Cultivation

Breaking down the “my donor” mentality between direct marketing and major gifts

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The first thing that many major gift officers will instinctively do when they see their donor portfolio is to shut down direct marketing efforts to those donors.  After all, you want the donor to take your call and don’t want them mistaking you for a telemarketer.

Imagine if you tried this in any other walk of life.  Imagine going to Jeff Bezos and saying “this person has been buying a lot of stuff from us on Amazon.  Let’s make sure they never get another email from us, because I really think that I can sell them the Lladro Niagara chandelier for $100,000 (plus $4.49 shipping, which is either far too much for shipping or far too little).”

bond_villainHe would laugh at you until he got stomach cramps.  Or he would have an underling, possibly with a mechanical arm, throw you in a vat of piranhas while he stroked a cat.  All depends on the mood.

Bottom line, it’s silly to take someone who has been donating routinely by one means and, by all available evidence, been satisfied with it and cut them off from that means in the hope they might give more.  You should only change this if the donor asks you to (in which case, you should do so immediately, while smiling) or if you have a relationship with the donor to the point that there’s an alternate communication strategy in place.

That said, the major gift officer is right.  You don’t want to treat a potential donor the same way as a potential $10 donor.  This is not a defense of sending someone with the capacity to give a transformative gift the same 12-mail-pieces-and-a-cloud-of-dust approach that everyone else gets. It means:

A donor newsletter.  You hopefully are doing this already.  And you hopefully are basing it on Tom Ahern’s Making Money With Donor Newsletters.  In case you aren’t, your donor newsletter should:

  • Focus on “you” — you being the donor
  • Focus on what “you” did — progress updates and impacts
  • Have short articles
  • Be written for skimmers — white space, bullets, and compelling headlines and images
  • Have a return envelope but not be as “ask forward” as a traditional mail piece.

This more cultivating newsletter will help you make money from these donors.  But it also creates a holding pattern for your major gift officer.  You’ve already made the segue to what impact the person can have, leading to a more natural conversation when the officer is able to get in front of the donor.

Higher-touch communications.  This can be simple things like crossing out the impersonal salutation on a letter and writing in “Dear Nancy,”.  Paperclips in your mail pieces show that the piece has been touched by human heads.  First-class postage is a nice touch, as is expedited postage to get the mail piece to the donor.  One nonprofit of my acquaintance has their CEO write a holiday letter in blue ink, then copies it on the color copier for a handwritten appearance.  These are techniques that can segue naturally to higher-value communications with a major gift officer.

Higher-value communications.  We’ve discussed the supreme value of exclusivity.  A major donor may want to be able to get a sneak preview of your upcoming report or have an exclusive briefing call with your head of government affairs.  These types of velvet rope communications can build to events where major gift officers can meet with them face to face.  Once natural enemies, direct marketing can set up the major gift relationship.

Helping define the major gift portfolio: You are looking for one of two things: a long giving history with multiple gifts per year, increasing gift amounts, and participation in the mission or someone who makes an unusually high first gift.  Usually the first group will be better prospects.

Thank extremely well.  Have you ever heard a potential major donor consider not making a major gift because they were thanked too well or too often?  Me neither.

Overall, you are looking to create a spirit of cultivation with these donors.  And you should give of your donors to your major gift officers.  By being a strong resource for them, you prevent them from trying the nuclear suppression strategy with you, allowing you to maximize revenue from these donors over time.

Breaking down the “my donor” mentality between direct marketing and major gifts

It’s time to stop… the big check photo

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Every nonprofit has a photo like this somewhere:

ansari_x-prize_check

It’s not necessarily a bad thing to do.  It’s a photo that your corporate partner can use on their Web site or in their annual report as a way of showing their commitment to the community.  And, among a still-sadly-plurality-older-white-male business community, the big check sends the message to other business people in the audience:

Your check is too small.

And this, to stereotype broadly, is not an audience that wants their anything to be too small.

But for goodness sakes: do not put this big check picture in your donor communications.

Ever.

Because it sends the message “your check is too small.”  This is sometimes a message you want to send.  We’ve talked about social proof nudges like “the average donor gives $X” as an upgrade strategy for people who don’t know what the socially acceptable amount is.  (Side note: can any of my readers let me know what the proper amount is to tip a shared-ride (Uber, Lyft, Sidecar, etc.) driver?)

