Here is a list of our current affiliate partners and how we earn money
Considering prize fulfillment services? Once your sweepstakes or contest ends, the next step is to deliver the sweepstakes prize.
Hiring a sweepstakes company doesn’t automatically mean that they are also a prize fulfillment agency. Don’t assume prize fulfillment services are included in sweepstakes or contest marketing quotes!
As a result, you should have a general understanding of what goes into reward sourcing and incentive and prize fulfillment services so that you can ask the right questions.
As you research sweepstakes and contest marketing agencies to work with for your promotion, ask about prize fulfillment.
Prize Fulfillment Basics
Here is how prize fulfillment works for sweepstakes and contests, what a prize fulfillment agency should offer, and when and why you should obtain prize indemnity insurance for a promotion.
IN THIS ARTICLE:
- What is prize fulfillment for sweepstakes and contests?
- Contest fulfillment services
- Prize procurement
- Prize fulfillment for many winners
- Prize indemnity insurance
Let’s get to work!
What Is Prize Fulfillment? How Does It Work?
Prize fulfillment services generally offer some combination of the following services:
- Prizing Strategy
- Prize Sourcing
- Prize Procurement
- Rebate Fulfillment
- Prize Fulfillment Management (Pick and Pack, Inventory Management, Shipping)
- Travel Agency/Event Coordination
- Notification, Affidavits and Taxes
- Winner Verification
- Winner Outreach (to Enhance the Sweepstakes Experience)
- Customer Support
While some sweepstakes and contest companies may also offer these services, you may find that hiring a separate prize fulfillment agency can make your promotion more cost-effective.
Ask prize fulfillment services what they can offer over the in-house prize fulfillment services of a sweepstakes company.
The answer to this question will vary greatly depending on the design of your promotion and the sweepstakes or contest prizes that you plan to give away.
There is no one-size-fits-all answer to this question.
Contest Fulfillment Services
With contest fulfillment services, you get access to the vendors that you need to deliver awards, as well as, prize options.
The most popular contest prize for all types of contests including essay contests, writing contests, photo contests, and video contests is money.
By giving away a large cash prize or rare prize, contest participants will put more effort into their contest entries.
If this is for a social media contest, the value of the prize can play a significant difference in the quality of the user-generated content (UGC) that your contest generates.
Aim for the best quality possible every time and you will be able to reduce the expenses of generating content later. Plus sweepstakes and contests generate a ready-made source of viral traffic so you’ll be able to run leaner paid ads with creatives already designed for you.
The better the incentives for users to create amazing content, the less need there will be for UGC moderation.
Why Is a Prize Procurement Service Recommended for Sweepstakes and Contests?
The ability to get participants excited about your sweepstakes or contest depends directly on you being able to deliver high quality prizes.
Plan Ahead for Prize Procurement
Prize procurement isn’t something that you should leave until the last minute before your sweepstakes or contest should be set to go live.
If you don’t have the prizes on-hand in your own inventory, you may find that it’s more difficult than you expected to get the quantity of prizes that you need for your promotion.
Prize Fulfillment Agencies Offer a Wider Array of Prize Options
Experienced prize fulfillment agencies can help you expand your possibilities. Want to give away a trip to Tahiti, box seats at the game, or $220,000?
Don’t feel limited to choosing prizes that you can easily buy from a store locally. Worse, your participants might recognize what store they came from and not enter just because of that!
Sweepstakes or contest are much more exciting when they create a customer experience that seems like a once in a lifetime opportunity or chance to win a rare or large prize for free.
Furthermore, some sweepstakes prizes are only available at volume through specific vendors.
If you want to maximize your sweepstakes prize options then you need to use a prize fulfillment service that offers prize sourcing.
How to Decide When You Need Prize Fulfillment Management?
If you’re planning to run a sweepstakes or contest for the first time, you may think that you can handle the prize fulfillment management on your own.
Don’t fall into this trap, especially if there is only one grand prize to be delivered.
This puts your brand at a disadvantage from the start.
If something goes wrong during the prize fulfillment after winner notification, you can potentially open your company up to bad feedback from sweepstakes participants.
