Month: May 2016

Including loyalty in your beyond-RFM segmentation

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Since Sandy first donated to your organization in 1992, she’s given over 100 gifts.  Nothing exorbitant – she’s now giving $30 every three or four months – but she also has volunteered, come to three walks, signed up for emails, and taken almost every advocacy action you offer.

On the other hand, you acquired Miriam from an outside list in 2012.  She gave $25, but nothing since then.  You don’t have her email or phone number, but a last chance lapsed package piqued her interest four months ago and she gave another $25.

What do these two have in common?

They look the same on a traditional RFM analysis: they are both 4-6 month $25-49.99 multis.

And if you use only a traditional RFM analysis, you will treat them the same.

That’s silly.  If you were looking only at these paragraphs to judge, Sandy would seem to be a good candidate for monthly giving, upgrade strategies, and/or planned giving.  Miriam probably has a 50-50 chance (or worse, given industry averages of lapsed reactivated retention rates) of never giving you another gift.

It’s easy to criticize this, but harder to do this analysis writ large, when you are doing five-to-seven-figure list selects.  So how do you draw these lines?  Here are a few ideas:

Lifecycle analysis.  Way back when (November 2015 – ah, those were the days), we talked about how there isn’t just one retention rate – there are several, based on where a person is in their donor journey.

This lifecycle analysis can layer on to your segmentation analysis and on to your messaging.  Some sample categories:

  • New.  What it says on the tin.
  • 1st year.  They have given a second gift, but it’s been less than 12 months since their first gift.
  • 2nd year.  Gifts in their first two years.
  • Core: Donors who have given in each of the past three 12-month periods
  • Lapsed: A gift 13-24 months ago.
  • Deep lapsed: A gift 25+ months ago.
  • Lapsed reactivated: Someone who has given a gift in the past 12 months after a gap of at least a 12-month period

Your mileage and organization may vary – it’s more important to look at this analysis than it is to have the same precise categories.

So you may not have a separate piece for Sandy, but you might want to make sure there is language like “As one of our most loyal donors” or “You’ve stood with us for more than 20 years.” or the like in the existing piece.

As for Miriam, as a lapsed reactivated donor, you are still worried that you might lose her again.  Perhaps you want to stay close to the tactics that recruited her (or won her back or both).  She might also be worth an e-append or phone append to see if you can find a channel that further engages her.  Or maybe you want to use a less aggressive ask string – your goal for a lapsed reactivated donor is to make donating a habit again, rather than to increase their giving just yet.

Gift density.  Take a look at the number of gifts someone has made, then divide by the number of years since a person’s first gift.  This is how many gifts you will get from them in an average year (or at least what you have received).

Sandy’s number is above four.  Four is a bit of a magic number (some would say three or even two– again, having a number is more important than what the number actually is) to indicate strong likelihood of monthly giving.  When someone has a pattern of giving frequently, this ask isn’t nearly the heavy lift it is trying to get someone to go from one gift per year to twelve.

Miriam is below one.  One is a separate magic number, as below one indicates a likelihood to lapse (by definition, they’ve done it at least once)  That should trigger some of the anti-lapse efforts discussed above.

One is also a magic number in that if someone gives you exactly one gift per year (and they’ve been with you a few years), that’s the bucket they see you in.  So, if they look unlikely to upgrade and they look unlikely to increase the frequency of gifts, the only other way to increase their lifetime value (other than increasing their retention rate) is to decrease costs.  Let’s say you send an average of 14 mail pieces per year and do two telemarketing cycles.  This person probably can decrease this substantially and save costs.

Longevity.  Length of donation is something that should be honored.  Not only are milestone anniversary notes and certificates and the like a good thing to do from a moral and ethos perspective, but they will also make sure that your most loyal donors know that you know they are important to you.

Channel responsiveness.  Change your tactics to suit the terrain.

All of these are even more important when looking at borderline segments.  Should you mail the 13-18 $15-$19.99 multis?  Maybe just those that have been with you five years or more?  Or with previous high gift densities?  Or just mail responsive?