But that is usually trying to get a person to increase their gift by double or less.  What you are saying with the big check is:

  • “What you are giving is 1/10000th of what this person is giving”
  • “This is how we treat people who give us things like this: note that we look to be dressed nicely at what appears to be a fancy hotel and really yucking it up with each other.”
  • “This is how we treat people who give us what you give: we send them this letter.”

Needless to say, this is not a response rate booster.  And, since the amount is so far off from not only what they give, but what they could possibly give, it is not an effective anchor for a higher gift.

It also indicates that this type of thing is what you do with your time as nonprofit employees.  This doesn’t help us dispel the overhead myth that we should have Robin Leach narrating the story of our non-profit; it reinforces it.

But the most grievous sin the picture has (and this goes for award pictures and ribbon cutting ceremonies): it’s not about the donor.  Remember that for the donor, you are a means to the end that they are hoping to create in the world.  The opportunity cost of that photo is immense when you could be showing visual proof of the impact the donor is having on the world.

It is a cultural shift because the big check photo is one of those things that is done.  But it shouldn’t be.

Instead, ask if you could also get photos of your corporate partner, grantor, or their employees doing some of your mission work.  Someone in a logoed polo shirt planting a tree or serving on your crisis phone line or reading a story to children is something you can use in your communications.  And it helps cement the bond between you and the person who gave you the big check.  Because they are (hopefully) in it for the impact as well and having a photo of trees, services, or kids is a far better reminder of that than phony grins and foam core.

It’s time to stop… the big check photo

It’s time to stop… the donor pyramid

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All pyramids are lies.They have a dishonest scheme named after them.  They will not keep your razor blades sharp or apples fresh.  They messed up the four food groups.  Maslow’s Hierarchy of Needs isn’t really true (in the sense that there are fundamental needs, but there isn’t a hierarchy).  Even the Egyptian pyramids were really built by aliens.  I know that last one is true because I saw it on the History Channel and you can’t have lies in history.

They have a dishonest scheme named after them.  They will not keep your razor blades sharp or apples fresh.  They messed up the four food groups.  Maslow’s Hierarchy of Needs isn’t really true (in the sense that there are fundamental needs, but there isn’t a hierarchy).  Even the Egyptian pyramids were really built by aliens.  I know that last one is true because I saw it on the History Channel and you can’t have lies in history.

i-am-not-saying

It’s time to give up the donor pyramid as yet another three-dimensional-triangle lie, something that desperate presenters shove into PowerPoint slides to give the illusion of intelligence.  (See also: clipart of stick figures doing things, photos of people shaking hands, any time arrows make a circle.)

So let’s see and know the enemy:

pyramid-12

It looks innocent enough.  But do not be drawn in by its tetrahedral lies.  These include, but are not limited to:

Steady steps up the pyramid.  Some illustrations even have a person climbing up the side of the donor pyramid like Yodeling Guy from The Price Is Right (I’m sure Yodeling Guy has a canonical name and such, but hopefully the description suffices).  In reality, steps are so frequently skipped as to render the metaphor useless.  Think of the little old lady who gave your organization $10 each year at Christmas, then left you a bequest of $400,000.  She skipped all of the steps.  You didn’t even try to get her to be a monthly donor, because your modeling indicated that she probably refers to going online as “The Google.”  And major donor?  Fuhgeddaboutit.  $10 per year.  She was probably the last person you were going to ask.  Literally, the last person.

I will bet the contents of my wallet (two dollars cash and seven receipts from my trip to DMA) that this experience happens more often than someone stopping at every step of the so-called donor pyramid.  At the point that the worst-case scenario for your metaphor is more common than your best-case, you have a metaphor problem.

More mundanely, it’s probably counterproductive to think that you are moving someone up one step at a time.  Take a look at monthly givers versus major givers.  Yes, you are probably going to invite your monthly donors to make major givers.  But if someone is giving you a thousand dollars through the mail and comes in high on wealth screening and affinity, you are going to start personal cultivation with that person (while not removing them from direct marketing, because you are not an idiot).  That will come at the expense of, and rightly so, an invitation to, and stop off in, monthly donor land.

The donor experience pinnacle is death.  If this is true for your organization, take a good long look at your donor relations processes.

Progress.  The donor pyramid has never heard of a lapsed donor.  When the donor pyramid thinks someone is about to say “lapsed donor,” it sticks its fingers in its ears* and says “lalalalalalalalalala” like a recalcitrant seven-year-old.**  The idea that you would have to get a donor back doesn’t occur to this pyramid – its donors are too busy ascending.

