Maximise your budget and get customers spending again with a risk managed promotion

Consumer confidence has undoubtedly taken a hit in 2020, but it’s important to start thinking about how to get your customers spending again. Marketing promotions will play a role in our economic recovery from the pandemic, so the time to start planning is now.

When done well, incentive driven promotions not only provide a much-needed sales boost, but can also prompt positive online reviews, repeat purchases and ongoing loyalty. A recent study by Blackhawk Network reveals that:

  • Promotions generated 6% greater average profit margin per customer than those that offered discounts.*
  • 72% of Australians would want to spend more if they received a reward from a retailer as a promotion.*

While the positive outcomes are undeniable, it is understandable that many businesses wish to proceed with caution. It may seem counterintuitive, but the possibility of a promotion being too successful can be a very real risk.

Managing over-redemption risk

Redemption Risk (over-participation risk) was created to solve this problem, offering businesses a cost-efficient way to limit their financial exposure in the event that the cost of redemption exceeds the promotional budget.

By engaging promotional risk management services an estimate of the likely rate of redemption for a particular promotion will be conducted and a fixed-fee solution will be provided, covering the cost of all redemptions and delivery logistics. With this safety net in place, businesses can ramp up their marketing and drive their promotion without risk.

A great example is Tip Top’s ‘Win A Pokemon Detective Lunch Set Every 5 Minutes’ promotion. Tip Top insured their promotional budget using Blackhawk Network’s Fixed Fee Promotional Risk Management solution allowing them to deliver a highly successful and cost-efficient campaign, exceeding sales targets and client expectations.

Think big and give your promotion some ‘wow’ factor

Do you ever wonder how brands can offer incredible big-ticket prizes? In most cases this is made possible with Prize Risk.

Prize Risk essentially transfers the risk of the prize by calculating a premium based on the value of the prize and the likelihood of redemption, leaving the promoter free to advertise a $1M cash prize without having to pay the big cash prize.

Prize risk management is a great way to stretch a marketing budget and allows even small brands to create attention-grabbing promotions.

Plan ahead and talk to the experts

At Blackhawk Network, we draw on our years of experience to develop tailored solutions to meet the individual budget and risk tolerance levels of our clients to minimise financial and legal exposure.

Our promotional risk management services include:

  • Redemption Risk – to forecast and protect promotional budgets against higher than anticipated redemptions.
  • Prize Risk - which removes any financial concerns surrounding mega prize headlines.
  • Promotional Compliance – to help ensure your promotion is compliant with the varying laws dependant on state or region.

Don’t let concern about financial risk hold you back from running a compelling promotion to get your customers spending again. Planning is an important step which can take time, so talk to Blackhawk Network today and we’ll help get you started.


Source: Blackhawk Network eBook: How People Pay A BrandedPay™ Study of Multinational Attitudes Around Shopping, Payments, Gifts and Rewards.

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