But there’s more to it than even that; tomorrow, we’ll talking about using other interactions with your organization to define and customize.

Including loyalty in your beyond-RFM segmentation

RFM segmentation alone must die

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220px-lev_trotskyRecency, frequency, and monetary value (RFM) are the ruling troika of segmentation-land.  And like one of the old Soviet troikas, they brook no challenge to their rule (e.g., Trotsky, pictured at right, was murdered on Stalin’s orders with an ice ax).

But they are simply not good enough alone anymore.  I tried to be civil about this in my post Beyond RFM.  But beyond is not good enough.  We need to let a million flowers bloom in the world of segmentation.

This means taking the “7-12 $15-$19.99 multi-donor” view of segment out for a date with your ice ax.

OK, not really.  It’s still going to be a decent starting point.  But it has to stop being the ending point.  Even for those of us that have to leave complex modeling to people with more letters after their names.

So this week, I’d like to take you through various different ways of figuring out the all-important question “is communicating with this donor in this way going to help achieve my goals of net revenue, quality file growth, and/or world domination?”.

And the first topic that should be layered on is listening to what a donor’s behavior is telling you.

Part of this is non-donor behavior.  You likely already have this information if you have the donor’s email.  You can potentially tell if they’ve been to your Web site, how often, how long they spent, and what they looked at.  You definitely should be able to know how they’ve reacted to emails you’ve sent them in the past.  The difference in a lapsed donor who still regularly opens your emails and clicks on the articles versus one who, according to your email records, may or may not be dead is a significant one.

If you can get robust data, so much the better, because now you can not only include people in a communication they may not have received before, but also customize it based on what they are interested in.

But some of this is donor behavior you already know, but RFM filters out.  Channel is one. Take an online donor who is reliable and frequent at donating online.  If you’ve mailed her/him 25 times over the years to try to get him/her to donate, but s/he hasn’t responded, chances are that s/he doesn’t want to give through the mail.  Personally, I’ve found telemarketing to be the most persnickety channel: those who give through it really give through it; those who don’t, really don’t.

Another is cadence.  If someone has given you ten gifts in the past ten years and all of them have been in November or December, my money is on the fact that you can ease off the gas in May.  One program of my acquaintance runs a membership campaign that starts every January.  There is about five percent of their file that will give a membership gift like a clockwork every January or February and then nothing for the rest of the year.  Should you stop trying to get extra gifts?  No.  Should you cut your cadence way down and save yourself some costs?  Yes.

These are things the donor probably thinks they are telling you explicitly with their behavior.  It’s now incumbent upon you to listen.

Because tomorrow, things get a little bit harder, as we talk about lifecycle and loyalty.

If you’d like more nonprofit direct marketing content like this, please subscribe to my free weekly newsletter. You’ll get all of my blog posts, plus special subscribers-only content.

RFM segmentation alone must die

Addressing the resource challenges of donorcentricity

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Getting to an organization that is able to know about its donors and customize communications accordingly is not easy.  We often lack one centralized database that acts as the Truth.  We don’t think we have time to make donor calls to thank people where revenue isn’t attached.  Our budgets are so small that we transcend lean and mean and are now emaciated and ticked off.

But we must start somewhere.  Why?  Remember the old joke about the bear and the sneakers?

For a refresher, two guys are at their campsite when an angry bear comes charging in.  One of the guys immediately bends over to tie his sneakers.  The other one says “You idiot!  You’ll never outrun that thing!”

The guy with the sneakers replies “I don’t need to outrun the bear.  I just need to outrun you.”

So, if you have no better rationale and didn’t read my Monday post about the value of donorcentricity to our business model, remember:

  1. Donors to our organizations donate to other organizations.
  2. Other organizations are doing these types of stewardship activities.
  3. BEAR!

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So how do you start this journey of a thousand steps?  Here are some tips to first steps to better talk to donors.

Get your database in order. This may mean some time working out of csv files to get your lists in order.  However, this is much better than not trying at all.  It will also help you in the long run, as the fancy pants SQL/database steps to data health are likely just automated versions of what you are doing in your spreadsheet.