Meanwhile, in reality, lapsed donors are valuable.  They are less valuable than multi-donors, but more valuable than person-off-the-street.  But they don’t fit into the pyramid power’s progress.  So they are left aside.

This last point also shines the way to the better analogy: the donor flowchart.  It isn’t as aesthetically pleasing, but it is true.  In being true, it also helps us better conceptualize our process.  We need to differentiate major donor versus monthly donor asks.  We need to try to get our lapsing donors back.  And death is not the only way the donor story ends.

So congratulations, donor pyramid.  You make our list of Things to Stop Doing.  Now, if someone asks where your donor pyramid slide is, let them know that aliens took it.  After all, aliens are far more plausible than the pyramid-y version of the donor story.

* Yes, in this analogy, pyramids have fingers and ears.

** This author has a seven-year-old and knows of what he speaks.

It’s time to stop… the donor pyramid

Welcome step four: Setting up your systems

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So you have your plan for your welcome series.  It is somewhere between 1 and n number of communications, depending on the person.  It crosses media where possible.  It thanks, learns, teaches, and asks.  And it honors the gift the person has given, while letting them know they can still be a bigger part of the change they seek to make in the world.

And it is worth nothing unless it is written down.

eyrha

You are working with a process that likely has:

  • At least three media (email, mail, phone) and perhaps more (mobile/texting, addressable ads, video, events)
  • Multiple vendors/systems involved (including caging, database, mail house, telemarketers, online communication systems)
  • Multiple points of differentiation, including medium, message, and high-touch v low-touch
  • Multiple people at your organization (you, donor relations staff, executives)
  • Intricate timelines.  For example, if you have three communications that you want in the order of thank you, learning about you/you learning about us, and ask, you really, really don’t want them to happen in the reverse order.  Also, every time you suppress someone from anything, things get complex.

This is not something that can be informal. In order for these systems to work together, you need to write out how.

Which does not mean you should write it in stone.  The basic principles should be (thank as quickly as possible, customize communications to the person receiving them, include both gratitude for what the person has done and opportunity to do more).  But how you accomplish them should be fluid with your testing regime.

I would say that the easiest way to create your process is to start with the simplest case and work your way up.  In this case, we have the rare example where ontogeny recapitulates phylogeny*.  So here’s how to build your program and your welcome/acknowledgment flowchart.

  1. Start with the most basic thank you by medium.  For an online gift, this is an email thank you; for an offline one, it is a mailed thank you.  Figure out how to get it out as soon as possible. 
  2. Customize those communications to the reason for giving.  A simple way to do this is to have a paragraph in the communication that changes based on the appeal to which the person gave their initial gift (since that’s usually the only information you have about the person at this point). 
  3. Create a special high-touch way to reach out to higher-potential-value donors.  This could be a policy of thanking all sustaining donors by phone or thanking all $100+ new donors and $1000+ existing donors with a handwritten card — whatever you are capable of doing.  This should be added to, not in place of, other thank yous. 
  4. Explore ways to break down your acknowledgement silos and thank people in different ways.  Put those that work into your process. 
  5. Add in a customized ask.  Yes, we’ve gotten this far before adding in an ask.  My thought is that a well-thanked donor is more likely to give to a regular-communication-stream ask than a poorly thanked one is to give to a specialized communication.  Also, you’ll note that this comes before creating a gap in communications (there likely already is one  that you can take advantage of) or learning about/educating your donor (I would rather have a less-educated donor who makes a second gift than a more-educated one who hasn’t).  This ask will be a bit more generic than we would like at this point, but you crawl before you walk. 
  6. Create your communication(s) to learn about your constituents.  These will usually be, but don’t necessarily have to be, separate communications from your acknowledgement and/or ask. 
  7. Create your if/then tree for customization from these learning communications.  That is, you should have something that says “if they are interested in advocacy, send them X paragraph in the ask; if they are interested in conservation, send them Y; if we don’t know, send them Z.” 
  8. Create the systems by which these changes will be implemented both for the ask as part of the welcome series and for all future communications. 
  9. Add communications from other media to the mix. 
  10. Create your timing for all of these communications, expressed in number of dates from the receipt of the gift.  I would encourage you to do a range, rather than an exact date for these communications — you may want to avoid having people telemarketed to on Christmas or on Sundays, for example.

