Vive le donor difference

When Iyoure-killin-me-smalls-quote-1 was but a wee lad, I played youth baseball.  Or perhaps more accurately other kids played baseball at me.  I excelled in three things and three things only:

  • Bunting
  • Getting hit by pitches, to the point that I once got hit by a pitch that was called a strike.  I had to wait to get hit by the next pitch to take my base.
  • Stealing signs.

This last was where my “talent” was.  I would watch the third-base coach and when I thought a steal was coming from the signals, I would yell into the pitcher and catcher from my position in right field.  (Of course I was in right field.  There’s a chance someone might hit the ball to left field.)  I probably caused more outs with catching signs than catching balls (though still far less than I caused by batting).

The trick to stealing signs is to look for what is different from the usual.  The same is true for catching donor signals – the trick is to look for what is unusual and work from there.  Some tips:

Seasonality: Most donors are season agnostic.  They donate when an appeal touches them or strikes their fancy or they hear about you on the news or they found a $20 in a purse in the back of a closet.  However, some will renew membership in January like clockwork.  Others believe in end-of-year giving (this is prevalent among online donors).

Like everything else, there is a way of doing a sophisticated model to determine this.  However, like only some things, there is also a fast, relatively easy, and free way to do it in Excel or similar spreadsheet:

  1. Pull all of the gifts at which you want to look.  I would recommend donors with at least three years of giving history and at least four gifts, so you have a sufficient history to work with.  You want the gifts labelled by a unique donor ID number.
  2. Label all of the gifts by month (1 = January, 12 = December, and everything in between)
  3. Run a pivot table that summarizes the gifts by donor with the min month and the max month.
  4. Subtract the min from the max.

(If you’d like a walkthrough of this in more detail, please email me at nick@directtodonor.com)

Now look at the results.  The majority of donors will likely have a wide spread of 9, 10, or 11 months.  However, you will also see some 0-3 month spreads, meaning that over (at least) a three-year period and (at least) four gifts, they have given to you only in one quarter of the year.  Thus, you can likely reduce your costs on soliciting them in the other quarters of the year (not eliminate, as you don’t want them to forget you exist).

If you want to be very thorough, add six to each month number and repeat to capture those few donors who may focus their gifting around both the end and beginning of the year, but not the middle.

Premium v non-premium: This is actually the same analysis as the months, except instead of coding your gifts by month, you need to code your communications by whether they required a giveaway to give.  Some people will present as exclusively premium or non-premium donors.

This is powerful combined with seasonality analysis; if you find someone only gives at the beginning of the year to your membership campaign and has never given to a premium piece, you don’t need to send them address labels in May or the calendar in September or telemarket to them in June.  Instead, you can use lower cost (and more cultivative) pieces like donor newsletters to maintain the relationship with them.  Yes, this may only be saving $3 per year per donor, but if there are 10,000 of those donors on your file, you are talking about real money.

Out-of-place gifts: Someone has given you $10 times.  They just make their 11th gift to you: a $173 check.  What should you logically ask them for next time?

HPC says you should ask them for $173 (possibly rounding to $175).  Common sense says that the person may not have turned from a generally smaller donor to a prospective mid-major prospect overnight.

Research indicates a better answer is to use average donation of giving for longer-term donors.  Thus, you see the anomaly, take it into account, but don’t let it drive your decision making.

Another potential treatment is to use a continuous, rather than segmented, version of RFM.  We’ll discuss that tomorrow.

In the meantime, if you are interested in more research on ask strings and amounts you should ask for, I’m working on a book/white paper/whatever it ends up being on just that topic.  Newsletter subscribers will get a free PDF copy of it when it comes out, so if you would like one, please sign up for my free weekly newsletter here.

Vive le donor difference

Ask string amounts: to round or not to round

 

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.  

ht_burger_kb_120530_wmain

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

Escaping fixed ask strings

Most of the science of ask strings that we’ve talked about is related to variable ask strings that depend on who the potential donor is.  However, when acquiring new donors, this is often not possible, since you know little to nothing about who the person is (yet).  Thus, while we’ll talk mostly about variable ask strings or topics that apply to both fixed and variable ask strings, it’s important to discuss fixed ask strings.

Namely, don’t use them whenever possible.  Yes, they are necessary for some acquisition purposes, but the effort to customize them to even what little you know about a donor is worthwhile.  Some tips:

Online donation forms are usually customizable.  CDR Fundraising Group estimates that this simple step can increase your response rate by 50% and your average gift by 40%.  In fact, they’ve posted code for how to do this in Salsa Labs. What if you don’t use Salsa Labs?  Usually searching for “dynamic ask strings XXname of giving platformXX” will get you some tips on how to.