Institutionalize calling.  It doesn’t need to be just development employees or just employees.  But any part of your culture that you can get to call donors to thank them – do it.  Even if it’s one call per month.  The practice of hearing donor stories helps whoever here them take what was once a figure on a spreadsheet and turn it into an understanding of why people outside your organization think you exist.

And it helps them to feel your gratitude as well.

Ditto for thank you notes.  The more these can be a cultural touchpoint, the better.

Try an unconventional thank you strategy.  We have 50 ways to thank your donors here, most of them unconventional and many of them very poorly rhymed.

Finally, once you have data from a good number of people who have randomly received thank you calls or notes or the like, run the numbers.  You should be able to see from an increase in retention rate (I hope) the impact that calling can have on your donors and your retention rate.  Sometimes that number will be enough to continue your random calling.  Sometimes it will be large enough to justify significant resource allocations changes.

After all, the quickest solution to a small budget is to get a big one.  This can help you prove it out.

If you’d like more nonprofit direct marketing content like this, please subscribe to my free weekly newsletter. You’ll get all of my blog posts, plus special subscribers-only content.

Addressing the resource challenges of donorcentricity

Lessons in donorcentricity from the for-profit world

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In 2008, Walmart asked its customers what they wanted.  They said they wanted wider aisles and less cluttered shelves.  So Walmart spent hundreds of millions of dollars to recreate their stores in this image.  Eight straight quarters of sales decline later (for the first time in Walmart’s history), the aisles narrowed and the shelves cluttered once again.  The total cost of the experiment was $1.85 billion.

Or put another way, they basically lost almost all of St. Jude for two straight years.

Fortunately or unfortunately, no one in the nonprofit sector is capable of losing that much money.  But that doesn’t mean we aren’t making similar decisions with ill-researched (see my commentary on donor surveys from yesterday) or non-researched forays that have no basis in what works (coughcouchbrandguidelinescoughcouch).

But there are customer-centric companies that can teach us something about how to get revenues from our donorcentric strategies:

Acceptance of non-total loyalty.  Coke is a company that has customers so loyal that the one time it messed with its formula over three decades ago is still synonymous with “marketing failure.”  Yet 72% of Coke customers also buy Pepsi.

What Coke drives for is what it calls “share of throat” – how much of what you drink can Coke own?  By using this metric, they know that if they can increase your loyalty and experience, they can increase their revenue with you still not giving them your unswerving obedience.

The same is true for us.  As I’ve talked about, our donors are good people who do good things in the plural sense.  Almost all of them support multiple causes and organizations.  That’s fine.  What we want to be able to do is create an experience for that donor that makes them want to give us more (share of donations) than other nonprofits.

Realization that your most loyal donors and your best donors aren’t necessarily the same thing.  The top 10% of most loyal Harley-Davidson riders – are probably the people you think of when you think of Harley riders.  They have the tattoos.  Their bikes are pristine.  They are a part of the Harley Owners Group (HOG) and have Harley merchandise.

And they are only 3.5% of Harley’s net revenue.  The reason is that these riders probably own “only” one Harley and likely a lower end model.  On the flip side, the (wealthy) motorcycle aficionado may have ten bikes, three of which are Harley’s.  A less loyal customer, but a more valuable one.

Harley’s strategy is a premium strategy.  Not in the sense that they mail their potential owners with Harley address labels and stickers (although I would love to see that!), but that they intentionally make sure they have fewer bikes produced than are desired.  As a result, they can charge a premium price.

They could realign their business about the most loyal customers.  This would likely involve producing more bikes so these loyalists, who are likely to be price-sensitive in their other purchases, are able to have an easier entry level into the market.  But they don’t, because that is not where their bread is buttered.

Similarly, you likely have a frequent tipper audience.  They give you $5 or $10 often when you mail them.  They have been on your file for a number of years.  They are loyal.

But they aren’t for whom you are designing your high-dollar donor newsletter or your handwritten CEO letter.  You are looking for the folks who are capable of making a large or transformative gift.  And high-touch efforts require this level of upside to be worthwhile.

