happy donors

Over the last six months I “bought” four beautiful, quite large plush animals from the Sierra Club. 

Well, I discovered that the Sierra Club had what looked like the handsomest premiums that they send to people who “Sponsor a Wild Place” with a donation of $50, $75, $100, etc. 

I first sponsored Adirondack National Park with a $75 donation to receive a wonderplush plush American eagle that’s about 10″ tall, then went on to sponsor the Grand Canyon and Acadia National Parks and the Alaska Wildlife Refuge.

I’ve supported the Sierra Club with donations for decades, off and on, relatively small gifts, but happily sent off a couple hundred bucks for what’s become a collection of whimsical wildlife.

Is this fair?  I’m ok with it and hope the Sierra Club is, too.  They’re getting enough to more than offset costs.  They’re getting attention from my friends, who admire these plush animals.  And they’re to some small degree locking me in as a donor, though I continue to send checks pretty far and wide.  If anything, I risk messing up their fundraising by self-identifying as being more “generous” than I appear to be, since I gave for their gift. 

Are premiums worth it for a nonprofit?

About five years ago I heard representatives of two national groups present long-term value comparisons of mail fundraising with and without use of premiums.

They did a random list split, one half received acquisition and appeals using premiums, including personalized address labels and notepads, tote bags, etc. The other “mission-oriented” file (selected randomly) received acquisition and appeals with no premiums of any kind.

One program tracked over three years. The other was pushing five years. Both had the same statistically sound outcome: premium programs provided a greater overall yield of funding.

Both organizations suffered the same conventional-wisdom downsides of premium use:

– Acquisition costs were higher.

– Renewal costs were higher.

– Premium-program donors had higher attrition than “mission” donors.

BUT … both organizations considered the premium programs the winners of these tests simply brought in SUCH BIGGER NUMBERS OF DONORS that they generated more funding despite these drawbacks.

I’m pretty sure these were the Wilderness Society and the American Lung Association. I believe this was at the DMAW Expo Conference in 2005. (I admit some chance of error in recollection. If you can confirm or correct let me know with a comment.

Here’s your #1 best action when you want to have the best donor cultivation … the best donor retention … the greatest bequest giving … the best lifetime donor value …

Acquire the right donors!!!

Duh?  No, really.

For smaller organizations, many donor files are cluttered with event attenders, inquiries, volunteers, friend-get-a-friend donors, etc.

Your best-potential donor is acquired via direct response — someone who got on board as the consequence of your invitation to give.

These people will respond to direct mail and email appeals.  They proved this.  At least once.

These donors were brought on board by your mission.  They weren’t just being polite to a friend or someone standing at a booth.

If you’re doing things right, they also responded to an EMOTIONAL appeal.

Not stats about your challenge, your mission, or your accomplishments.

They responded to an appeal to their heart — a specific example of your effectiveness wrapped in strong emotion-driven storytelling.

Donors who emotionally engaged with your organization’s mission and responded to your request for funds.   They’ll keep on giving, as long as you continue to engage them emotionally.   For a LONG time.  Some even longer:  in their wills.

I recently picked up Tom Ahern’s new book, Seeing through a Donor’s Eyes,  and highly recommend it to all in fundraising.   Subtitle: How to Make a Persuasive CASE for Everything from your Annual Drive to your Planned Giving Program to your Capital Campaign.  Yep, there’s good stuff for all such endeavors.

One snippet I really like, just for the phrasing, on the supposed “battle for dominance” between emotion and reasoning, Tom’s bite re fundraising appeals:

“The well-informed thinking now knows that emotions initiate the decision, and the reasoning area of your brain struggles to keep up with a ‘Yes, dear.”

Well said.

Maybe late for this year, but …

When asking for an end-of-year donation, pump up response by promising…

When I send my Thank You Note (a preview of your appreciation), I’ll enclose…

… your receipt for tax purposes (drawing yet more attention on the tax-deductibility of the donation plus adding urgency by EOD December 31), PLUS …

… an EXTRA Gift of Appreciation, your XXPremiumXX.   Here you can add an extra incentive for immediate action.  Nothing big.  No plush ocelots.  A bumper sticker, bookmark, or notepad … something that fits in the #10 envelope you’re using with your acknowledgement program.

Gotta give you a lift.

Use the idea right now with that end-of-year email donation reminder.

