 1) whether |
| audience and the specific goals of your online | | | | you’re targeting current customers or |
| promotion strategy. | | | | non-customers, and 2) how risk tolerant your target |
| Given a fixed budget, the main problem in structuring | | | | audience is. |
| your prizes is to find the right balance between a small | | | | Risk Tolerance: It’s important to recognize in |
| number (often just one) of high-value prizes, versus a | | | | your promotions planning that your targets may be |
| large number of low-value prizes. | | | | more or less risk tolerant. All else equal, a more risk |
| It’s important to note during your promotions | | | | tolerant audience will prefer a single high-value prize, |
| planning that what you’re trying to impact is not | | | | and a risk averse audience will prefer many |
| the actual customer satisfaction or perceived value | | | | smaller-value prizes. As part of your overall online |
| upon using the product. Instead you’re trying to | | | | promotion strategy, it is important to balance the risk |
| impact the combination of the customer’s | | | | tolerance of your target(s) against the number of |
| expected (or anticipated) value of the product and | | | | prizes you offer. |
| prize(s) together. | | | | Coming up in Part 2
the #1 factor in determining |
| There are a number of factors to consider in our | | | | your prize structure! |