Read this article for less than the price of your Starbucks coffee

OK, you got me.  This post is actually free.

But it’s a phrase that is often used in DRTV spots: “you can X for less than the price of your morning coffee.”  The goal is clearly to get a monthly donation and to make the pain of spending money less by breaking it into smaller chunks.

But since my two most popular posts so far have been the study of ask strings and the anchoring of ask strings, I did want to update it a bit with new research on reference points in asks for donations.

In the American Marketing Association journal, there was a study that looked at referencing an indulgent product as a reference point for your ask.

This worked pretty darn well.  In each test, there was a control with no reference point, a hedonic (related to pleasure, usually with no socially redeeming value) reference point, and a utilitarian reference point.  So for example, they asked people to donate $1 to UNICEF.  People who got the hedonic version had the ask followed by “One dollar is the cost of downloading one top-ten song off of iTunes, such as the current #1 hit ‘Hallelujah’ by Justin Timberlake.” (Which dates this paper very nicely).

justin-timberlake-trolls

Image credit.  This is what comes up when I Google “Justin Timberlake hedonic condition.”  I’m really hoping I’m the first person ever to Google this…

People who got the utilitarian version got “One dollar is the cost of downloading one top-ten podcast lecture from iTunes U, such as MIT Professor of Physics Walter Lewin’s lecture, ‘Electricity and Magnetism .’”

Less than half (47%) of the control group donated, 57% of the utilitarian folks donated, and a whopping 88% of hedonic folks donated.*  

They replicated this with donations of time, where two hours was either “how long it takes to watch the season finale of MTV’s Jersey Shore” (hedonic) or “to watch the season premiere of House” (utilitarian).  Before I go to the results, I’ll say here that I will donate any amount of time you want if the only alternative is to watch Jersey Shore.**

In this case, 12% of the control group volunteered, 14% of utilitarian folks volunteered, and 30% of hedonic folks volunteered.  

They also tested with similar results in increased donations with an online $10 donation to UNICEF, which I mention only so I can repeat the hedonic condition:

“Remember, $10 is about the cost of a hand blender, which is great for making exotic cocktail drinks and is a good tool for a luxurious lifestyle.”

I love science.

The authors hypothesize this is because we feel the need to signal to ourselves that we are good people.  I’d agree.  The same element is at work as in the slacktivism study that people who didn’t take a petition were more likely to donate to an unrelated non-profit.  They were compensating for their lack of action on one thing with another action.  A similar mechanism seems to be at work here.  We like Ben and Jerry’s (because it’s gosh-darned delicious) but we also know that it is a selfish act to eat it.  Thus, thinking about it reminds us of our faults and we need to make amends by donating.

How does this work for us in direct marketing?  There’s the obvious point that bringing in a comparison that we know we shouldn’t like, but we do, can increase our giving.  It’s a good solid and now proven tactic.

I think there’s a side note to this, however.  I’m hugely in favor of the donorcentricity movement.  I think we should be learning about our donors, telling them the impact they are creating, and customizing their experiences to them.

However, sometimes we can overdo it in our copy, making it seem as though our $10 donor from 24 months ago has moved a mountain and is a saint among men.  When we do this to extreme, we trigger the opposite of this effect: people who feel very good about themselves tend to do hedonic, not charitable, things.  So, yes, customize your ask to what the person wants to give to, play back their donation history to them, and treat them well.  But when it comes to flattering copy, like Ben and Jerry’s, too much of a good thing is not an even better thing.

* This brings up the tantalizing, but not entirely relevant, possibility that for about 10% of the population, a physics lecture is a hedonic good.  Whoever you are, find me, as I long to be among my people.

** In case you think this is snobbery, let me disclose for the record that if the question had talked about Impractical Jokers on TruTV, not only would I not have volunteered, but I wouldn’t have finished the survey because I could be watching Impractical Jokers.

Read this article for less than the price of your Starbucks coffee

Anchoring, ask strings, and the psychology of first impressions

One of the most talked about cognitive biases, for online donations especially, is anchoring. Anchoring means we rely on the first piece(s) of information we get about something more than the last.

