If you could put your donors’ names up in lights, you probably would do it, right? That might get a little pricey. Would they settle for their name on the back of a T-shirt, alongside the names of great jazz musicians? Donors to KCSM-FM 91.1, a community jazz radio station in the Greater San Francisco Bay Area, liked that idea.
Almost 9,000 lapsed members of KCSM-FM were offered a renewal for $80 — twice the regular membership fee — in a direct mail piece this past October. For $80, donors would receive a KCSM T-shirt with their name on the back, alongside the names of jazz legends like Miles Davis, Charlie Parker and Duke Ellington.
The Legends of Jazz campaign raised $42,400 from 577 donors, with 200 donors giving at least $80, for a response rate of almost 6.5 percent. The average gift was more than $100 and the campaign’s overall Return On Investment (ROI) was 204 percent.
"The biggest difference for us was the personalization piece. We’ve offered T-shirts over the years but never in such a unique way to personalize the shirt," said Carolyn Goodman, president and creative director at Goodman Marketing Partners in San Rafael, Calif., which worked with KCSM-FM to develop the campaign.
"Everyone likes to get something personal," Goodman said, which is reflective of what the campaign accomplished. There was an air of exclusivity created as people asked where they could get a personalized T-shirt, but the offer was by invitation only to lapsed members. The invitation was a simple #10 direct mail package.
"We did find that people were ordering T-shirts, using other names, and giving it as a gift," Goodman said. They plan to test the same idea using tote bags, perhaps offering an alternate focusing on female jazz legends to appeal to female donors.
A custom T-shirt for each donor would have been too expensive to produce. Instead, among the almost 200 names of jazz legends were about 40 slots for donors’ names to be inserted. So five templates were created, each with 40 donors’ names sprinkled among jazz legends to produce the 200 T-shirts. "We were able to personalize it and keep the cost low," Goodman said.
The shirts cost less than $15 each but other expenses related to production and mailing brought the cost to about $30 per shirt. The cost per shirt drops with more volume so 1,000 T-shirts would have made for an even less expensive unit price.
"We were looking for a premium that didn’t compete with our pledge drive thank you gifts, but was utterly groovy," said Sinclair Crockett, development director at KCSM. "I think the most surprising thing was how many people took the time to call and ask if they were Ôtoo late’ to get in on the campaign. We’re planning to do this campaign again in the fall and I’ve already got a list of folks who want to be notified in advance of the mailing," she said.
While some nonprofits give away T-shirts, there are those that literally give away money as a premium.
Joel MacCollam, CEO and founder of World Emergency Relief (WER), likes to remind organizations that the goal of fundraising isn’t to tell the nonprofit’s story — it’s to generate the maximum net profit for programs. And sometimes to make money you have to give money. MacCollam’s Carlsbad, Calif.-based organization sends out live checks in premium direct mail packages.
"It hits the people in a way they can’t avoid," said MacCollam, who has used the live check package for five years. WER tested $5, $10 and $20 amounts and stuck with $5 and $10 after MacCollam thought the $20, while it worked well, was too aggressive. WER has tested money premiums for the past 15 years, beginning with small denominations of pennies and nickels, and got the live check idea from a commercial entity. MacCollam said there is no magic check amount, and that the amount is chosen after rigorous testing. The checks boosted response by 2 percent, with minimal added cost, and less than 0.25 percent of the checks are usually cashed. The checks mailing is still showing a similar return on investment five years later – but it’s still a premium.
A study by M+R Strategic Services in Washington, D.C., tested the effects of offering a premium to prospective donors for four nonprofits during their 2008 year-end campaigns. Easter Seals, Human Rights Campaign, Save Darfur Coalition and The Wilderness Society each had a premium ask and an end-of-year control appeal without a premium. Premiums included scarves, calendars, T-shirts and blankets.
Offering a premium significantly boosted response rates and average gifts for two of the four groups while the other two experienced a significant jump in only either response or average gift. On average, response rates increased by 95 percent and average gift jumped 37 percent when a premium was offered.
After taking into account the cost of the premium, three of the four nonprofits netted more with the premium while the fourth didn’t have significant results due to it being a small test group. On average, the net dollars raised per recipient was 51 percent greater when a premium was offered. Also, 24 percent of donors, on average, elected not to receive the back-end premium when offered an opt-out.
Premiums scare some nonprofits. What if no one likes the product? What if the donor only gives when asked in conjunction with a premium? Will it cost too much compared to the return?
"I want to stress that premiums need to be entered into very carefully," said MacCollam. "It’s not a silver bullet, and in some cases it can be a lead bullet." He suggested nonprofits try to negotiate with premium vendors for a shared-risk or break-even guarantee and to be prepared to test a variety of concepts.
Not all premiums will work for your organization. Try to tie the premium to the mission to boost branding. If the premium has nothing to do with your organization, donors might not connect the organization with the product – no matter how creative the packaging. Seed packages might not work for a victim support organization, but might fair better for an environmental group.
"If you love the creative, than donors will hate it," said Megan Gibeau, vice president of strategic and creative services for PEP Direct in Wilton, N.H. Gibeau recommended testing the premium at least once, and more if time and money allow. Gender segmentation might also boost response with just marginal tweaking of the premium. Male and female donors might react differently to artistic elements, and segmenting with that in mind can create higher conversion rates, according to Gibeau.
Culture can also play a large role in premium choices. WER has offices in the United Kingdom, Honduras, Hong Kong, Germany, Holland and France, and sometimes has to tailor the premium to the culture, such as tea bags to increase response in Hong Kong. WER tried sending an African coin in American mailings, but those didn’t test as well as the live checks. WER’s United Kingdom mailings use a two-pence to highlight the biblical story of "The Widow’s Mite," which ties the donations back to WER’s interdenominational Christian roots.
Nonprofits should also think about a premium’s usability. Paper premiums, such as notepads, stationary and cards, have a high usability value without draining your budget. Staggering better premiums, like blankets or umbrellas, for higher donations is more cost effective. Bundling premiums, giving a combination of premiums for a certain giving amount, can also push your donor to give a little bit more.
Not everyone needs a premium. The Guideposts Foundation, based in Pawling, N.Y., decided to add mailing labels to its annual Christmas bounce-back card mailing – the organization’s only donor renewal campaign that didn’t have a gift. The mailing requested that donors sign a card for a veteran or nursing home resident and return the card with a gift, according to Lisa Greco, direct response manager in Guideposts’ philanthropy division. The test package with the mailing labels depressed response by 6 percent and the average gift by 4 percent.
When in doubt about a premium’s success, test without it. Guideposts removed two bookmarks it sent in its donor appeal reminder without any difference in response or average gift – but the rollout package cost was reduced by 12 percent, according to Greco. She said organizations should not be afraid of the test costs, but should instead focus on the net revenue.
MacCollam warned that premiums could be deceiving, increasing your donations in the short-term but degrading in the donor’s lifetime value. MacCollam said that WER does not give a gift when the donation is less than $10, to cut costs and increase profitability. MacCollam said the reality is that first-time donors who give less than $20 might be unprofitable to cultivate with premiums.
"The rule of how you get people on your list is how you keep them on your list," said MacCollam. "We have donors who are very responsive to premiums — and we need to keep them that way." NPT