To Discount or Not to Discount – the Potential Perils of Perks to Drive Social Media Engagement

I was interviewed recently for a blog on the use of perks to drive social media engagement. It’s an interesting topic and judging from the proliferation of such contests and competitions online an important one. Aside from questions related to the efficacy of such competitions, businesses should also be aware of–and knowledgeable about–the impact of these perks on their desired brand image and the laws related to contests, sweepstakes and lotteries.

The offering of perks is commonly used by businesses, large and small, to attract customers. Unfortunately, this isn’t always the best approach. There are a couple of big drawbacks of offering perks (e.g. discounts, etc.). One is that they come to be expected and people are reluctant to purchase anything or interact with the company without a perk involved (JC Penney has been grappling with this issue over the past few years). The other is that it may have a negative impact on the company’s brand, depending on what its desired image is.

That doesn’t mean that perks should never be offered. If the desired brand is aligned with offering perks/discounts and if the offering of perks/discounts is part of the pricing strategy for the company it can make sense. Businesses should just exercise caution and make sure that their perks are part of a well-defined strategy and not just a knee-jerk reaction to declining sales, increasing competition, etc.

One type of perk that can be particularly effective online–and can help build brand and buzz for organizations–is competitions that are somehow aligned with the product/service. For instance, there are companies that have asked customers to “send them photos” of themselves using the product/service in unique places. These photos can be posted to social media sites which increased the reach of the company’s communication. They can also become part of other communication efforts. Building in a “contest” related to the submission of photos (or other materials) can help to increase response/participation. Importantly, these activities should be tied to the product/service and its use/purchase – it’s not just about generating high numbers of participants; ultimately it’s about sales!

Of course, any time you decide to engage people in a competition or contest, you need to make sure that you are following legal requirements related to these types of events. Here is some information from the Direct Marketing Association (DMA) that marketers should be aware of before promoting a contest or competition.

Recommended Reading:

The Everything Guide to Customer Engagement

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