Education versus emotion in direct marketing appeals

You can not educate your donors into giving.  It’s close to a cardinal rule in direct response fundraising.

At the same time, it’s a constant temptation.  You have great programs that save and change lives.  You’ve worked hard to validate that you are making a significant impact.  And you’d love to tell someone about it who cares.

Karlan and Wood tested education versus emotion in mail appeals.  And while the results are a bit more obvious than the last two days’ studies, they are still instructive for direct marketers.

The researchers sent mailers to recent donors (which they define as past three years, an interesting difference between researchers and we direct marketing practitioners, who would likely look at people who made a single gift almost three years ago as lapsed rather than recent).  In the first test, the control group (⅔) received an emotional and personal story about a participant in the nonprofit’s program.  In the test group (⅓), there was an additional paragraph in the insert, which talked about the “rigorous scientific methodologies” that demonstrated the impact of the nonprofit’s program.

For the follow-up, one-third received an emotional appeal, one-third received the control letter plus paragraphs about program effectiveness, and one-third received the control letter plus paragraphs about program effectiveness that explicitly cited Yale researchers as the source of program effectiveness.  This is likely an attempt to use authority influence similar to the Gates Foundation study discussed last week.

The researchers found that the information on program effectiveness had no impact on either likelihood of giving or amount given.

That is a nail in the coffin for those who think we should be talking about program effectiveness and double-blind studies and outputs versus outcomes versus impacts in our fundraising copy.

And we could bury that coffin now except for an interesting split that the researchers found in the data: effectiveness data turned off smaller donors and turned on larger donors.

That is to say, people who had given larger amounts (about $100+ more recently) were about one percentage point more likely to donate when given effectiveness information and donated $4.45 more.  Smaller donors were .6 percentage points less likely to donate when given effectiveness information.  With controls in place for things like household income, previous gifts, etc., the researchers were able to reject the idea that larger and smaller donors behave the same.

This goes to the idea that there are two different mechanisms for giving going on: heart gifts and head gifts.  (Or, if you prefer the Kahnemann nomenclature, gifts that come from System I and System II).

Your smaller donors are potentially giving gifts because of how it makes them feel and how you make them feel as a result.  A $10 gift is something many can do without deep contemplation.  However, if you are dedicating a more substantial part of your income to a gift, you may want to know that Yale researchers (or, better yet, Vanderbilt researchers) have backed up the program’s effectiveness.

The lesson that comes from this, in my mind, is that we should not have the same verbiage in our letters for a high dollar and a low dollar audience.  In fact, this study indicates that you can get more and larger gifts from your high-dollar donors with a simple paragraph addition to your existing emotional impact appeal.

In the unlikely event that there are social scientist researchers reading this, this study presents three questions in my mind:

  1. Does the amount at which the heart/head switch occurs depend on your income?  That is, for some, $100 is a life-changing amount of money; for others, it’s a tip at a restaurant.  My thought would be that everyone has a different threshold for what type of gift is which.
  2. Is this why we see an end to people upgrading their gifts at a certain point?  That is, once a charity has recruited your heart, is there a point beyond which you won’t give to them because they are entering the head realm?
  3. Finally, is this part of the reason sustaining gifts work well is that they break down a gift that, annualized, would require sign-off from the brain into gifts that can be given on an emotional basis?

Please leave your thoughts in the comments.

Education versus emotion in direct marketing appeals

The science of ask strings

Today’s direct marketing paper says, in essence, the less you ask for, the more people respond and the less they give.  Duh.

But there are some great surprises in the paper that make it well worth exploration.

De Bruyn and Prokopec took a look at anchoring effects in ask strings.  Specifically, they worked with a large and anonymous European non-profit to mail to their donor list.  They did so with a 3 x 3 matrix of ask strings set by two criteria: 1) is the initial ask below, at, or above their previous contribution? and 2) is the ask string steep (20% increases in levels), steeper (50% increases in levels), or steepest (80% increase in levels).  The ask strings were four items long.