Design around experiences.  I strongly recommend Experiences: The Seventh Age of Marketing by Robert Rose and Carla Johnson.  I won my copy thanks to my knowledge of Firefly/Serenity, but would gladly have paid.

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Thank you, Captain Malcolm Reynolds

In it, they talk about how what we are seeing more and more are how microexperiences (and micromoments) are adding up to create the totality of our brand impressions.

So, as we urged with our donor surveys, it’s good to measure what your donor’s experience is with your organization (and former donors) to make sure it ties to what matters to your donors.  There’s a reason people go to Disneyworld, when you can go to a closer and cheaper amusement park.

Lessons in donorcentricity from the for-profit world

Creating useful donor surveys

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In my DMA Leadership Conference talk, I said that people who listened to what donors say they want in donor surveys deserve to be lied to.  That was obviously too harsh – what I should have said is that they deserved to be misled.

Because people (not just donors, but all human beings*) aren’t meaning to lie to you; they just don’t know what their true motivation is.  As we’ve seen, emotional reaction happens 6000 times faster than rational thought.  So unless someone is doing System Two thought, where they are rationally considering all alternatives, the role reason plays in this process is coming up with the best possible justification of a decision already made.

Consider a study that asked people to rank their top 16 motivations.  Sex was rated #14; wealth was dead last.  Then they looked at actual subconscious motivators of decisions.  Sex was rated #1 and wealth was rated #5.

This should be considered no surprise to people who have met, well, ya know, people.  But it was a surprise to people themselves, who think themselves chaise and uncorruptable, but in reality dream of having very special moments in Scrooge McDuck’s vault.

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But that doesn’t mean all donor surveys are bad – far from it.  It just means that, in a statement that may get me arrested by the Tautology Police**:

Bad donor surveys are bad.  Good donor surveys are good.

Common traps in donor surveys:

  • Talking only to current donors. You want to talk to people who stopped giving as well, to the extent that they will talk to you.  After all, you are looking for the difference between these two groups.  Trying to define who your good donors are without talking to former donors is like saying the reason that Fortune 500 companies are successful is because they have employees and offices.
  • Asking donors to analyze why they did what they did. They don’t know.  So they are going to try to figure out what answer someone like them would generally say or what they think you want to hear.  Neither is helpful to you.
  • Asking donors what is most important to them. Clearly, from the above, the answer is sex.  Looking only at your limited options, however, they will probably make mistakes in determining what is important to them, similar to the poor people who thought that sex and wealth (aka Genie Wishes #1 and #2) didn’t impact them.

So how do you construct a survey that gets to these important points?  You are going to set up your survey so that you can run a regression analysis.****  If you need help with how to do this, check out our post on basic regression.

You will need a dependent variable.  Ideally, this will be donation behavior because it is a clear expression of the behavior you are trying to impact.  If not, an overall satisfaction score with the organization will be generally OK, as it should correlate strongly with donation behavior.

For your independent variables, ask about aspects of your organization.  So, for example, “have you ever called X Organization about your donations?”, “did you receive a thank you note for each donation you made?”, “have you been to X Web site”, “how many days did it take for you to get your thank you note on your last gift?”, etc.

The powerful thing about regression analysis is that it will help you figure out both how people feel about their experience and how important that experience is to them?  For example, my guess is that for most organizations, the number of days it took to get a thank you will be a good predictor of retention.  Since the analysis tells you the strength of that association, you can invest the right amount of resources into that area versus new donor welcome packages or donor relations staff or database infrastructure and the like.

* Yes, non-donors are also considered human beings – just slightly lesser ones.

** Motto: Enforcing through enforcement since Socrates.***

*** Former motto: Our motto is our motto.

**** Or other modeling if you are feeling fancy.

Creating useful donor surveys

Quantity versus quality of pieces in donorcentric fundraising

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Food for the Poor, the DMA’s Nonprofit of the Year last year, sends 27 mail pieces in its control donor series throughout the year.  These are all very good donorcentric letters, focused on the impact that you as a donor are having in saving people in their times of desperate need.

