Let the Wasteful Spending Begin
November 13, 2010 Leave a comment
It’s about that time of the year when stores begin to throw money away in the most indefensible manner. I’m talking about the annual Christmas contests.
These extravaganzas are the biggest waste of money you can imagine, yet knee-jerk marketers persist in having them even in difficult years like this one. They should stop.
The fact is, contests do not work. Repeat after me: do not work. I should know: I’ve run them, analysed them researched them year after year, We put Mac Fingall on TV and created the modern MoneyMaker competition (David Bynoe had introduced the first spinning wheel back in the ‘60’s, when Mannings was still on Broad Street). We ran some of the most memorable Banks beer contests (not the tosh they do now).
So I know. I’ve been there. Done it. And they don’t work.
It got to the stage where we would produce research for Dacosta Mannings, showing that their expensive competitions appealed to their existing customers, the shoppers they would get in the stores anyway. They did not drag away and customers from Courts, Standard, or anywhere else. Once a person has credit at a store, they aren’t going to move, especially as their store has a contest as well.
But none of this helped. They wanted a contest, and by golly they were going to have one. So we took their money and did it, under protest.
I believe the same is true at every store. Christmas approaches, and they feel inadequate unless they spends scads of money on a contest which no-one remembers, no-one wants, and only their own customers enter. I calculate that these combined events cost well over $3 million per year. I’ve said elsewhere: competitions are expensive thank-you’s to your current customers. That’s all. In the unlikely event you drag someone new to your store, they’re going to go back soon. Contests are not long-term loyalty builders; they can’t be.
Of course the media love them; after all, they write their bonus cheques from them. But contests still don’t work, and haven’t for over 40 years.
Now watch the money being wasted.
The opinions expressed in this commentary are solely those of Greg Hoyos. Greg Hoyos is the principal of GHA DDB headquartered in Barbados.