This is a bit confusing, but here are initial and final asks for each condition, assuming a $100 donor.  You’ll note they are appropriately rounded:

Lower Equal Higher
Steep $85 … $140 $100 … $170 $120 … $200
Steeper $70 … $230 $100 … $350 $150 … $500
Steepest $55 … $320 $100 … $580 $180 … $1000

Some of these may look to you as they looked to me — fairly aggressive.  In the higher steepest condition, you are asking your $100 donor to donate $180, $320, $580, or $1000 — not a common ask string by any means.  That’s why I’m glad there are studies like these that test this with other people’s money.

As I mentioned, they found asking for more got more in average donation but suppressed response rate.  However, there were several other elaborations on this:

  • Ask string steepness didn’t affect response rate. Only the lowest, left-most ask seemed to affect response rate significantly.  The lesson here is that you can ask for more and get more without hurting response.  This is potentially free money.
  • Steepness did increase average gift.  So 80% increases won in this case.
  • Multi-donors were more set in their ways. Indexing off of higher than their previous contribution was related to a big drop — from an average of 10.5% among those who had the ask string that started at equal to 9.1% among those who were asked for higher.  It is, not shockingly, as if the multi donors were saying that they had already told the nonprofit what they give and don’t forget it.
  • The worst thing you could do was ask single donors for what they gave before.  This surprised me.  Response rates for the single donors were 5.3% in the lower group, 4.1% in the equal group, and 4.3% in the higher group.  Indexed average gifts were .937 (lower), .909 (equal), and 1.162 (higher).  So there was a trough in both response rate and average gift for asking a single donor for the same thing they gave before.

They didn’t give the net revenue per piece charts in the study; I found them invaluable in understanding the implications.  These are indexed to a $100 donor to make the math easy:

Single donors Lower Equal Higher
Steep $4.74 $3.54 $4.23
Steeper $4.76 $3.96 $5.62
Steepest $5.49 $3.68 $5.26
Multi-donors Lower Equal Higher
Steep $10.42 $10.16 $9.96
Steeper $9.30 $10.44 $9.67
Steepest $10.46 $10.53 $10.68

All this indicates something to me that I hadn’t thought of before (and maybe you have and have tested it — if so, please put it in the comments or email me at nick@directtodonor.com so we can have a report from the trenches): different ask strings for single versus multi-donors.

The hypothesis that I would form based on these results is that people who have given before are set in their ways of what they want to give and thus we should index from the previous contribution or the HPC.  Single donors are more pliable, so we can work to get more value out of them early in the relationship, elevating their support before they get set in their ways.

science-pinkman

Hope this has been as valuable for you as it has been for me.

The science of ask strings

How to structure your matching gift campaign

Matching gift campaigns work. But are they necessary?

Whether it’s a grantor’s challenge fund, a campaign match, a fund set up by a generous donor or donors, matching gifts are a frequently used and frequently successful tactic.  Most of the time, it’s set up as a “double your impact” campaign.

Three researchers — Huck, Rasul, and Shepard — looked at whether a lead donor increased the success of a campaign and how the structure of the match impacted that success.

They did this for the Bavarian State Opera House.  (BTW, if you are a researcher and want to run a test with donors on your dime, email me at nick@directtodonor.com; I’m usually game.)

300px-mc3bcnchen_nationaltheater_interior

The Bavarian State Opera House.
Fundraising motto: hey, these inlays don’t gild themselves.

Here were the six test treatments:

  1. Control: No lead donor, no match commitment
  2. Lead donor: A generous donor has already funded part of the program for 60,000 Euros (remember, Bavarian State Opera House).  We need your help with the other part.
  3. 50% match: A generous donor will match your Euro with .5 Euro.
  4. 100% match: Euro for Euro match
  5. Non-linear matching: A generous donor will match any gift made over and above 50 Euros.  (Which is to say if you donate 120 Euros, the donor gives 70.  If you donate 70, the donor gives 20.  If you donate 40, the donor gives nothing)
  6. Fixed gift matching: A generous donor will match any positive gift made with 20 Euros of his* own.