Another nonprofit of my acquaintance that will remain nameless, sends out one appeal per year.  When they asked me whether they should send a second piece, I told them that they should make their one piece work first, because it was not a compelling appeal.

There are wonderful donorcentric people who argue that nonprofits need to reduce the amount they communicate across the board.  I would argue that they need to reduce the amount they communicate badly.

Let’s take a look back at the reasons that people give for stopping giving to a nonprofit from Dr. Adrian Sergeant (first covered in Wherefore Segmentation):

 

reasons-for-lapse

As you can see, 72% of the reasons were related to not getting our message across like “other causes are more deserving” or “I don’t remember donating” or “they don’t need money any more.”  Less than four percent said inappropriate communications.  People are leaving because we persuade too little, not too much.

And as for the sentiment you may get about mailing too much, Van Diepen et al looked at irritation from nonprofit mailings.  They found that irritation can be incurred from mailings, but that it had no impact on revenue per mailing.  That is, people kept donating at the same rate per piece.

As Jeff Brooks put it in his wonderful book The Fundraiser’s Guide to Irresistible Communications:

[A] typical donor gets at least 10 pieces of unsolicited mail every delivery day.  That’s 3,000 pieces a year.  If you write to a donor twelve times a year, you’re sending 0.4 percent of her yearly total.  If you stopped mailing, the daily average would drop from 10 to 9.96.  Not a meaningful difference for you and your donor.

But for you, that cutback would mean lost revenue, forever.  A loss of hundreds, maybe thousands, of dollars from each donor.

You’ll never solve the Too-Much-Mail problem if you treat it as a numbers game.  The real issue is the relevance of the mail, not the volume.

All of that said, you could be mailing too much, as measured by both your net revenues and a true donor focus.  Here are some of the symptoms:

  • Channel mismatch. It is correct and laudable to try to get an online donor to give offline and vice versa.  However, there is a point of non-response (that varies by organization) at which the online donor is very unlikely to give.  For example, if someone gave their first gift online, continues to give on online, and hasn’t so much as looked at 10 mail pieces from you, you might be wasting money in sending those appeals (note: I say those appeals – perhaps a mailing that encourages her to go to the Website and make a donation is just what the doctor ordered).
  • Seasonality mismatch. If someone donates every November or December like clockwork, but never a second gift in the year over five years, you are probably safe in reducing the mailings they receive in spring and summer.  Note that I don’t say eliminate.  It could be that the updates they are receiving in the summer are the reason they donate in the winter.  But you can probably save some costs here.
  • Mismatch of interests. As we’ve advocated in the “change one thing” approach to testing, you can find out what messages people will respond to and what they won’t.  One you learn that, for example, a person only gives to advocacy appeals, you can safely cut some of the other types of messages they get.  Or someone who only gives to premium pieces get premiums (but for whom they are a turn-off don’t).
  • Systemic waste. Additional mailings should do two things: increase retention rates and increase total program net revenue.  That is to say, it’s not enough to say “this piece is a good one because it netted positive”; you need to be able to say that without the piece revenues would have been down overall.

To make the math simple, let’s say you mail three pieces, each of which gets $100K net revenue.  If you eliminated one of them and two pieces started making $150K net, that third piece was not netting program revenue (unless it was a cultivate piece that set up future year’s revenues or had an upgrade component or the like.

What this nets out to is that in a donorcentric future (or, at least, in my donorcentric vision of the future), people will ask how many control pieces you send and you will have to say that it depends greatly on the donors themselves (or give a range like somewhere between two and 30 pieces per person).

And, of course, that each of these pieces is customized and crafted to appeal to that particular donor or segment.  That, in my mind, is listening to the donors and not trying to let a Platonic ideal donor get in the way of each precious unique donor snowflake.

If you’d like more nonprofit direct marketing content like this, please subscribe to my free weekly newsletter. You’ll get all of my blog posts, plus special subscribers-only content.

Quantity versus quality of pieces in donorcentric fundraising

Donorcentricity: it’s only a fad if you aren’t doing it

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I had the pleasure of doing a debate at last week’s DMA Nonprofit Federation Leadership Conference with Lynne Wester, the Donor Relations Guru, about donorcentricity.  She was pro (and was a pro, surprising no one); I was con.

