by Simona Covel
CASE STUDY
Tesla Gives Out Swag
DOES TESLA MAKE A great product, which generates tons of great press on its own? Undoubtedly. But that doesn’t stop them from using current customers as marketers. Tesla’s referral system works because they have a fantastic product, as well as infrastructure that makes it easy (and cheap) to refer new clients and reward existing ones.6
The exact rewards for current owners have varied over the years, but here’s a recent example:
1 to 2 Qualifying Referrals:
A Signature Black Wall Connector or miniature drivable electric Model S for kids
3 Qualifying Referrals:
21-inch Arachnid Wheels for Model S or 22-inch Forged Turbine Wheels for Model X or
A week-long test drive of a new Model S or Model X
4 Qualifying Referrals:
Founders Series Powerwall 2—a red, limited-production Powerwall 2 home battery
5 Qualifying Referrals:
Invitation to the next unveiling event or early access to the company’s coming Solar Roof
Clearly the most fanatical brand ambassadors are getting the greatest rewards. Offering a tiered rewards system keeps the company on their advocates’ minds, and encourages them to talk with their friends about how much they love and would recommend their experience with the company.
The costs of the rewards items themselves are easily overshadowed by all the revenue that referred customers bring. Case in point: in late 2015, one Tesla owner referred 188 new customers, and generated around $16 million for the company in two months. That customer won a P90D Ludicrous Edition Model S.7
CAUSE MARKETING
Causes are hip. In 2015, 66 percent of consumers said they were willing to pay more for sustainable brands, up from 55 percent in 2014 and 50 percent in 2013, according to Nielsen.8 The trend shows no signs of abating.
That’s good news for your marketing. You can support a great cause and engender goodwill among your customers at the same time. It can be differentiating if you’re in a crowded industry, and there’s no underestimating the power of the feel-good factor. Imagine a software company supporting initiatives that get new technology into public schools, or a food delivery service donating its goods to homeless shelters. The possibilities are endless.
You may want to take a campaign approach, drumming up interest and publicity over a limited period of time. Or, you can consider making a cause (or causes) a core part of your marketing and product strategy. A charitable partnership that’s aligned with your company’s values has the power to strengthen your mission, foster a philanthropic spirit among staff, and may even turn your once-in-a-while customers into longer-term loyalists.
Try a One-Time Campaign
Start by determining how much you can afford to give away. Annual planning is a good time to think about supporting a cause, so you can incorporate into your budget how much you’ll be giving away. You certainly want this to benefit your business, not hurt it.
To get everyone at the company involved and excited, you might want to ask your employees what cause they care enough about to want to get behind. Or pick something that has had an effect on your life or that’s somehow related to what you do—a way to use your product in a charitable way, or to support a related cause. Or, you can align to a broader initiative that people are talking about, like Breast Cancer Awareness month, the Ice Bucket Challenge, or International Women’s Day.
One of the simplest ways to structure a campaign is to give a percentage of all revenue generated from a specific product purchased for a specific time period. For example: “All profits from our new software product for the next two weeks will be donated to the Columbus City Schools. Or, you can donate dollars for each purchase made over some specific amount. An example: “For any total purchase made over $200, we will donate $20 to the American Red Cross.”
If you’re looking to collect information from customers, that’s a perfect time to begin a campaign. You can donate dollars to a cause of your choice for each survey taken, up to a certain number of surveys. Janine Popick, founder of email marketing company Vertical Response, says when her company offered a $10 donation to the Susan G. Komen Foundation in honor of Breast Cancer Awareness Month for each completed product survey (up to 300 surveys), they hit their goal number in just two days.
Before you start the campaign, make sure you spend some time talking to the charity or funds recipient, too. Many charities offer free publicity as a means of enticing the support and sponsorships of businesses. If your company chooses to sponsor an event or organization, you may see your business logo plastered across t-shirts, social media platforms, and flyers supporting the cause. If the charity hosts an event, you can send a few employees and post pictures on your website and across social media.
Include the campaign in all of your marketing materials along with a link to the cause. Talk about your involvement on all your social networks, and use relevant hashtags. Once you reach a donation amount that feels significant, shout it with pride. Put it on your website and in your social networks. Talk about the amount of money you raised and what it was used for. You can also send a note to customers who participated, letting them know that their participation had a meaningful result.
Make It Last
If you want to incorporate long-term cause marketing, you can think about creating a partnership with a charity or nonprofit organization. No matter what organization you’re considering, first ask yourself whether your company’s vision, mission, and goals align with those of the charitable organization.