Worse, sweepstakes prize fulfillment mistakes result in legal liability as you are required by sweepstakes laws to deliver the prize.
Prize Fulfillment Mistakes Can Tank Your Entire Promotion
A logistics problem isn’t going to stop a regulator from intervening in your promotion if there is a complaint from the sweepstakes winner.
With a prize fulfillment agency, you’ll get access to professional prize fulfillment management including: quotes, shipping carrier options, order tracking, customer support, customer returns, and secure warehousing.
You’ll also get the assurance that your sweepstakes or contest winners will enjoy a fun and exciting promotion experience.
Prize Fulfillment Services for Events
Even with prizes that don’t involve pick and pack fulfillment services or shipping, a prize fulfillment agency may still be needed.
In the case of sweepstakes and contest prizes that involve events, prize fulfillment agencies can provide trip coordination services, including accommodations, transportation, and tour guides.
Events not only need to have precise execution in order to ensure guests safety, the services often need to be sourced from several vendors.
Having a prize fulfillment agency negotiate on your behalf can help you maximize your budget while also ensuring that the services will be executed seamlessly.
If you run sweepstakes and contests frequently, prize fulfillment services can also be your go-to events coordinator.
How to Deal With With Winner Notification, Affidavits and Taxes?
For sweepstakes that have prizes of $600 or more, the sweepstakes sponsor needs to notify the winner of the amount of “income” that they won from the sweepstakes.
First, the prize fulfillment agency will make sure that all sweepstakes winners have completed IRS Form W-9.
Then the winner(s) will be sent an IRS Form 1099-MISC.
A prize fulfillment agency can submit the Form 1099-MISC to all of your sweepstakes winners via bulk mail, cutting the cost of shipping and providing you with reliable tracking to confirm that each of the participants did in fact receive the form as required by law.
Another aspect of the prize fulfillment process that needs to take place is to also make sure that the necessary legal documents to release liability from the sweepstakes sponsor are completed by the winner(s).
Sweepstakes winners should sign Affidavits of Eligibility, Liability, and Publicity Releases. If the sweepstakes prize is a trip, then they should also sign waivers, as well.
Sweepstakes Winners Should Seek Consultation With a Tax Lawyer or Legal Advisor
To be clear, it’s not the job of the brand, sweepstakes or contest marketing company or prize fulfillment agency to provide legal and/or tax advice to sweepstakes winners.
Always advise sweepstakes and contest winners to see out their own tax attorney or legal advisor.
There are law firms that practice gaming law and can provide guidance on sweepstakes law.
Don’t Forget About State Sweepstakes Laws
Some states, namely New York, Rhode Island, and Florida require sweepstakes to be registered and bonded if the sweepstakes prize has an ARV of $600 or more.
There are also other state sweepstakes laws which require the sweepstakes sponsor to publish a winner’s list. A prize fulfillment service will help make sure that you meet any state requirements if they provide winner management services as well.
How to Deal With Prize Fulfillment for 100s of Sweepstakes Winners?
Enormous sweepstakes and contests with 100s of winners involves a greater degree of prize fulfillment management then a single prize.
Companies should always hire a prize fulfillment management if there are hundreds or thousands of sweepstakes prizes to be delivered.
If even a small percentage of winners have a problem with sweepstakes prize delivery, then your brand suffers the consequences. So always outsource prize fulfillment in the case of sweepstakes or contests with multiple winners.
What About Prize Indemnity Insurance?
Prize indemnity insurance is generally recommended for sweepstakes and contest promotions that involve large prizes: Trips & Vacations, Cash, Gift Cards, Home Makeovers, Technology.
Prize indemnity insurance is recommended for sweepstakes and contests where the prizes are attractive and in high demand.
For example, if you plan to give away a gaming system to several lucky winners that is sold out in stores for the holiday season, it’s worth much more to thieves than it otherwise be.
Therefore, attractive prizes should also be insured.
If you need to request prize fulfillment agency quotes, make sure to use the answers provided in this guide as you do your research.
Looking for a sweepstakes marketing company to help you with your next promotion? Sweepsify helps you find top sweepstakes companies in seconds. Create your free Premium account now to get started.