Where this comes into play most often, and intuitively, for nonprofit direct marketers is in ask strings. People tend to key on the first value of the ask string most. Ordering your asks from high to low will increase your average gift and decrease your response rate; low to high will do the opposite. In our The Science of Ask Strings post (which is currently the most visited post on the blog, so don’t be left out (we talked about fear of missing out yesterday…)), we saw single givers were more pliable on the anchor than multi givers. Single givers receive an anchor from you; multi givers have their anchor already in their minds.

This piece of information doesn’t have to be an all relevant. People were asked to recall the last two digits of their Social Security number, then tell how much they would pay for an item. Those with higher numbers gave higher prices by 60-120 percent. This is why if you have a focal point number in your piece, it’s good to make it higher than your average gift. If you usually say four people die every hour, move it to 96 people die every day; that 96, if highlighted, will ask as an unconscious anchor on giving.

Anchoring can tie very deeply to social proof. If you give people the impression that most people are doing a thing, that’s an anchor. If you give the impression that most people don’t give, that also is an anchor for not giving. Last time, I picked on Wikipedia’s fundraising for this; now it’s Charity Navigator’s turn:

CN social proof2

I think they think they trying to anchor people to give $50 or more and they may be increasing their average gift with this because of this. However, when the first thing I hear is that less than one percent of people give to Charity Navigator, I’m less likely to give. Or I would be if my personal likelihood were not already a negative number.

The anchoring/social proof crossover also supports letting people know what the average person like them donates. As you might guess, people who have their anchor set by social proof higher give more. What this study found is people are more influenced by what their in-group was doing than their out-group and thus more anchored by their giving. Thus, I would bet good money that “most people give X” beats no anchor and that “most Texans (or whatever) give X” beats “most people give X,” because it’s a closer in-group.

This also manifests in peer-to-peer fundraising. It’s vital to educate fundraisers that the most important gift they get will be their first one (ideally, the one they give to themselves). If that first gift is $100, they will almost certainly raise more than a person who gets a $10 initial gift. Since peer-to-peer fundraising is more giving to a person than giving to a cause, people want to know what a socially acceptable donation is. We want to tell them the right number.

It probably goes without saying, but don’t advertise average gift to people who give more than the average gift.

Finally, there is an anchor you might not think about that falls into the Blink category of quick reactions. You know that first impressions matter, but you may not know how fast is fast. Research shows that people form a solid impression of a Web site in 50 milliseconds.

For perspective, a blink is at least 100 milliseconds. So in the time of half a blink, people have judged your Web site.

So the big question here is what is your first impression? Especially for mobile, what loads first on your site (if anything)?

You may want to make sure that it is your name, what you do (in quick, not in mission statement, form), and a call to action (whether donation or not). Because a second is an eternity now to set your anchor.

Anchoring, ask strings, and the psychology of first impressions

Cognitive biases, loss aversion and your nonprofit marketing

1410734667Last week, I used a magnet strip on a plastic card to buy passage on a giant metal bird. The bird leaders asked me to turn off the thing the size of my palm that connects me to all human knowledge, but I could use my book-size thing.  In two hours, the bird took me to a place that I couldn’t reach in a season by walking.

And yet you and I have the same mental equipment that supported our deep ancestors to decide only the four f’s: fight, flee, feed, and, um, well, when two cavepeople love each other very much (or are just anatomically compatible)…

We may stand straighter with less hair and more clothing; mentally, we haven’t changed as much as we’d like. 

We deal with this by taking mental shortcuts, or heuristics, constantly.  There’s a good, bad, and ugly to these biases.  They allow us to function in a complex world and many of them (e.g., trial and error) are pretty good rules of thumb.  However, many of our worst tendencies are in this primitive coding.  They poison our unconscious mind.  For our ancestors, it was useful to use the heuristic that the more the thing looks like me, the more likely it is a friend.  For us, that’s called racism, sexism, and many other unpleasant -isms.  

