Sweepstakes vs. incentives: Differences and benefits

By Aaron Small|5 min read|Updated Mar 14, 2024

If you’re looking to get a survey response, boost participation in a research program, or shape customer behavior, guaranteed incentives are a proven tactic to reach your goal.

Using an incentive (even a $10 reward) increases the likelihood you'll get a response by between 19-30%.

Paying research participants, prospects, or customers upfront also increases cooperation and shortens response time

Say you want feedback before launching a product, or are looking to recruit participants to join your research study – you need people and their opinions to collect accurate data.

This post examines the pros and cons between two of them: incentivized participation and a sweepstakes.

Which do you choose? What does the science say? First, let’s clarify what we’re talking about.

Incentives are rewards that motivate individuals to act in a certain way. In general, they take two forms:

Monetary incentives (e.g., Cash, gift cards, prepaid cards (like Visa® prepaid cards), or a donation to a charity)
Non-monetary incentives (e.g., Swag, gifts, travel, merchandise, experiences, promotions, professional development)

Incentives inspire action. They tap into our natural desire for rewards and recognition and are highly effective means to drive engagement and influence decision-making. With an incentive, you promise something either before or after the desired action is completed, which helps spark interest and participation.

Most people aren’t waiting around to participate in surveys all day for free. Even rewards as simple as a $5 gift card can increase the odds of participation. With the power of incentives, you can encourage people to:

Take your company survey
Engage in your customer referral program
Join a clinical research study
Get vaccinated
Try your product demo

Sweepstakes (lotteries) are another type of incentive, usually on a grand scale.

Lotteries have been used throughout history to raise money for governments and fund public projects, like the Rialto Bridge in Venice. Maybe you’re looking to build a bridge, too – to research participants, potential customers, or the general public.

A sweepstakes relies on the draw of big rewards, like a Five Star Luxury Cruise or a $5,000 payout, to attract participation and create buzz. The ask can be simple, such as “Enter your information and you could win!” Sweepstakes can be held online or in real life.

But contrasted with incentivized participation, where anyone who plays gets a reward, only a few will win in a sweepstakes. Not great for them, but good for you: the higher your participation rate, the more cost-efficient your lottery becomes.

So, what’s more effective as a tactic?

A 2019 study at the University of Wisconsin–Madison asked roughly 38,000 undergrads to fill out a survey. Participants were either awarded a $5 Amazon gift card or entered into a high-payout sweepstakes.

Researchers discovered that incentives were more effective across the board, with:

Higher response rates: The guaranteed $5 Amazon gift card resulted in increased survey response rates compared to the prize draws.
Better data outcomes: The gift card group showed lower survey drop-off rates. In other words, they were more likely to fill it out.
Better responses: Compared to the gift card group, the sweepstakes group was more likely to skip specific survey questions.

Prepaid or postpaid?

What’s more effective and less risky? To pay your participants before the action, or upon completion? This 2018 research study asked oncologists to fill out a survey on cancer treatment. Members were either given upfront or promised a $50 check as a reward. Here’s what they concluded:

Cooperation rates were higher for prepaid members (41%) than postpaid (29%).
Prepaid members responded earlier than the others, which lowered admin cost.
The higher cooperation rate and faster response time was associated with 30% cost savings.

So, guaranteed incentives do a better job of driving participation. But let’s not discount lotteries entirely.

When your budget is tight.
If your funds are fixed and you can’t risk going over, a sweepstakes lets you pour all that money into one buzzworthy prize, like free gym membership for life or a hefty cash payout. If you know the costs upfront, and awarding the selected winner is easy, your biggest challenge is likely deciding on the prize.

Pro tip: Know your audience and come up with something just for them. If you’re a cosmetics brand, offer a spa experience, not a robot vacuum. (Though that sounds relaxing, too.)

When the desired action is small.
Say you’re running a conference booth and looking to add new subscribers to your email list. Or you’re looking to gain more followers on social channels. A sweepstakes here can sweeten the deal. The contrast of a low-lift action and high prize potential taps the psychological concept of loss aversion. It capitalizes on our desire to avoid missing out on potential gains, even when the odds of winning are low.

When a partner steps in with the prize.
If you can get an epic prize donated, congrats. You’ve hit the jackpot in terms of reducing overhead costs. Nothing beats free.

A sweepstakes strategy sounds lovely, but there are tradeoffs and potential watch-outs in most cases.

Some people may sense that their odds of winning are low and walk away.
Participants might only remember the prize, but forget the brand promoting it.
Sweepstakes must comply with legal and eligibility regulations, which are more complicated and trickier to navigate than you’d expect. Lotteries are illegal unless run by the state, and businesses that promote illegal lotteries may be subject to penalties. To avoid this, at the very least you’ll need to create an Official Rules document for your program and make it readily accessible to all who enter. Are you hoping to activate influencers in the promotion of your sweepstakes? You must ensure the influencer follows the Federal Trade Commission’s influencer guidelines, or face possible liabilities. Social media platforms also have their own particular rules regarding sweepstakes, so it’s wise to check before you start.

In other words, your job just got way more complicated. So what’s your other option? Let’s shift gears.

When you want high engagement. Guaranteed incentives yield better outcomes, and should be your first choice when looking to achieve your goal. Whether it’s launching a customer referral program or motivating your team to do yoga, incentives can do the trick. Tremendous lets you quickly send incentives and rewards to customers and prospects at every stage of the funnel.

When you’re asking a lot from customers. A one-question survey is easy to do. Sixty questions could take an entire lunch. A guaranteed incentive works well here – it shows that you value your customers’ time and are willing to compensate them for it. Another carrot you can dangle for them? Give them gift card options with Tremendous.

When you can’t handle more headaches. As we mentioned, running a sweepstakes at scale can get complicated with lots of moving parts. An incentive program, when executed with the right partner, can operate smoothly without hiccups.

When you want to keep customers in your ecosystem. A sweepstakes may involve a third party or external brand. There’s value in keeping the ship airtight with fewer moving parts. An incentive program does that.

Budget and objectives are important factors, but our research indicates a simpler and smarter winner when it comes to user participation: guaranteed incentives.

To learn more about how to launch a program of your own and engage your customers, schedule a short call with your friends at Tremendous.

Learn how you can brand an incentive program with your logo, colors, and messaging to keep people on your playground. And let your recipients choose from over 1,000 retailer options in over 200 countries. Contact us today.