But if these tips are Greek to you, you can always take a shortcut: setting up multiple donation forms with different ask amounts and sending the links to customized segments of your audience.  This isn’t ideal, but it gets you most of the way there.  Even if you take a very shortcut and have a $100+ versus under $100 versions of your donation form to send, you will be customizing the experience for your online donor a little bit.

Use intelligence from your outside list selects.  If you are like many organizations, your outside list selects will feature a minimum threshold below which you won’t accept donors (often $5 or $10).  Chances are you have tested into these amounts:one list is productive without a threshold, so you haven’t incurred the cost; another had subpar performance, so you asked for a more select group of donors.

Chances are, your $10+ donors from one list will behave differently from your $5+ donors from other and from your “anything goes” donors from list number three.  Thus, you can use this threshold as a customization point for your fixed ask, making sure to ask people who give more for more.

Make sure your ask string testing doesn’t select just one winner.  When you test an ask string in acquisition, there’s a temptation to treat it like a traditional control and test, where a winner is chosen and rolled out with.  Here, however, you may find that even though the majority of lists performed best with your control ask string, there were a few lists that had demonstrably better results with your test version.  Since different lists have different donor characteristics, you may get better results by keeping with an ask string that better fits those donors.

Use modeling to determine your ask.  List cooperatives will be only too happy to create models for you.  Chances are, they can do a response model that maximizes response and another that maximizes average gift.  The folly is when both of these groups get the same ask strings when they were set up with different goals in mind.

However, you don’t have to use a co-op or pay a PhD to run a basic model.  Simply take the average gifts from your current donors at acquisition by ZIP code, standardize them (rounding to the nearest five or ten for fluency), and use that as the basis for your fixed ask strings.  After all, there’s no reason you have to treat 90210 as the same as 48208 in Detroit.

Make sure you are using information from multichannel giving when running a conversion program.  Sadly, walkers, event donors, volunteers, online donors, and e-newsletter subscribers are often dropped into an offline acquisition with nary a thought as to ask string.  Please don’t do this.  You could be asking your $500 online donor or your gala chair to sign a $20 check.  It’s debatable whether it would be worse if they didn’t give a gift or if they did.

Instead, make sure all giving, not just channel-specific giving, is taken into account when formulating your asks.  Additionally, even if someone has not given, you can apply filters like ZIP code or historical data (e.g., last time, your volunteers’ average donation was twice that of your e-newsletter subscribers; why not ask for twice as much?) to your ask string.
Hopefully, these tips help make even your fixed ask string more customized.


This is a special bonus Sunday blog post.  As I was writing my mini-book on ask strings, I realized this was a topic I hadn’t covered yet on the blog, so I’m putting up a draft version of the content here.  Please let me know what you think at nick@directtodonor.com so I can improve it.  And, if you would like a free copy of the book when it is ready, sign up for my weekly newsletter here.

Escaping fixed ask strings

Ask strings and $100: It’s all about the Benjamins, maybe

I, like many, am currently obsessed with Hamilton despite the minor handicap of not having seen it or likely being able to see it in the near future.  (Not shockingly, the idea of someone writing like they’re running out of time appeals to me.)  But the Founding Father most relevant to our work is still likely Ben Franklin.

usdollar100front

Do not reproduce.

In nonprofit work, we tend to view the $100 level as a bit magical.  Once someone makes the psychological jump to three figures, they are likely weighing the effectiveness of your nonprofit and not just the emotion.  Additionally, when someone is giving in the same number of digits, it’s easier to upgrade.  That is, the jump from $100 to $200 seems easier for donors to make than $50 to $100, even though it’s more money to increase.  And $100 donors in acquisition are instant candidates for high-touch treatment, as they are showing significant support of your organization from the start.

There’s a lesser known place where $100 is magic: in your ask string.

Reiley and Samek did a study in which they tried two different ask strings). The first was $35, $50, $75, $95, $250, and other.  The second was the same as the first, but with $100 swapped in for the $95.

Revenue per solicitation went up 29%.  Average gift went up almost 20% and response rate went up 7.6%.  Let me repeat that: the ask string with the higher gift amount in it also had a higher response rate.  This is a rare thing.

The major reason for this, they hypothesize (and I agree), is fluency.  As I wrote in the piece on word choice:

People tend to prefer things, people, objects, etc. that are easy for them to understand. (study here). This is known as the fluency bias. There’s a reason that only eight names cover more than half of our presidents (James, John, William, George, Thomas, Andrew, and Franklin (which used to be a lot more popular than it is now)). Names that are more common help people rise faster in occupations. Believe it or not, stocks that have ticker symbols that can be pronounced as words outperform stocks that can’t be.

So, you would think logically that $100 isn’t the only fluent number.  And you would be right.  Another study looked at whether people were more likely to give $20 or a strange amount like $20.03 (if they graduated from the college in question in 2003).  People were less likely to give the strange amount (although this was not statistically significant at the .05 level).