Heuristics lead to cognitive biases, where we skip over a number of steps in the thought process  to arrive at conclusions.  That’s what we’re going to talk about this week: cognitive biases and how to either use them or mitigate them in your direct marketing.

One common bias we have is loss aversion.  People hate to lose things more than they like to win things.  This sounds nonsensical, but here’s an example from the literature.

Scientists asked people to imagine preparing for the outbreak a disease expected to kill 600 people. If Program A is adopted, 200 people will be saved. If Program B is adopted, there is a 1/3 probability that 600 people will be saved, and 2/3 probability that no people will be saved.  Seventy-two percent of people opted for program A.

They also asked people about two other programs.  If Program C is adopted 400 people will die. If Program D is adopted there is 1/3 probability that nobody will die, and 2/3 probability that all 600 people will die.  Seventy-eight percent of people opted for program D.

The thing is that programs A and C are the same and programs B and D are the same.

The study is here.  All that changes is the framing device.  People hate the option of program C — that 400 people will die.  And they hate the option of program B, where they can’t lock in gains.

The authors conclude that people faced with choices involving gains are often risk averse.  However, we will take risks to avoid losses.

This is partly intuitive.  Picture two gamblers.  One has an early run of luck and is trying to sit on his lead.  Another has an early run of bad luck; she starts wagering more and more to try to get back to neutral.

So, the obvious implication for nonprofit direct marketing is that you aren’t trying to do good things; you are trying to prevent bad things.  People are more likely to donate to prevent a negative than to preserve a positive.

But you can read other blogs to get the obvious implications of things.  There are two other important implications of loss aversion to nonprofits.

The first has a recent snappy acronym: FOMO or fear of missing out.
 enhanced-13539-1397047008-6

Something doesn’t have to be as dramatic a loss as death for people want to avoid it.  Sometimes it’s as simple as opportunity cost: the idea that you could be doing something other than what you are doing.  This dovetails with the scarcity/urgency persuasion trigger discussed here

You can trigger this fear by:

  • Having a time deadline on your action.  I’ve done this with matching gifts (which is why I’m only testing the lead gift strategy described here and not rolling out with it).  In both mail and email, these are the only communications I see where the follow-ups do better than the initial communication (because they are closer to the deadline).
  • Having unique benefits that belong to an exclusive few.  This could be an invitation to a gala or access to information before the hoi polloi.  
  • Asking people with exclusive access to information to share it.  You can trigger FOMO if juicy tidbits might be shared with someone’s social network (in the broad and specific senses) before one has a chance to share it oneself.

The second is that dollar signs trigger fear of loss.  There is an excellent study of this on restaurant menus, which is why you see high-end restaurants put 38 sans currency market or cents next to that duck a la orange.  They don’t want you to have a fear of losing your money, but rather want you to focus on what you can get.

The problem is that, in my limited experience testing this, forms and reply devices without dollar signs look a little bit silly.  I’m hoping that we can make this the standard over the long term, but for right now, they seem required.

However, we don’t have to do it in the letter or email copy.  Spelling out dollars instead of putting the currency mark alleviates the fear of the recipient until they (hopefully) have already made the decision to make the gift.*

Tomorrow, we’ll talk even more about ask strings with the cognitive bias of anchoring.

 

* Why is this section green?  Because after I posted this blog post, there’s now some evidence that many of the money priming studies aren’t able to be replicated.  Additionally, there’s evidence that there were negative results that were not reported.  There’s a good write-up of this at Discover Magazine’s Neuroskeptic blog and I learned about it from Andrew Gelman’s blog here.

I feel I owe it to you both to not change my original post (and thus to admit when I’m wrong) and to let you know about the change, so this is my mea culpa.  If you have other ideas as to what I should do in these circumstances, email me at nick@directtodonor.com.

Cognitive biases, loss aversion and your nonprofit marketing

The science of ask strings

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

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

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

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

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

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

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

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

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

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

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

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

science-pinkman

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

The science of ask strings

How to structure your matching gift campaign

Matching gift campaigns work. But are they necessary?