Got your guesses of what will do what?  Good — here we go with the results**:

Response rate Average gift Revenue per piece
Control 3.7% 74.3 2.79
Lead donor 3.5% 132 4.62
50% match 4.2% 101 4.19
100% match 4.2% 92.3 3.84
Non-linear match 4.3% 97.9 4.18
Fixed gift match 4.7% 69.2 3.27

Yeah, not what I thought either.  I figured, from all of the virtual ink I spilled in social proof and authority last week, that the presence of a lead donor would help. Presumably, there was another mechanism in place — that of anchoring.  I’ll dedicate a full post or five to anchoring effects at some point, but now, suffice it to say that by throwing out the number of 60,000 Euros you can trigger the idea that a person’s gift should be closer to that number.  For some, that may turn them off (although the decline in response rate wasn’t statistically significant).

What surprised me was that the matches didn’t help revenue per piece (unless of course the match is generating marginal revenue).  The matches increase response rates, but the average gift was significantly lower in all of the matches.  The authors’ hypothesis is that the match has a bit of a crowding out effect — that is, the donor feels like their 50 Euros is actually 100 Euros, so they need not make the donation of 100 Euros to have the impact they wanted to have.  This is certainly plausible and consistent with previous research.

What to make of this? Like, I’m guessing, many of you, I’d only tested matching gift language versus control language. However, there is some evidence here that simply stating that a lead gift has been made can increase the anchoring effect and support the idea that a program is worth funding without potential negative byproducts of crowding out donations.

That’s for the general case.  You might also take a look at a fixed gift match depending on your goal.  Generally, I prefer quality of donors to quantity.  However, if you were running a campaign like lapsed reactivation, you might legitimately want to maximize your response rate at the expense of short-term net revenue.

Based on this, I’m going to be looking at testing this against our typical matching gift campaign.  If you do likewise, please let me know at nick@directtodonor.com or in the comments below.  It would be great to see additional evidence on this.

*  The gendering is from the original — not my own.

** The rounding is in the original paper and throws off the revenue per piece variable a bit, but I chose to stick with what they had in the original paper.

How to structure your matching gift campaign

Is your direct marketing hot or not?

You are likely being inundated this week with best of 2015 posts in your feed.  This is not that kind of post.

Rather, I’m looking to spend this week delving into academic studies of nonprofit giving that may have been missed or underreported in the popular nonprofit press.  If this isn’t your cup of tea, I wish you a happy new year and I hope to see you again on January 4th.

However, I like the idea that other people are paying money for me to learn things about nonprofit giving, especially with the alternative is for nonprofits to pay for me to learn things through failed tests.

So today we’ll look at the impact of attractiveness in the photography that you use in your communications.  Think for a moment about the picture that for-profit businesses use alongside their inbound call center’s phone number.

attractive-blond-call-center-rep-13691665

Hi. I care deeply and passionately about your call.
Let’s ignore this stock photo watermark and get down to business.

BTW, you can order this stock photo here, where the intent of the photo is clear from the title they give it: Attractive blond call center rep.

Anyone who has worked at a call center, or thought much about what a call center looks like, or thought much about what the average member of the human race looks like can easily deduce that this is not likely to be on the other end of the photo line/fiberoptic cable.

Yet these images are often used.  Why?  Because for-profits think that attractive people make us want to buy.

A study that came out last month from Jenq, Pan, and Theseria shows this effect works for nonprofits as well.  They looked at direct philanthropy on Kiva, a microlending site of which I am a fan.

The authors asked research assistants from Singapore and the US, male and female, to rate the photos of the people requesting loans on Kiva on several criteria, some of which were:

  • Attractiveness
  • Physique
  • Skin color
  • Whether the person was smiling
  • Neediness of the person
  • Trustworthiness of the person
  • Creditworthiness of the person

They then looked to see if these factors impacted funding.

Let’s pause here to ask ourselves WWSD — What Would Spock Do?*

Spock would not care about the photo.  Rather, he would care 1) maximizing the social impact of his loan, 2) maximizing the likelihood of getting repaid, so he could regift and maximize someone else’s social impact afterward, and 3) there is no number three — he would care only about those two things and certainly not some photograph.