Several people asked me afterwards what I actually believe.  For the most part, I’m very much pro-donor-centrism.  I took the con side because I believe what John Stuart Mill said:

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And also because sometimes an admirable goal of improving the nonprofit sector’s sometimes abysmal treatment of donors loses sight of the goals of fundraising.

So this week, I’d like to poke, prod, and challenge the wisdom for and against a donor focus, starting with what it is and why it’s important.

The answer is not to make our donors feel better.

The answer is to cure cancer.  Or end drunk driving.  Or prevent mistreatment of animals. Feed the hungry.  Protect the abused.  Light the fire of education.  All this and more.

To do these things, we need money.  To get money, we need donors.  To get and keep donors, we need our donors to give happily.  Thus, making our donors happy is a good goal.  It’s just not the end goal.

But at the same time, we ignore it at our peril.  In the room, I talked about the amazingly low retention rates we have, especially for first-time givers, as a reason to churn-and-burn.  My actual conclusion could not be farther from the truth – retention is something on which can we continually work and improve.

We face numerous challenges right now to the very model of nonprofits historically.  Donors are looking to fund an impact and a cause, not necessarily an organization.  Why should they pay what they perceive to be (but aren’t) high overhead rates when they can do a microloan with Kiva, or directly fund a school through DonorsChoose or find a particular person in need through GoFundMe ?

In addition, aggregator sites are more than happy to give nonprofits the money as long as they own the constituent.  Facebook, usually a reliable example of most examples of walled gardens and rented land, is one of these where information does not get to the nonprofit for meaningful communication.

All of these satisfy donors’ needs to make a difference and feel an impact, while not engaging with an organization.

There are three ways I can see to adapt to this new world:

1. Fail.  Remember, in the words of Adam Savage:

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This may not sound particularly palatable, but it’s better than being the best buggy-whip salesperson or whale-oil-light manufacturer or print journalist left on earth.

2. Compete on the value of our models for effectiveness. Small scale efforts like GoFundMe can fund one person, but they can’t fund a systemic scale against hunger.  Individual donors tend to pick projects based on the basis of attractiveness and skinniness and whiteness (unfortunately), so nonprofits fill a role in helping everyone.  Small efforts can’t effectively change laws or study methods for change.  And they while they fix things well, they can’t prevent them from breaking.

Unfortunately, these are usually tough sells.  For years, we have talked about the systemic problems through the story of the one.  It’s the one that touches the heart and we know that emotion is far better than education in low-dollar appeals (and since you attract people as low-dollar donors, that hurts acquisition as well).  If someone can see a person’s plight and fix it, rather than the underlying problem, easy trumps thorough.

3. Compete based on how well we can treat donors. That’s donorcentricity.  That’s where we can have a meaningful advantage.  One-off sites like Facebook can’t build a relationship around an issue like we can.  And while Kiva is fabulous in terms of creating an addiction around helping, other sites lack in this regard.

So rather than die off, donorcentricity is going to be (in my mind) how we justify our very existence: we are the best at creating meaningful connections between donors and the world they wish to create.

So this is not a fad.  It is not everything, but neither is it nothing.  But in my mind, it also doesn’t mean what some people think it means.

Along those lines, I’ll be talking about communication quantity tomorrow.

Donorcentricity: it’s only a fad if you aren’t doing it

Ask string amounts: to round or not to round

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Rounding can be controversial.  On the one hand, round numbers could potentially help with fluency, which is crucial in persuasion.  Rounding out ask strings can help you get out of weird numbers that consistent upgrading can create (e.g., if you donate $30, then upgrade by 50% each time, that’s $45, $67.50, $101.25, then $151.875.  And if you haven’t got a ha’penny, then God bless you).

On the other hand, there is a potential draw in using an odd amount specifically to stop someone short (e.g., your $17 will feed X people).  In fact, in face-to-face settings, panhandlers found that when they asked for change, 44% of people contributed.  When they asked for a quarter, 64% contributed.  When they asked for 17 cents or 37 cents, 75% of people made a contribution.  This is called the pique technique: the idea being that the odd request breaks people out of their normal mental structures, forcing them to think about what you are saying.

