Thursday, March 29, 2012

Premium v non premium donors

The blogger Data Monkey confessed to being a bit of a cynic following my article about premiums* in Fundraising and Philanthropy magazine.

Much has been written about premium and non premium donors, mostly by people who love them, or by people who hate them.  The bottom line can be summed up by:

Against:   Many people just don't like them - a personal view, shared by a couple of mentors including Uncle Ken Burnett.  This is like many people just don't like face to face.  They argue:
* Average premium donors are not as loyal as non-premium
* They need to be sent premium appeals to give again

Others love them arguing that
* Response rates are huge
* Loyalty is almost by the by - if they only respond to premiums, then send them premiums!

Both sides are kind of right really, but are not mutually exclusive.  For me it comes down to looking into the data.

The solicitation pack, and whether it had a premium in it is only one variable we can use for analysis.  There are lots more variables - such as amount donated, list source, use of credit card, cheque or even cash and age of donor.

What we see is that premium mailings tend to acquire many, many more donors than non premiums.  Our tests have revealed considerable response rate differences:

Here, the premium beat the next best non-premium pack (which did extraordinarily well) by nearly three times.  Even though it cost more, the ROI was nearly twice as good too.  Other charities get similar differences - premiums seem to get two to four times the response rates of non premiums, with ROIs at least 50% better.  

Working closely with one charity (the one represented in the chart above) we have studied how these new donors behaved.  We found that the average premium donor is not as 'good' as non premium, give less, have a slightly lower chance of giving again to non premium appeals than non premium acquired donors but still do give - and of course, there are between two and four times as many of them.

However, when we drilled down we found that donors who donate the same amount to either a premium or a non premium seem to have little else to differentiate them.  For example, about 44% of premium donors who gave $50 had made another gift (to non premium appeals) within 12 months, compared to 47% of non premiums - too close to be significant.  Interestingly their average second year total giving was $91 for non premium and $89 for premium.

So, for this charity at least, $50 donors are more or less the same regardless of whether their original solicitation included a premium or not.  Other charities are getting perfectly satisfactory results from premium acquired donors too, but few have tested premium v non-premium so we aren't in a position to know if this is consistent but I imagine it will be.

We (Pareto staff and clients) have co-written a paper on all of the findings we can share, working title "Pareto Guide to Premium acquisition in Australia" with this kind of information, case studies, data and more.  It is with the designers at the moment, but if you want a copy, just drop me an email.  


* Definition of a 'premium donor': Someone who responds to a mailing which includes an unsolicited 'gift' such as a tote bag, keyring, stationary pack, cards etc.  These are usually great devices for increasing response, but even those that don't respond may use them - they are kind of like viral advocacy for your cause.

For my original article you will need to subscribe to Fundraising and Philanthropy magazine here.  Ask if they have a back copy and they may throw it in with your subscription if they have any left, after all you are a fundraiser and are used to asking...


Damian O'Broin said...

Really interesting data Sean. Have you done any testing on back end vs front end premiums? I'd expect the response from back end to be somewhere between the premium and standard response rates you cite here - have you any data to back it up?

'Sean is always learning' said...

Hi, we are hoping to test some high value back end premiums with regular giving offers - thinking microscopes, digital video camera, fleece etc - like Time and National Geo. Have no Aussie data yet.
Meeting colleagues from US, Belgium, Spain, France, Italy who do premiums today... I will see if they have any data I can share.

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