Thursday, May 31, 2012

Should you use a sweepstakes or other promotion to increase sales?

Promotion devices such as sweepstakes, contests, coupons, gift cards, gift certificates, rebates, giveaways and the like are respected and successful means of garnering customer loyalty and improving sales.  But the days when a company can just “crank one out” are long gone.   Promotions today are subject to regulations in every state and the District of Columbia, and territories such as Puerto Rico.  And more and more federal laws are touching on these topics.  There are traps for the unwary depending on the kind of business (e.g., dairy, tobacco, alcohol, gasoline/fuel, retail, or association with a charity), the size of the promotion (e.g., if a sweepstakes prize is more than $5000 it needs to be registered and bonded in certain states), the duration or expiration of the benefits (some minimums now apply), and who can participate (special rules apply to promotions to children under 13, while others are limited to adults). 

And then there’s the question of what data businesses can collect and what they can do with it. 

Don’t be afraid to promote your business, but do it with a comfortable knowledge of the rules of the road.  In the coming months we’ll tell you about some of the issues you need to know.


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