However, this may or may not be as applicable in non-face-to-face environments.  Burger et al took a look at the mechanism by which this worked.  They found that contributions only increased among people who came over to ask a question; there was no difference in giving between people who were given a specific answer (e.g., “I need to buy a stamp”) versus those who were given a generic answer (e.g., “I need to buy some stuff”).  Since there isn’t a mechanism for someone to stop and ask you a question in the mail or online (yet!), this technique may not work on asynchronous platforms.  And, in fact, a study of the pique technique when applied to causes, rather than donating directly to the person face-to-face, found no significant difference with this technique.

There is, however, evidence that rounded numbers can increase giving.  One study of donations found that rounded values increase giving by seven percent.  Specifically, they found that people were more likely to choose things that were on the ask string (what they called an appeal scale) than rounded numbers not on the ask string, but that a good number of people wrote rounded numbers in as the other when not on the ask string.  Additionally, they found when a round number was on the ask string, there was a particularly strong pull of that number on donations.

In addition to articulating that round numbers have a pull that is independent of the pull of a person’s internal reference point and the ask string itself, they also helped define a conundrum.  To wit: what is a round number?  As the authors put it:

“While the notion of a round quantity is seemingly intuitive, it is nonetheless difficult to make precise. Round numbers are operationalized in the present paper as the face values of commonly used French currency notes or small integral multiples thereof. Based on the data used here, this functional definition accounts for all but a negligible proportion of off-scale donation amounts, in the sense that adding or removing additional rounded values does not substantially alter any aspect of the analysis.”

As we noted in the all about the Benjamins piece, these banknote values are especially strong — $100 in particular. 

 

In summary, fluency seems to trump creativity in the case for round numbers, especially at higher levels.  If you are looking to increase average gift, it should be to something that is highly fluent like $20, $50, or $100; if you have to be creative, do it with lower ask amounts so that they don’t have as much draw.

However, there is some evidence that having one oddball, very high donation amount can be helpful, as we noted with the Make-a-Wish Canada example here.

The idea of providing an outlier as a potential anchor and/or moneymaker is an interesting one.  While I could find no data on this from the nonprofit world, there are studies from the for-profit world that indicate that the existence of one very high product can increase what someone is willing to spend on a medium-priced product.  This explains the existence of those news stories you hear from time to time about how someone has created an even more expensive hamburger, made with wagyu beef, caviar, gold leaf, and unicorn tears.  

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Medium rare, unicorn tears on the side, please.

Having this burger on a menu, in addition to the free publicity, could also increase average spending.

 

This post is a section of my upcoming, not-quite-a-book, not-quite-a-white-paper about ask strings.  It will be free to all subscribers to my free weekly newsletter, so please sign up here.

Ask string amounts: to round or not to round

Cognitive fluency, your brain, and direct marketing

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“Cognitive fluency” means brains like things easy.  Easy things make brains happy.  Happy brains make people do things we want them to do (proof is here). 

Options of three things are easy.  Brains Goldlocks it and pick the one in the middle – not too much, not too little.  There’s a study that shows this. 

Repeating things makes them easier.  Seeing something once makes you more likely to like it a second time.  Thrice is even better.  Even if it is nonsense, you like it because you’ve seen it.  

The easier something is, the more it convinces.  That’s also been shown.

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Image credit: The Boston Globe.

For example, reading Arial makes us think doing something will be easy.  Reading a script font makes us think it will be hard.  The study is here.  

Simply named stocks do better than tough ones.  Simply named people become president.  More info here.

Also, repeating things makes them easier.

So make it easy for your donors.

Have people looking at your donate button.

Repeat things.  Because repeating things makes them easier.

Build up to your ask.  Small steps like email petitions increase donations.  

Tell people what other people are doing.  That’s social proof.  Brains like social proof because it makes things easy.

Just like repetition does.

Make your text a very different color from the background.  Because this stinks.  If it’s too close, it blends in.  Blending is bad.  Reading easily is good.  