So remember to create round numbers in your ask strings unless you have a really good reason to: the ease of recognizing and using these amounts will benefit your organization and get you more of those elusive Benjamins.

When you can, see if you can get the $100 into your ask string.  It increases your response rate with no loss in average gifts.  Wins like that don’t come along every day.


 

I’m working on a book on ask strings.  My goal is to make it free to subscribers of my newsletter here.  So if a round-up of the science and psychology of donation amounts sounds interesting, please sign up today.

PPS. Tomorrow would also be fine, as I won’t be done with the book tomorrow, but that lacks urgency, don’t you think?

 

 

Ask strings and $100: It’s all about the Benjamins, maybe

The choice: more donors or better donors?

There is a forthcoming study in the Journal of Marketing Research looking at the choice of defaults in donation asks (e.g., which radio button you have auto-clicked on your Website for donation level).

One of the findings was that for many scenarios, changing this default impacted average gift and response rate, but didn’t change revenue.  That is, the average gift and response rate moved in exactly offsetting ways.  So which is the winner?  

Let’s leave aside the fact that there is an obvious correct answer to this*.  It brings up an interesting conundrum: all other things being equal, would you rather have fewer, better (which we will operationalize to higher average gift) donors or more, lesser donors (lower average gift)?

So, let’s say your campaign is bringing in $100,000: would you rather have 2,000 $50 donors or 5,000 $20 donors or some other scenario?

This is a realistic question.  If you graph out your acquisition success by outside list that you are using, chances are you will get something like this:

paretoefficiency

This is actually a good sign.  It means that you are using the best lists, as you are approaching something close to the Pareto efficient frontier (a fancy way of saying you can’t grow any more; you can only make tradeoffs).  After all, if there were a list that was in the upper right here — high response rate and high average gift — you’d be doubling down on that.  But since there isn’t, do you invest more in the upper left or lower right?

This has far-reaching implications.  For example, what metric do you use to determine the success or failure of an acquisition piece?

Yes, in a perfect world, you would use lifetime value.  But we don’t live in a perfect world (if you doubt this, watch a presidential debate at random; this could make Dr. Pangloss open a vein).  Lifetime value takes time to manifest and you need to know what you are making a decision on tomorrow.

So, for your preliminary work, do you go toward net cost to acquire a donor, which will reward getting a large number of smaller donors?  Or do you go to something like net per piece, which will reward fewer larger donors?

(Or, as I’m starting to do, do you look at the donors that a campaign is bringing in and their initial give, then projecting out their average gifting as a poor man’s model for lifetime value?  This is a better solution, but again, don’t let logic get in the way of a good thought experiment.)

This week, I’d like to explore this thought experiment in some detail (in part because it’s something I’m struggling with as well), laying out the case for both approaches and seeing what the implications of this are.
* The correct answer is to set up ask strings and defaults based on previous giving history and/or modeling; customization cuts this particular Gordian knot.

The choice: more donors or better donors?

Using your real estate better: reply devices

When people in your organization review a mail piece, people expend sound, fury, and energy on the teaser copy, the word choice in the letter, and the photographs used.  

But I bet you could send around a reply envelope with the wrong return address on it and have no one notice it.  I’ve actually done this test, albeit unintentionally; I am not immune.  I caught the error in the final proof process, meaning I missed it twice before.

This is where you, as the direct marketing expert, justify your salary.  Anyone can go through a letter with a red pen and choose their own favorite words.  You get to do the unsexy things that will get results.

And the reply device is probably the unsexiest thing in mail, which is saying something.  If your mail piece were the crack spy team, the reply device would the guy in the van.

573-20091

“You know what? I’m sick of being in the van. You guys are going to be in the van next time. I’ve been in the van for 15 years, Harry.”

— Gib,  True Lies

It’s also where a mail piece is one and lost.  And it’s a place where you can implement your priorities where no one will yell boo.

So, some ideas:

  • Anchoring.  We’ve talked a bit about this here and the science of ask strings here.  However, there’s a wonderful SOFII article about the making of a mail piece here  that explains the below the reply device.

    art_51_reply

    Did you notice the $6518 option?  Not only is that a nice high anchor that people are giving toward, but they find that some people actually give that.  From the SOFII piece:

    There is, however, one twist: there is an option to donate a sum of $6,518. We put that figure in because it is the actual average cost of granting a wish. Every now and then, when I’ve done that before, you find a donor who is willing to donate at that level. We did this once for a hospital when the price point for a piece of equipment was $6,942.73. Thirteen people “bought” this device. These donors upgraded from an average of $65 to nearly $7,000. It never hurts to ask.

    Good for you, Make-A-Wish!