Then, test the everlovin’ crud out of the system.  You are looking to break your system and then make it stronger at the broken places.  Some common things to test:

  • Do you have a plan, and only one plan, for every giving amount?  I’ve seen plans that say that donors over $100 get this communication and donors under $100 get this other communication.  They forget that a computer is going to be looking at this and ignoring people who give exactly $100. 
  • Do you have a plan for defaults?  Remember in most cases, you are not going to have additional information from the donor when you make your welcome series ask.  You want to make sure there isn’t a big blank space where paragraph three should be. 
  • What happens to your system if someone miskeys a code? 
  • What does your flowchart look like if someone does everything?  That is, you have paragraphs for people who are interested in various particular diseases, want to do advocacy, or have a personal connection to the mission.  What if they are all three, and they are a high-dollar donor?  The goal here would be to make sure you have prioritization and that you are not inundated with communications.  Remember that one of the priorities with your welcome series is to help the donor understand what to expect from you.  This should not be “I will expect to be annoyed.” 
  • How do your dates line up?  If you are integrating multiple messages and channels, you want to make sure that a person doesn’t get a phone call, mail piece, and email all exactly 21 days after their gift. 
  • How are you going to be able to handle the load?  That is, if you are going to be sending a getting to know you email seven days after the gift, will you be able to handle that on January 7th given your December 31st volume?  What?  You don’t have huge December 31st volume?  Let’s do a week on year-end fundraising at some point.

And you want to be vigilant to potential leaks even when you have this written down.  I have the privilege of working with a great donor relations person who keeps me apprised of the tone, tenor, and quantity of calls we get.  From this, she was able to discern that we were getting people calling (from a pattern of three people — like I said, she’s good) that already existing donors were getting member cards, something we include in our getting-to-know-you section of our welcome series.

What had happened was that our caging vendor had had instructions to send the new donor welcome letter to people who came in from acquisition mailings.  Since acquisition mailings often have lapsed donors in them that you are looking to reacquire, there were people who had donated for over 20 years who were being treated as if they were brand new to the organization.

Sovigilance

Image credit.

I will say that I have entirely failed to set up a welcome series for the weekly newsletter companion to this blog.  If you were to sign up for the newsletter here, what would you like to see?  Email me at nick@directtodonor.com; I’d love to use this as a test case.


* “Ontogeny recapitulates phylogeny” is the (mistaken) idea that we go through all of the stages of our biological evolution in development of our embryos.  The catchiest treatment of this I’ve seen is in Stephen Jay Gould’s I Have Landed, where he talks about how the drawings that supposedly prove this theory (like the allegation that we have gill slits at a point in the womb) persist in science textbooks.  It’s also the theme of his first book, which is a technical book and thus one I haven’t read.  In any case, I doubt his first book has any essays on Gilbert and Sullivan, which I Have Landed does, so that’s another point for the latter work.

Welcome step four: Setting up your systems

Welcome step three: Ask again

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Now you have thanked someone for their gift, you’ve used both asking and revealed preferences to learn about your donor, and you have given your donor opportunities to learn about you.  Once all of this is established, you should ask again.

I’ve said earlier that the welcome series time doesn’t matter too much to me, as long as you are accomplishing all of these objectives.  I’m going to give lie to that here to say that you should be trying to get to this point fairly soon (within 15-30 days online; within 30-60 days offline).  Contrary to your intuition and the indignant cries of your board members that they would never give again so soon after making a first gift, this window is actually your best opportunity for getting that second gift.

And it is critical to get that second gift, for a couple of reasons:

  • Your likelihood of retaining a donor goes up significantly after a second gift.  This is why I advocate not looking at a monolithic retention rate.  Instead, it’s best to break down into retention among new, first-year, lapsed reinstated, and multiyear donors; the retention rates among these are really that different.  Indeed, that’s why on Monday I said that a one-time giver is not really a donor.  Retention rates after first gift are really that low.

  • The second gift sets the tone for the rest of their relationship with you.  Looking at one of the studies we’ve discussed on ask strings, you can see that first-time donors are fluid in terms of their giving. They are in a place where it is literally better to ask them for anything but what they gave previously.  Multidonors, on the other hand, need to be asked for what they were asked for previously.  Ask them for too little and they will downgrade; too much and they will not give.

1280px-Blacksmith_workingImage source here.
It’s a metaphor for a reason: cool metal hardens — only when it is hot is it pliable.

If you have done your welcome series/letter/email/whatever well, this ask should be natural.  You’ve learned about them, you’ve customized your ask to specifically what they want to hear about and who they are, and you know that what you are asking them for is something they will support.

Because of this, and because of the fluidity of first-time donors, I strongly advocate that this second ask be an upgrade in amount or degree.