Marketing agency Inspira, for example, has a partnership with Alex’s Lemonade Stand Foundation, an organization dedicated to fighting childhood cancer. Inspira not only works with the organization on many of its flagship fundraising events, but it also donates a portion of its profits to the nonprofit to aid in the fight against pediatric cancer.9 The company chose that charity because it’s a cause that hits close to home for founder Jeff Snyder. His daughter, Kennedy, was diagnosed with a rare form of spinal cancer when she was just two years old and has been battling the disease ever since. Inspira’s charitable partnership drives its purpose, the employees it chooses to hire, and the campaigns it develops.
For many companies, there’s an opportunity to donate more than just money—you could offer your product, or your employees’ time. Coders could teach elementary school kids, or extra product could be sent to homeless shelters.
Consider BoxLunch, which belongs to a crowded market of novelty retailers. Through its partnership with Feeding America, the pop culture–themed retailer is working to chip away at the hunger crisis in the United States. For every $10 customers spend on its merchandise, BoxLunch provides a meal to someone in need. To date, it has supplied more than 14 million meals through Feeding America’s food banks.10
The cause that customers can support through a product should align with your company’s overall values. For example, Warby Parker works with a nonprofit that trains people in developing countries to perform eye exams and provide glasses at affordable prices to their communities. Since Warby Parker is a company that sells glasses, this initiative makes total sense. For example, if you sell a product like hiking boots, or sports clothing, it would make sense to support an environmental cause.
One cautionary note: Tread carefully when it comes to political or socially charged causes. Not only do you risk alienating potential customers, but employees as well. Any effort that involves employees should unite them and connect them at a deeper level. You can’t do that if you’re sowing controversy.
How Much Does It Cost?
You control the cost of your campaign or initiative. Make sure the costs don’t run away from you by electing to donate up to a certain dollar amount, or capping your contributions another way. You’ll also need to consider the cost of any corresponding marketing.
For a long-term commitment, you’ll need to build the cost into your business model. Adjust the frequen
cy of these contributions as it fits your financial capacity, and make sure to stick to your word: If you promise to donate a meal for every $10 spent, as BoxLunch does, make sure you can commit to it.
Can I DIY?
Absolutely, and you should. Authenticity—a real connection to a cause—is a key element of cause marketing.
How Measurable Is It?
With cause marketing, it’s not always easy to track and measure effects. Those who advocate for cause marketing say that beyond the warm fuzzy feeling it generates, it helps set you apart in a sea of competitors.
When you’re running a cause marketing campaign, there are some things you can do to quantify impact: You can build some metrics into the initiative. Note how many social media followers you add. Track increased traffic to your site or store.
SWEEPSTAKES, GIVEAWAYS, AND CONTESTS
It sounds like a foolproof plan: Host a giveaway (everyone likes free stuff!) and you’ll receive more sign-ups, likes, comments, and follows than you’ve ever had. Sales will spike because awareness for your product and brand will be so broad—and you will be profitable forever after.
Time for a reality check, says Jim Belosic, CEO and co-founder of contest company ShortStack. While giveaways can be incredibly effective for reaching business goals, they can also be a huge waste of time and money if you haven’t prepared well. Belosic suggests asking yourself a handful of questions before you start the planning process.
Does the Prize Have Emotional Appeal?
While expensive prizes are what some marketers might call “sexy”—an all-expenses-paid trip to an exotic location or the latest Apple must-have—they don’t guarantee success. The giveaways that do really well—those that get shared a lot and/or receive thousands of entries—are the ones that take their intended audience into consideration. The prizes speak directly to the needs, interests, and desires of the audience they’re trying to target. Even better, they’re relevant to the company and keep its products top-of-mind. One great example is a contest hosted by Tootsie Roll Industries, the iconic candy company. The prize? The opportunity to be a test-taster for a new Tootsie Pops flavor. More than 43,000 people entered that particular contest in just three days, says ShortStack’s Belosic, whose company administered the contest.11
During your planning process, spend some time thinking about the kinds of prizes that will resonate with your audience. You could save money on what might have gone to an unnecessarily extravagant prize and you’ll also help improve your giveaway’s odds of attracting more of the kind of people you want to engage with—true fans of your brand.
Am I Asking Too Much of People?
People don’t have a lot of time, and they don’t want to give away lots of personal information. Keep in mind that people don’t trust businesses to do the “right thing” with their personal information. (“Sure, asking for my email address is fine, but why do you need my phone number and zip code and marital status, too?!”) Ask for the bare minimum, like a name and email address. You save people time and engender goodwill by not requiring lots of personal info. By simply reducing the number of fields in your form from six to three, you can increase your giveaway’s conversion rate an average of 66 percent, according to QuickSprout.12
Am I Prepared to Execute?
When you’re in the planning stages, it’s easy to think that by the time your contest launches, executing it will be your top priority. Think again. What often happens for businesses running giveaways in-house is that the responsibilities of day-to-day business get in the way. This often shoves promoting the giveaway to the bottom of the daily to-do list.