I’ve written before about the risk of using a standard HPC (Highest Previous Contribution) as the base for ask amounts.  In sum:  When I give $100 in an inspired moment of generosity, you might lose if you forever thereafter ask me for “$100 … or $150″ ($HPC … or $1.5HPC, a standard ask string in mail fundraising).

HPC works fine for $20, $50, maybe $75 donors.  Asking for 1.5HPC can be a good way to upgrade.

But testing has shown (not always) that using MRC (Most Recent Contribution) as the baseline in a housefile ask string can provide enough of an increase in response rate to offset the increase in average gift that can be gained with HPC.

Example:  People who gave $50 last time are willing to give $50 again.   People who gave $50 last time but $100 last year may be more willing to give $50 again, but won’t give at all when you’re lowest ask is $100.

All to be tested with each organization, of course.  If you’re using HPC, test MRC.  Or test MRC with specific giving segments.

E.g., use HPC for “up to $50″ donors.  But test MRC with “$100-$250″ donors.

Or, another option, that I haven’t seen tested.  (It may well be in use, but not reflected in my mailbox.)

For donors whose MRC was anything under $50, ask for $1.5MRC or $50 — whichever is lower.

For those $50-$90, ask for $100.   For those $90 to $145, ask for $150.

Whatever.  The idea is to incrementally upgrade donors by tier.  Rather than what can be a very odd assortment of dollar values that puts some people at risk of not giving because of some perceived ask amount barrier.

Another way of looking at this:  Why does retail price at $9.99 instead of $10?  A perceived pricing barrier.   The $9.99 feels more affordable.

For donors in the $50-$90 range, getting a gift of $100 might be a perceived big step.  Getting them to $100 could be a big cultivation point.  Once there, $150 is in sight.

But the same donors won’t move to $100 if their last few gifts — their MRCs — were $75, even if their HPC three years ago was $125.

Headache territory for fundraisers who aren’t into the statistical side of things.  I notice this because I gave “adoption” business gifts a few years ago that raised my HPC above my regular giving level.  And I made the mistake (?) of one big gift inspired by a great plush toy adoption offer a year ago, again elevating my HPC beyond general comfort for the organization’s housefile appeals.

I made an online donation to a small organization last week, a little disappointed they used a third-party collector for online gifts, then delighted that www.donortownsquare made the monthly giving option as prominent and easy as my one-time gift.

Nothing against operations that help small nonprofits with online transactions.  When you can’t  afford the set-up and have very little online giving, third-party is a great way to go.

The downsides are:

(1) Savvy donors know that a chunk of their donations go to someone else.  Some services’ have an interface that invites the donor to give a bit more, so the organization NETS the intended gift.  Good for the nonprofit, but not the ideal donor experience.  (All should know that credit cards eat some of our gift, but that’s the cost of doing business online right now.)

(2) Use of third party can make the group too comfortable to take the next step toward effective online giving, i.e., setting up a proper transaction system.

All that aside, I applaud Donor Town Square for making monthly giving an easy and evident option.  (Network for Good does this, too.  I haven’t checked others.)

Monthly giving has been the prevalent way donors support a cause in Britain and Europe for decades.  In the last two years, monthly giving has gained great traction in the US, representing a  cultural shift among donors, who are now more comfortable giving this way, and among organizations, increasing comfortable ASKING donors to support them in this sustaining way.

Groups with strong monthly giving programs are relatively safe from economic shifts.  These donors have lower attrition, hence greater lifetime value.  They also find that monthly givers donate to special appeals, bumping up lifetime value yet more.

How do they get people to make the shift?

Adding a monthly giving ask to house-file appeals will bring some in, though it also slightly risks lower performance from the appeal overall.

Phone works great for many groups.  Select a fairly strong donor profile and call them.   Phone is a relatively costly medium, but see above for the pay off.  When calling, go to credit card donors first!   Many of these are ONLINE donors, prime target for phone appeals of all kinds, and for monthly giving via credit card best of all.   (Obvious if you think about it.)

Direct transfers from checking accounts still lags behind month credit card debits, both a cultural issue and a reflection of the relative ease of setting up each system.

Still in “emerging” status in the US:  face to face.  Mall intercepts have been successful in UK and Europe for many years, pioneered by Greenpeace as I understand things.

US groups have had great success with mall intercepts and, some, with door to door.

Whatever the means of acquisition, monthly giving is a great way to grow.  A big-lead donor upgrade that more may welcome that you now believe.   Give it a shot.