After all, your ask now should be improved from your semi-blind graspings in acquisition, where your goal was to cast your net far and wide.

And you can drastically increase the value of your donor (to you and hopefully to them) by upgrading them to a monthly giver.

There are some who advocate for acquiring with a monthly giving ask (and, in fact, acquiring with only a monthly giving ask).  As I’ve mentioned, I don’t have the guts to try this yet, other than in means like DRTV where the medium is too expensive to try anything else.  (If you’ve done this, please write in the comments or to nick@directtodonor.com.  I would love to share your experiences with the readers of this blog and/or to read them myself).

But post-acquisition, you may have the perfect storm of factors to lead someone to become a monthly giver:

  • They are still in the glow of their first gift
  • You’ve created a customized experience for them
  • They have not yet become set in their ways of how they give to you.  We’ll talk more about mental accounting at some point, but suffice it to say that people have different boxes of finances in their heads.  Once you are in a box, it is difficult to break out of it unless the person’s finances or perceptions of you change.

We’ll dedicate a week to monthly giving, but you’ve already seen some of the tactics you can bring to bear in this upgrade ask:

It’s definitely worth testing against a more traditional upgrade strategy that would ask for a larger one-time gift.  So test away, but make sure both versions incorporate what you know about the donor.

Welcome step three: Ask again

Welcome step two: Learn more about your donors and engage them

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You’ve now created a gap between now and your normal communication stream for your new donor.  What do you do next?  As any Londoner can tell you, you now need to

bakerloo_line_-_waterloo_-_mind_the_gap

We know in case after case that personalization increases the effectiveness of direct marketing.  And not just making sure the person’s name is spelled correctly: it’s about making sure you know why they are giving and are thanking and soliciting them under those auspices.

With a new donor, you will have a single data point with which to start.  They responded to theme A through medium B.  You can leg your way into donor knowledge as we recommend by changing one thing at a time, but that won’t help you get that second gift.  And even if you are doing well, 60-70% of the time, you won’t get that gift.

Previously, I’d talked about the two ways of getting information about your supporters: watching their behavior and asking them.  It turns out those are the two things you should be doing in your welcome communications as well.

The critical step, and the one most often missed, is setting up opportunities for behavior watching and for feedback.  Or sometimes we go to the opposite extreme and send an email for every little bit of our mission we can think of, drowning the donor or prospect with a deluge of did-you-knows.

The way to maintain that balance with your supporters is to give them three major opportunities:

  • To use you as a resource.  People are more likely to support organizations that solve their problem.  This can range from “I want to eat more sustainably but I’m drowning in a sea of cage-free, organic, cruelty-free, etc. labels and don’t know how” to “I donated to suicide prevention because a friend committed suicide, but now I’m having these thoughts…”.  We nonprofits are (or should be) experts in our area and we can help in these areas.  And, as a much secondary effect, it allows us to see our supporter as a person. 
  • To use you as means to accomplish their goal.  If they donated to a particular issue, they may also want to write their legislator about it — that may give them the same (or similar) warm feeling that donating did.  Or they may want to volunteer in a very specific way that helps them achieve the same end their donation did.

 

  • To learn what they think.  You want to know how you can serve them better.  This can be through a survey or an open-ended question.  Or this can be an opportunity to bring in a different medium by having a human call them, thank them, and ask for why they gave and why to you.

The larger point here is that these should be framed in how they help the donor or cause, not how they help you.  It’s amazing how much of a difference there is between “We are also on social media, so like us on Facebook and follow us on Twitter!” and “Our Facebook community helps parents of children with autism support each other, so please join in if you’d like to hear from others who have been where you are.”

It goes without saying that you should track these activities.  If someone sends back the petition in their mail package, advocacy is something that appeals to them.  Thus, the way to get them to be a higher value donor may not be to get a second gift through the mail (although you should try); it may be to get them to be a frequent online advocate, then ask them after an online petition to become a monthly giver to support the specific advocacy activities they enjoy.

It’s even easier online.  If someone clicks on your link for more information for parents of kids with autism, you know they almost certain fall into this category themselves.  This is a programmatic opportunity as well as a fundraising one, but all boats will lift if you have this information and use it to help the person in question.  Links that you send should be trackable and appended to each supporter’s record so you can customize your messaging.  

The alternative is to become the cable company that asks you for your phone number with their automated system, then has a person ask you for it, even though caller ID is a thing that has existed for a while in this universe.  If someone tells you something, they will expect that you know it.  And clicks are, believe it or not, communication.