Yet, we are human.  Studies show that attractiveness has an impact on pay, dating profiles, perceived intelligence, perceived competency, tips, success in customer-focused enterprises, etc.  

So it should not be surprising that people take a non-Vulcan approach to photographs.  The study found that, all other measured things being equal:

  • Those people who were one standard deviation more attractive had an 11% shorter time to get full funding.
  • Those people who were one standard deviation heavier had a 12% longer time to get full funding.
  • Those people who had a skin color one standard deviation darker had a 8% longer time to get full funding.

For perspective, asking for 10% more money increased the amount of time to complete the loan by 13%.  So, in essence, being more attractive and skinnier than the average was the equivalent of getting almost 20% more money.  Just on the photograph that you use to ask for a microloan.

It’s important to note two things here:

  • Reporting this is not to justify this.  Attractiveness and skin color have no relationship to need, desire, or any other factor under the skin that would merit investment.  We should interrogate ourselves and our choices to try to dismantle this unconscious bias.
  • This is where we are right now.  I try to be a pragmatist.  In trying to get to the world to where we want it to be, we have to start at or near where it is right now.

So the implications of this study for nonprofits?  There are three in my mind:

  • Put your best foot forward.  Other than those pictures that are designed to show the harm you are trying to solve, the photos on your Web site should largely be smiling, happy people (happy people generally show as more attractive than unhappy).
  • Invest in photography.  Good lighting and posing can take someone like me and bring them to the median.  OK, it can bring me closer to the median.  OK, let’s just say it can help and leave me out of this.
  • Invest in professional retouching.  This is not to advocate for going the full fashion magazine airbrushing and Photoshopping; as Meghan Trainor would remind us, we know that [stuff] ain’t real.  But simple things like increasing the size of pupils can increase trust and attractiveness.  Similarly, increasing the size and darkness of the limbic ring (the ring around the outside of your iris) can increase attractiveness.  Look at that: three more studies for the price of just the original.

So, now you can ask yourself, knowing that (sadly) it matters, is your fundraising hot or not?

* Those of you who prefer can think of it as what econs would do in Richard Thaler’s description or what those thinking slow would do in Daniel Kahneman’s description.  

Is your direct marketing hot or not?

Influence in direct marketing: scarcity at work

Scarcity as an influencer should be of no surprise to those who know basic economic theory – as a good gets more scarce, assuming demand remains the same, the price will rise.

Given this, you might think it has no impact on nonprofits, as we sell no goods.  Even the corollary to the supply and demand argument – the idea that there is a psychological fear of missing out that makes people want an item more – doesn’t work for nonprofits, given that one person’s donation makes you no less able to donate.

And yet scarcity can be a powerful motivator in nonprofit direct marketing when harnessed correctly.  Here are five ways how:

Back-end premiums.  This is a way of mixing scarcity with reciprocity.  In the reciprocity piece, I mentioned that back-end premiums (aka the public radio tote bag model) can help increase your donations.  Now, what if there were only so many of those tote bags, calendars, or whatever other premium you have available to go around?  By limiting the premium to only the first X number of people who donate (or take whatever other action you are aiming for), you can have scarcity working for you.

I would recommend layering on a third influencer – social proof – and setting the number of giveaways above what you would expect to get in terms of actions.  This not only mitigates the likelihood that people will take your action and not get the potential reward.  It also has the benefit of making it seem like many people will be taking this action.

Matching gifts.  A matching gift deadline can create scarcity of time – by limiting the amount of time someone has to make a gift in order for it to double, you create urgency in the desire to give that gift.

Exclusivity of information.  In reciprocity, I mentioned that giving someone information that they wouldn’t be able to get elsewhere is a good way of creating the desire in them to reciprocate.  The key part of this is that the information must be scarce – giving someone something that the general public would or could know does not trigger the desire to reciprocate.

Done well, you can also build in authority and/or social proof to this.  Let’s say you do a conference call with a select group of high-dollar donors (scarcity).  The lead speaker is an expert on the harm that your cause is trying to end (authority); supporters can ask questions of him/her (reciprocity and scarcity, as you are providing a unique experience for them) and hear that there are other interested donors on the call (social proof).  Then you follow-up with a transcript of the call for everyone who was invited but couldn’t attend to make sure they can this important information.