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

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

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

300px-mc3bcnchen_nationaltheater_interior

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

Here were the six test treatments:

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

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

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

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

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

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

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

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

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

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

How to structure your matching gift campaign

Ask strings (a.k.a. why you have $18 donations)

There is no platonic ideal for an ask string.  It varies organization to organization, piece to piece.  Testing is really is the only way to determine what asks work best for your organization.

Nor is it a place where asks translate well by medium.  Generally speaking, an average online gift can be 2-3 times higher than an average mail gift (why, you ask, would you then bother with mail?  Because retention rates on online giving are much, much lower than mail or telemarketing).

There are two types of ask strings – one fixed, when you don’t know who is going to give what, and one variable, when you have a history with a donor.

Tests that work for both

  • Generally, you want at least three options.  Probably no more than seven.  In there is a lot of room for testing.
  • You will more often see ask strings ascend, but testing descending can frequently add value.  Sometimes having them somewhat out of order works best – I’ve seen controls that ask for $15, $10, $25, or $50.
  • No dollar sign. There is some psychological evidence that seeing signs of money actually make people thriftier (hence why they are omitted on pricey restaurant menus). Try without
  • What do you call your other category? Some say an indicator like “Your most generous gift:” or “Your best gift:” strikes a better chord than “Other:” (How could it not?)
  • Circle the goal. Often, you will circle an amount that isn’t your highest, but isn’t the lowest, with a note along the lines of “Your $X gift today would really help those incontinent badgers you love so much!”  The idea is to try to upgrade the donor or get a higher gift amount in acquisition.  Social proof – adding a line like “most people in [your city] give this amount – can also help.  This helps a donor classify your organization and avoids awkwardness like the question of how much you should tip your Uber driver.  (Seriously, how much should you tip your Uber driver?  Please leave comments in the notes, as it’s one thing I can’t effectively test.)

Fixed ask string tests

  • Mission tie-ins and odd amounts. Why ask for $15 when $17 is what you really need to help buy art supplies for an inner city youth?  This compelling why also creates a strong tie between the letter and the response device.
  • Social/cultural tie-ins. If you are focusing on a particular audience or demographic, some numbers have important tie-ins.  Some Jewish people believe in giving in multiples of $18 (Chai in Hebrew means living; the letters of chai add up to 18, so “giving chai” is considered to be especially fortunate).  In Chinese, eight is especially lucky and 88 more so, as the number eight is pronounced similarly to prosper or wealth.  Eight is used like nine is in the US in prices (e.g., $1.88 versus $1.99 – they really just both mean $2).  Conversely, four is unlucky in both Chinese and Japanese, because it is homophonous to the word for death in both languages.
  • Where to start? A good rule of thumb is to start your ask string around where your current gifts are, but you may find that you test up from there.  Another tip is to look at the list you are renting – if you are getting donors $20+, you wouldn’t want to start your ask string any lower than $20.  If it’s $5+, you may (or may not) go that low.
  • Do you have to use these? If you can make your acquisition purchases in segments (e.g., give me all of your $10+ donors and all of your $50+ donors), you have dual benefits – you can use the $50+ donors as multis and you can start one ask string at $10 and the other at $50.

Variable ask strings

  • Highest previous contribution (HPC) v. the previous contribution. Let’s say you gave $50 to a nonprofit, then $25.  Should they next ask you for $50, $75, or $100?  Or $25, $37, and $50?
  • Multiplier: HPC, 1.5 HPC, and 2 HPC is probably most common, but I’ve seen HPC, 2 HPC, 4 HPC, and 8 HPC be effective (on a matching gift campaign in particular, where the idea of doubling is already planted)
  • To round or not to round? If someone make an odd gift of $27, should you next ask them for $27, $40.50, and $54?  Generally not; cents don’t make sense.  $27, $41, $54?  $30, $45, $60?  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, if someone is giving $18 or $88 for a reason, it also rounds that out.

As with many things, testing this online is far easier and cheaper.  But testing online is a different blog post for a different time.

Has anyone else found success with an innovative ask string?  Please post in the comments or email me at nick@directtodonor.com.

Ask strings (a.k.a. why you have $18 donations)