Trade promotions – what are they?
Trade promotions are a marketing strategy (it can also be a stand-alone business model) used by businesses to promote goods and services. Generally, it involves some type of promotional activity that is designed to increase sales and engagement. Some common types of trade promotions include competitions (giveaways), loyalty schemes, instant win promotions, discounts and more. However, the important thing to keep in mind is that these types of activities are legally regulated across Australia, and the rules changes between States and Territories.
How do you make money from a trade promotion?
One of the most popular types of trade promotions to run is a competition. You’ve probably heard of LMCT+ (who giveaway cars) and similar businesses who give away houses, handbags, cash, and more.
While you can’t sell entry directly to the trade promotion (entry must be free), you can require that people purchase goods or services as a condition of entry. In this way, you can charge the normal price of your goods and services and include entry into the trade promotion as part of the purchase. This either results in a greater number of individuals purchasing your goods and services because of the incentive provided by the competition, or if you’re running a membership, you can have a relatively passive business that generates income from the incentive of the giveaway.
Unsure? Let’s break it down.
Membership structure
Let’s say that you’re a marketing business and you want to run a competition where the winner gets a free branding starter pack. While you can’t charge for individual tickets into the competition, you can make it so that each new customer that purchases an initial consult with you automatically enters the competition. This way you’re not charging more than the usual price of your goods and services.
However, people may also want the trade promotion to run as its own business, and the most common way of doing this is to use a membership structure.
This is where you create a genuine and valuable membership offering – usually one that offers discounts or access to partners’ information, education, or something similar. If you purchase entry into the membership, you automatically get entry into the trade promotion. You can also use membership tiers, (think “Bronze, Silver, Gold) where each tier increases the number of entries into the trade promotion, as well as in the inclusions in the membership. This is how brands like LMCT+ and Get Dressed Designer Giveaway Club work.
Where people can go wrong though, is trying to charge for individual tickets into the competition – this isn’t permitted.
Compliance advice
Trade promotions have dominated the headlines lately with trade promo kingpin LMCT+ slapped with a lawsuit by South Australia – but it’s not because there’s anything inherently wrong with the model, the South Australian government is alleging that LMCT+ failed to secure the correct permits for the competition. This highlights the importance of getting sound legal advice about your compliance requirements and understanding which States and Territories require permits. There can be many rules that apply to a trade promotion, such as permits, how to run the trade promotion, dealing with winners, how to draw the prize, what happens if the winner doesn’t show, prohibited prizes, and more. We recommend that business owners who are new to trade promotions engage us for advice first so that they can be confident in the legal landscape.
What legal documents do you need to run a trade promotion?
Most businesses looking to start a trade promotion need to have competition terms, membership terms (if that’s your structure), and partner terms (to manage the membership inclusions provided by third parties).
While we don’t manage permit applications on your behalf, we can give you advice about which permits you’ll need (if any) and how to apply.
Q and A with Michelle Taylor - Get Dressed Designer Giveaway Club
We’ve worked with several businesses to help them establish trade promotions, including across industries such as motor vehicles, lawn care, fashion, and more.
Recently, we worked together with Michelle of Get Dressed Hire – a female owned fashion business, to start her trade promotion business, Get Dressed Designer Giveaway Club.
Tell us what made you consider a trade promotion business model?
The idea of a trade promotion business model came naturally when I combined my passion for designer fashion with the excitement of creating opportunities for people to access luxury items in a fun and engaging way.
Trade promotions offer a unique way to connect with customers by turning traditional giveaways into experiences that generate anticipation and excitement. It’s not just about the prizes—it’s about building a community where members feel involved and valued. This model also aligns well with my expertise in the fashion industry, allowing me to share my love for designer brands in a way that’s innovative and accessible.
Moreover, trade promotions provide a sustainable business structure that supports consistent growth. By hosting regular giveaways with high-quality items, I can maintain engagement, attract new participants, and create lasting brand loyalty.
What do you feel are the benefits of running a trade promotion?
Trade promotions create a sense of excitement and anticipation among participants. Regular giveaways keep the audience engaged and coming back, fostering a loyal community.
By associating the promotions with luxury designer items, it enhances the brand’s image and helps attract attention from a wider audience, including those passionate about fashion and exclusive prizes.
This model allows for flexibility in scaling the business. As the audience grows, we can offer bigger and more frequent prizes, adapting to the interest and demand of our community.
How is running a trade promotion different from what you initially expected?
Running a trade promotion has been an incredible learning experience, and there were certainly aspects that differed from my initial expectations. I knew there would be legal requirements, but I underestimated just how intricate trade promotion regulations could be. Ensuring compliance with state and national laws, and drafting comprehensive terms and conditions took more time and attention to detail than I initially anticipated.
I knew marketing would be key, but I didn’t anticipate the extent to which strategic advertising and social media content would drive the success of the promotions. It’s been a steep but valuable learning curve to optimize these areas.
Would you encourage other women to try out their own trade promotion?
Absolutely! I would wholeheartedly encourage other women to explore their own trade promotions, especially if they’re passionate about creating something unique and engaging for their audience. It’s an empowering way to combine creativity, business savvy, and customer connection.
The beauty of trade promotions is that they’re adaptable—you can scale them to suit your resources and ambitions. It’s a challenging yet incredibly rewarding business model, and I believe more women should explore it as a pathway to entrepreneurship and creativity.
What’s a piece of advice you would tell other women in business before getting started with a trade promotion?
My biggest piece of advice for women in business considering a trade promotion is to do your homework and build a strong foundation before launching. Engage a solicitor early on to help with permits, terms and conditions, and any other legal requirements… and make sure you have an awesome website!
What has it been like to work with her lawyer?
Working with Her Lawyer has been a fantastic experience. They’ve been a true partner in helping me navigate the complexities of setting up the Get Dressed Designer Giveaway Club. From the very beginning, they took the time to understand my vision and goals, which made me feel confident that they truly cared about the success of my business.
Their guidance has been invaluable, especially when it came to ensuring legal compliance. They handled everything. What I appreciated most was their ability to explain complex legal requirements in a way that was easy for me to understand, making the process far less overwhelming.
They were also incredibly proactive, identifying potential challenges before they became issues and offering practical solutions. Their attention to detail and thoroughness gave me peace of mind that every aspect of my business was legally sound.
I’d describe my experience working with them as not only professional but also supportive. They’ve helped turn what could have been adaunting process into an exciting and empowering one. I couldn’t have asked for a better legal partner for this journey.
I also loved the fact they were an all-female team, that support women in business… its so important to align yourself with like-minded businesswomen.
Need some legal help? Book a Discovery Call
If you’ve identified something that’s affecting your business, or you’d like to discuss how these topics apply to you, you can book a free discovery call with Her Lawyer here.