Exclusivity of opportunity.  This can also work well with social proof.  Which one of these volunteer opportunities is more appealing:

  • We desperately need more people to help serve lunches this week to the homeless.
  • There are only six slots left to help serve lunches this week; we may have more opportunities available next month, but it is first come, first serve.

Through a reframing, you have turned your lack of volunteers into an exclusive experience for those people looking to help.

Event exclusivity.  Many of your high-end type events are exclusive in terms of guest list, but there are opportunities for exclusive beyond just this velvet rope effect.  Table sponsorships are one: as you will only have so many tables, you can advertise the number left (and, if you are doing well, ask sponsors to reserve their spots for the following year).

Then there are auction items. In a traditional (non-Dutch) auction, auction winners are like the Highlander: there can be only one.  The exclusivity of a package leads to higher prices as both the auction structure, which economics shows is the way to get the good to the person willing to pay the most, and the fear of missing out on an exclusive good conspire to maximize the price achieved.  The best nonprofit auction images are experiential items that cannot easily be purchased on Amazon – this exclusivity makes it so that only one person can possibly get the item.

The exception to this was a nonprofit I worked with that had an auction item go far beyond the expected price.  Apparently, while the bidding was ever-increasing, they were able to talk with the person providing the experience and negotiate another package.  Thus, at the end, they were able to provide a package to the second-place bidder as well, doubling their rewards.  This was a brilliant strategy – using exclusivity to get the maximum possible price, then expanding the pool (only slightly, so as not to cause regret among the first-place bidder) to maximize returns.

This week has been dedicated to the idea of major influence levels you can use in your direct marketing and development areas.  I would be remiss if I didn’t once again recommend the original book itself, as it has examples behind what I’ve provided here.  Thanks for reading and I’d love to hear examples you have from influence in the comments section or (if you are willing) in a guest blog post – just email me at nick@directtodonor.com if you’d like to post your success story.

Influence in direct marketing: scarcity at work

Influence in direct marketing: authority at work

I debated whether to do this one.  I have a bit of an anti-authority, and a definite anti-authoritarian, streak.  When you read about authority as a form of influence, you can delve into some very dark parts of what it is to be human.  There are famous Milgram experiments, where people generally gave shocks to a test subject to the point that the person would be in severe pain or dead just because they were told to.  And the Stanford prison experiments show “absolute power corrupts absolutely” isn’t just an aphorism to be stitched onto the world’s most off-putting throw pillow.

But authority is a form of influence.  And it’s one that nonprofits can and should wield.  After all, quite frequently, nonprofits are experts within their own realms and those with great expertise serve on their boards and as volunteers.

Testimonials in various forms can help validate your nonprofit in the minds of your supporters.  Some of that, as mentioned earlier in the week, can and should be from individuals who support your individuals as close to your target audience as possible.  But an authority pitch, with external validators, can be helpful as well.

So can burnishing your credentials.  One test to run online is whether an online security badge can increase your donation form activations (sometimes it does, sometimes it doesn’t).  A seal from the BBB can likewise be tested (just don’t use your Charity Navigator perfect score – that isn’t a badge of honor).

Talking about influential donors can also help.  Dean Karlan and John List did a study that found two things.  The first, no surprise, was that a matching gift increases response rates.  The second was that identifying the matching donor as the Bill and Melinda Gates Foundation (versus an anonymous matching donor) increased response rates by over 20%.  This effect also lasted past the matching period, which is unusual for often ephemeral nonprofit solicitation.

This would tend to indicate that the Gates authority is rubbing off on the nonprofit they are supporting and that their authority is a signifier for other donors.  Celebrities can also be a nice validator for certain audiences.

Finally, a successful authority technique that I’ve seen is to send copies of positive editorials or stories about a nonprofit’s impact to donors.  It’s one thing for a nonprofit to tell you how great they are and how great you are for making their work possible.  It’s another thing for an unbiased external source validating your choice in cause.