Bigger fonts are also better.

Write at the lowest grade level you can without sounding Dick and Jane.  Jeff Brooks, in his very good book, recommends 4th to 6th grade level.

Some may call this stupid.  But it’s not dumbing down.  It speeds your donor up.  It makes it easy for their brain.  And that makes you more persuasive.

So, small words.  Short sentences.  Fragments of sentences, even.

Your high school English teacher might disagree.  If s/he wants a say, s/he needs to donate.

Please make your donors’ brains happy.  Make it easy for them.  Then they will make it easy for you.

Cognitive fluency, your brain, and direct marketing

How the brain decides whether to donate

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The classic of this decision-making writing is Daniel Kahneman’s Thinking, Fast and Slow.  In it, he talks about two thinking systems, cleverly named one and two.  System one is our fast thinking, emotional, instinctual system; system two is our contemplative, logical, slower system.  Many of the cognitive biases and heuristics that we talk about in this blog stem from system one having clever (and not-so-clever) shortcuts so that we don’t have to spend the energy to think.

There’s a subtle shift on this that more neurological minded decision theorists propose (not that Kahneman’s system is bad — there’s a reason it’s a classic).  They say there are three decision-making pathways: 

  1. Pavlovian: This is the system that makes you want a meringue cake dessert.

    300px-pavlova_dessert

    Nope, sorry.  Knew I shouldn’t be writing while watching Food Network.  A Pavlovian pathway is instinct: it’s an unconscious or nearly unconscious, reflexible behavior.  It gets its name from the ring-a-bell, get-a-treat, now-the-dog-salivates-when-the-bell-rings conditioned response guy.  This may be System 0 in the Kahneman taxonomy.

  2. Habitual: When you repeat actions over and over, they become subconscious behaviors.  There’s a neurological saying “fire together, wire together,” meaning that if you do something repeatedly, the stimuli involved in that something will tend to become associated and more efficient working together.  Think of walking the same path through grass day after day.  Pretty soon, that path becomes almost as good as a sidewalk, controlled by your basal ganglia.

  3. Goal-oriented: When you make conscious, reasoned decision based on trying to get to a positive outcome.  You likely have heard about how people like President Obama, Steve Jobs, and Mark Zuckerberg wear the same thing every day so they don’t have to make that decision every morning.  There is a germ of truth in this: we can only handle so much in a day and every goal-oriented decision takes its toll.

If you would like to read about these three mechanisms and how they function in prosocial (not selfish) behavior, there’s a nauseatingly detailed study here. 

So what are the implications for direct marketing?  I’d love to hear yours; here are a few of mine:

  • For a certain type of supporter, is reduced cognitive load part of the pitch for a monthly donation EFT?  That is, can you take something that you have to think about in the goal-oriented pathways and put it into automatic?
  • Conversely, do you want to?  Do you want to encourage goal-oriented thinking or aim for a more conditioned response?
  • Donors will likely expect that you behave like Pavlov’s dog.  That is, you need to do what you say you are going to do, especially as it relates to acknowledgments.  If someone is going to expect that hit of dopamine upon receiving their thank you, you need to follow through on that.
  • This likely explains the reason that gifts under $100 are given with the heart and over $100 are given with the head.  At that point, a gift goes from a habitual response to a goal-oriented action full of actual thoughts.
  • What type of conditioning are you doing with your direct marketing program?  There is a chance that premiums are conditioning some of your donors, whether habitually or Pavlovianly, to donate only when they get something for that donation.
  • Are there some means of communication that are truly Pavlovian?  I’m thinking here of mobile messaging.  When someone automatically checks their phone when they get a ding sounds, it’s not too many steps removed from a salivating dog listening to the bell.
  • See if you can discern habitual behaviors in your donors.  Do you have a set of donors who gives every year in November or December, but never in the other ten months out of the year (answer: yes, you do)?  Do you still mail them or call them with all of the other donors in June?

Any other thoughts?  I’d love to hear how you are building positive habits with your donors at nick@directtodonor.com or in the comments section.

How the brain decides whether to donate