  • Ask for more information about a donor.  Your mind must always be in two places about a donor or prospect: where they are now and where there are the possibilities of them going. One opportunity is for this donor to become a multichannel donor; to do that, you need an email address or phone number.  And, while you can append these data, this has costs both in money and in not learning what method(s) by which your donor wants to be contacted.

  • Ask about other opportunities.  Would this donor be interested in more information about becoming a monthly donor, leaving your organization in their will, or donating a used car?  You will never know unless you ask.

  • Customize based on what you already know.  Usually, reply devices are mass printed, which seems to be a missed opportunity.  If you already have the person’s email address or phone number, you shouldn’t ask again.  Likewise, if someone has ignored your checkbox for planned giving five times in a row, perhaps a monthly giving offer is more her/his speed.

There’s also the reply envelope; if the reply device is the guy in the van, the envelope is the guy in the van’s intern.  Usually these are blank.  However, messaging on the envelope can:

  • Reinforce the person’s decision to donate with trust indicators like the BBB seal.
  • Build urgency with messages like “Rush this envelope to save lives.”
  • Spread program awareness (e.g., “If you or a loved one has been affected by X, please call our hot line at 800-XXX-XXXX”)
  • Help with the program allocation of your mail piece in joint cost allocation.  (For those not familiar with this procedure, you should be looking at each of your pieces and determining what percentage of this content is for each of your programs and what is fundraising for the purposes of your tax returns.  Additional program messaging on the envelope gives a slight boost to the programmatic content.)

Just because the reply mechanisms don’t have as much messaging doesn’t mean that you still can’t make them work for you.  Hopefully, these tips have helped you customize your reply so that you can get more replies.

Using your real estate better: reply devices

Learning from political fundraising: chip in change for change

You’ve seen the headlines: “Americans more divided than ever”, “Gridlock reaching threat level crimson, which is worse than red somehow”, and “Pelosi-McConnell dancing knife fight leaves two dead.”*

Seemingly, parties can’t agree on anything.

But here’s a ray of hope.  They can agree on donors chipping in:

Martin O’Malley:

chipinomalley

Rand Paul:

chipinrandpaul

Bobby Jindal:

chipinjindal

DCCC:

chipindccc

RNC:

chipinnrcc

Jeb Bush:

chipinbush

Bernie Sanders and MoveOn:

chipinsanders

John Kasich:

chipinkasich

Marco Rubio:

chipinrubio

Hillary Clinton:

chipinclinton

I’ll be honest: usually my research for this blog is harder than this.  The hardest parts of finding these were:

  1. Remembering who had been running for president.  For example, it turns out Lincoln Chafee is not a model of car.
  2. Finding photographic from former campaign sites.  There’s evidence that Scott Walker, Chris Christie, Mike Huckabee, and others used chip-in language, but couldn’t find them online.  So passes away the glory of a presidential campaign.

But nonprofits don’t seem to be using “chip in” much.  Yet.  I think BirdConservancy.org was the largest organization I could find in my Googling.

So why do political organizations almost unanimously use “chip in”?  Here are my theories:

  • “Chip in” sounds very small. Giving permission for small donations increases the likelihood of giving. This is probably part of the appeal.  This extends to the standard ask strings.  Clinton, Cruz, Kasich, Rubio, Sanders, and the current Republican frontrunner (since I pledged I wouldn’t use his name as a cheap SEO play) all start their asks at $3-25.  In fact, if you take out Kasich, the highest initial ask is $15 (ironically, for Bernie Sanders).
  • Making a cost sound small also decreases the amount of pain that someone feels from making a purchase/donation. 
  • The value of a name in political spheres far exceeds just their donation value.  A $3 donor is also a voter at worst and perhaps a volunteer or district captain.  And of course, they may be able to give more in the future.  A $2,700 donor is these things, plus someone who may be able to attract like-minded funders at a max level.

    I say this is in political spheres.  But isn’t this true for your nonprofit as well?  You want that $3 donor as a volunteer, walker, bequest donor, monthly donor, etc.  And yet we generally have higher online ask thresholds. 
  • “Chip in” implies that others are doing the same.  In fact, Oxford Dictionaries defines “chip in” as “contribute something as one’s share of a joint activity, cost, etc.”  Social proof is a powerful persuasive force and knowing that others are doing it and are counting on you too can greatly influence decisions. 
  • People like to be a part of something bigger than themselves.  This is especially true for causes, political or non-profit.  The ability to make something part of your identity that ties you into a larger in-group can be very powerful.

So I’d encourage you to try chipping in as part of your emailing strategy (and, if it works, test elsewhere) as a way of pulling these cognitive levers.

A post-script: after I drafted this piece, this came in from the Clinton campaign:

unnamed

 

* I will offer a free signed book (in that I will print out any one of my ebooks , sign it, and mail it to you) for the first person who can do a Photoshop of this based on West Side Story.

 

Learning from political fundraising: chip in change for change