So that’s authority.  I hope you’ll join us for the scarcity discussion tomorrow.  It’s the last in the influence series, so you’ll want to be sure to read it.

(Yes, of course I planned the scarcity post as the last one.  Why do you ask?)

Influence in direct marketing: authority at work

Influence in direct marketing: liking at work

you-like-meHat tip to The Interview Guys for the image

Liking sounds like it is exclusively the property of face-to-face asks, where you work to be liked so as to directly solicit a gift.  There’s a reason that we direct marketers stay behind a desk while our glad-handling extrovert brethren ask for major gifts. (In my case, it’s introversion, a love of numbers, and a face most suitable for print.)

Did that self-deprecating humor make you like me more?  Good!  Then we can continue with the post.  (Also probably for the best that you think it is self-deprecating; there’s a reason this blog has no picture of me.)

There are three major areas in which the psychology of liking can give us a significant advantage, even when we aren’t physically with a person.

The first is in persona.  Not the hip marketing term where you put a name, face, and demographic/psychographic profile of your constituents, also that’s a bit of the idea.  Rather, it’s who the virtual faces to your brands are in your various communications.

In The Audacity to Win, David Plouffe talked about their digital strategy for fundraising and who quality signers were for various content:

To keep things fresh, we varied the length and tone of the messages–some were long and informative, others quite short and informal. Perhaps most important, we learned that people responded very well to e-mails from Michelle Obama and that we needed to use Barack somewhat sparingly–when he signed an e-mail it always produced by far the biggest response, but we did not want this to become a stale event. So many of the e-mails came from me, though when we needed a big response to an ask–for money, volunteer time, or to watch an event–we made sure the e-mails came from the Obamas.

To me, this speaks to a compartmentalization of voice: Barack Obama was the primary persona in the campaign, used for speeches, policy positions, debates, etc. etc.  Because he was everywhere and in every media, a communication needed to feel special.  However, Michelle Obama did not present in the same way.  A communication from her was able to touch different emotions, make different points, and, frankly, be liked in a way that you can’t like a person that you agree with even 90% of the time, because that 10% will always be in the way.

So who are the different voices in your organization and how do you use them?  I would recommend an inventory of people and uses.  For some, a victim/survivor is one certain type of voice.  A head of policy or government affairs can be the attack dog that your advocacy supporters and donors want to hear from.  A development staff member or volunteer can be used for institutional appeals – renewals of membership or reminders to fulfill pledges – so that your passionate voices aren’t drawn into this bureaucracy.  A celebrity can bring in his/her followers to the fold, even if they are loosely affiliated at first.

And so on.  Some even might want to transcend the human – would an animal charity want to have an official spokesdog?  I recommend using a person as a mouthpiece for a specific type of communication to a specific type of person who wants to receive that communication and will like the person who is the messenger. 

Don’t have institutional messages that aren’t from someone.  So many e-newsletters fall into this  trap.  They are from the National Conglomeration for the Amelioration of Sesquipedalianism, when they could be from Rachael.  I don’t know Rachael, but because she’s a human, people will generally like her more than the monolithic NCAS.

The second is in being liked by liking.  As with consistency, praise for past actions will get you everywhere.  People generally like people who like them.  Similarly, flattering works and since I mentioned that yesterday, here’s another study that shows this, lest I not be giving you sufficient value.

The third major impact of liking is that people are more likely to like people like them.  I’ve seen a 30%+ increase in response rate to a communication when people were told that the story they were hearing happened in their own state – and that includes states like California or Texas, where the case may not have even been within a full day’s drive.

Similarly, people reaction better to communications from, and about, people of similar age, background, religious persuasion, racial or ethnic breakdown, educational background, and so on and so on.  This is not to say that you should go out and create “the Hispanic mail package.”  In fact, please don’t.  But customization can help you talk about how the problem you are trying to solve affects the people like the person you are talking to.

These rich details given a good picture of a person and the more someone can picture a person, the more they like and empathize with that person.

So these help your communications make your voices, and you, more liked and bring in donations.  After Christmas, we’ll talk a bit about authority in influence.

Influence in direct marketing: liking at work