There is a lot of ink and virtual ink used on how many emails or mail pieces you should have in a welcome series, how long it should last, etc.  You’ll notice that I don’t cover any of that here, because I don’t find it to be all that important.  If you can accomplish the thank you, learning, and engagement all in one communication, go for it.  On the flip side, as long as a welcome series is about supporters’ interests, it’s difficult to say that it is going on too long.

Welcome step two: Learn more about your donors and engage them

Education versus emotion in direct marketing appeals

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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

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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

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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

Ellinger’s Peak of Ideal Customization

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There is a concept in aesthetics called the Uncanny Valley. The idea is that generally we like things to be closer and closer to human likeness to maximize emotion and empathy. That is, until the thing reaches a point that is not quite human, but too close to human, for comfort. So, things that look somewhat human, but clearly are not (think C3PO from Star Wars or a teddy bear) look fine to us. But getting close without quite being right is highly offputting or creepy.

uncanny valleyYour dislike of clowns, explained.

For some, this is part of a dislike for ventriloquist dummies or clowns or porcelain baby dolls. It’s also why even in these days of high-tech CGI, you will see animated movies that make cartoon characters to be, well, cartoony and not human looking. Efforts to make hyperrealistic animations have fallen into the Uncanny Valley (e.g., Polar Express, Beowulf).

polar express

This girl has come for your soul.

I posit that there is a similar dynamic in personalization.

On one side of the spectrum, you have the cable company. Long after most people have heard of the concept of caller ID, the first thing they ask you to do in their automated system is to put in your phone number.

What is the first thing the person on the other end of the line asks for after your brief 47-minute wait listening to the instrumental version of “My Heart Will Go On”? Your phone number. That isn’t just not knowing your customer; that is Memento-level forgetting.

On the other side of the graph, you have the Target Knows You Are Pregnant story. To make a long and interesting story short, there was a man who called Target irate that his minor daughter was getting coupons for items that would imply that she is pregnant. Shortly thereafter, he called back to apologize, letting them know that there were things going on in his house that he didn’t know about. Target “knew” his daughter was pregnant before he did.

This story is a bit creepy: that Target’s algorithms would “know” something like this. After other coupons were a little too overpersonalized, Target has started putting in random dummy coupons into its coupons, so they look a little more random. (Even though they know what you really want).

“Even then, retailers learned early that shoppers prefer their shopping suggestions not be too truthful. One of the great unwritten chapters of retail intelligence programming featured a “personal shopper” program that all-too-accurately modeled the shoppers’ desires and outputted purchase ideas based on what shoppers really wanted as opposed to what they wanted known that they wanted. This resulted in one overcompensatingly masculine test user receiving suggestions for … a tribute art book for classic homoerotic artist Tom of Finland, while a female test user in the throes of a nasty divorce received suggestions for a small handgun, a portable bandsaw, and several gallons of an industrial solvent used to reduce organic matter to an easily drainable slurry. After history’s first recorded instance of a focus group riot, the personal shopper program was extensively rewritten.”
― John Scalzi, The Android’s Dream

So here is the Ellinger Personalization Satisfaction Curve (I figure if I keep trying to name things after myself, one will stick):

ellinger curve3
I spent upwards of 42 seconds on this graph

As personalization increases, you like it, unlike a point where you stop liking it.  The three big implication for nonprofits are:

  1. This curve is moving right. It used to be an innovation to have a person’s name included in the salutation. Now, unless you are going for an ultra-low-cost package, it’s table stakes. Donors used to be OK with the Super Mario Bros. excuse for not knowing entire gift history (“Thank you for calling, donor. But your data is in another database.”); now it is inexplicable. We now live in a world that knows our name and who we are (or can look it up quickly enough to simulate this).
  2. But people generally don’t like you to know things that aren’t logical leaps from their existing relationship. For example, if you are using acquisition lists from advocacy organizations, it’s almost certain fine to send them an advocacy piece from your organization to them. However, you don’t want to say “Because you support other advocacy organizations, you may want to help support our cause.” This is a part of the sausage making people don’t need or want to see.
  3. This sweet spot is different for everyone. Some people still get weirded out when people know who is calling from caller ID. Others wear their digital hearts on their sleeves, inviting everyone to know everything. The best you can do is aim for the middle for the general population at first, but then test up and down to see what each your donors prefer.

I’ll talk about a few positive customization techniques tomorrow.

Ellinger’s Peak of Ideal Customization