To avoid this, automate your promotional efforts as much as you can before it even starts. You may be able to set up autoresponder emails to send to entrants at calculated times. You can also schedule social media posts to publish throughout the duration of your giveaway. The more you invest in marketing automation processes, the better chance your giveaway has of being successful.
What’s the Post-Giveaway Action Plan?
You’re going to collect a ton of data over the course of your giveaway. Use it. Think of every person who entered your giveaway as a brand-new lead. If you got your prize right, you attracted a highly engaged audience and they’re not just leads, they’re highly qualified leads. To make them work for you, follow up. Whether it’s sending out a personalized and incentivized email, or commenting on each piece of user-generated content that was created to enter to win your giveaway, follow-up is a crucial step. Without these post-giveaway efforts, you’re missing out on the real value of hosting a giveaway.
Making It Social
Social media is a natural place to hold a contest. But just because you post it doesn’t mean followers will engage. Execute them carefully, though, and contests and giveaways have the tendency to spread like wildfire.
Timothy Sykes, the founder of an online stock trading academy, has built a massive social media following by offering periodic giveaways to his followers. He does this by asking his followers to answer a relevant trivia question about his content or business.
Timothy requires each follower who responds to tag two to three friends in the answer—doubling or tripling his reach. Sykes sends winners one of his products, such as a DVD program from his academy—and sometimes he gives away cash.13 It’s a great low-cost way to drive a lot more engagement.
Sweepstakes vs. Contests vs. Lotteries
It’s essential to understand the differences between sweepstakes and contests (which are legal promotional campaigns), and private lotteries (which are illegal). A sweepstakes is a campaign in which entrants can win a prize based on chance. No purchase, payment, or other consideration is permitted, and the winner is picked at random. The element of consideration must not exist in a sweepstakes. What does that mean? Consideration is anything of value the contestant must give up to participate, monetary or non-monetary, and can exist if the contestant must expend substantial time or effort that benefits the sponsor. For example, some states have determined that providing contact information is consideration if the information is to be used for marketing purposes.
CASE STUDY
Contest for Good at Cotopaxi
OUTDOOR GEAR COMPANY COTOPAXI donates 10 percent of its profits to charitable causes in the developing world: Buy a Kilimanjaro backpack, and you will be providing three weeks of tutoring to a child at an orphanage in Tanzania. Buy a water bottle, and you’re helping a nonprofit called Charity Water dig a well near a school, enabling young girls to attend school and bring home potable water instead of spending their days going to remote wells.
It’s an admirable mission. But when it comes to rugged outerwear and gear, consumers often are looking for the known brand name—the North Face coat, the Patagonia backpack. To build a brand in the space, Cotopaxi founder Davis Smith needed to think creatively and attract a loyal audience.
On the day of its launch in April 2014, Cotopaxi planned to hold a competition called Questival in Utah, where teams would compete for prizes by completing challenges like hiking or volunteering at a local soup kitchen. To encourage signups, Smith and his team went around to college campuses with their llamas—yes, their llamas—in tow. (Cotopaxi’s logo is a llama—“They’re rugged and they’re the chillest animals you can imagine,” Smith says.) A thousand people signed up to compete.
He didn’t stop there. Each team was required to post pictures of its members wearing Cotopaxi backpacks in order to complete each challenge. This resulted in 30,000 social media posts during the first twenty-four hours Cotopaxi was up and running.
Today, the adventure challenge contests are a major component of the young company’s marketing strategy, with dozens of them held around the country each year.
CASE STUDY
Isabel Harvey Lures Customers to Stores
ONE REASON THE MASSACHUSETTS boutique Isabel Harvey has thrived, say founders and sisters Kimberly and Alexis Kissam, are its promotional contests where customers a
re rewarded with discounts.
The Daily Glitter contest relies on the pull of urgency. Every day in December, Isabel Harvey sends its customers an email. Each email contains a discount offer redeemable that day only—that is, until the store closes for the night, or until midnight if you’re buying online. For example: One day in December 2015, the email offered 30 percent off an Ethiopian leather tote bag. The email provided a picture of the bag, along with the proviso that it was available in two other colors. In addition, the email provided a discount code for online shopping, and a reminder that there was free shipping for all of December.
A different day, the email touted a “Buy 3 Get 1 Free” offer on Nicolette bracelets, which were depicted in a photo. It also included the discount code and the same reminder about free shipping.
Same-day promotions like this make it easy for the Kissams and their employees to gauge which discounts have the most appeal. Any retailer can tell you what “normal” Tuesday afternoon store traffic looks like, compared to what it looks like when there’s a tempting discount on Ethiopian leather totes.
Plus, because it’s all conducted through email, the Kissams can compile data about their open rates and the demographics of customers who use the discount code.
While the Kissams haven’t precisely measured their average cost of customer acquisition, they have gained a general understanding that the contests are a far more efficient means of gaining new customers than, say, radio advertising, which they tried several years earlier.