Premium v non premium mailings

I am currently in Canada, being overwhelmed with premium data from Italy, Belgium, France and US. It is wonderful! All that data :)

The US data sometimes goes back decades, the European 5 to 7 years and some fascinating stuff.

As per my previous blog, premium acquired donors are shown to respond to non premium mailings - like we found in Australia.  At slightly lower levels than than non premium donors, but there are so many more of them it all works out quite nicely.

But, and it is a big BUT, they respond better to premiums.  Also rather fascinating is that the results all these direct mail agencies' clients get from their non-premium donors - they tend to respond to premiums better too.

In Australia mailing warm donors premium mailings is more challenging than cold for logistical reasons but we are trying to test these findings in the New Zealand and Australian market too.

I do wonder if things will be different here - the other countries are much more 'mature' (ie more charities have been mailing more premiums for longer).  In the US the premium acquired donors really don't seem to do anywhere near as well when sent non premium packs (as per Data Monkey's recent blog) but the level of activity there is massive compared to over here.  The Europeans seem to be somewhere in the middle.

However, Data Monkey also recently quoted  David Hazeltine saying that if premium donors only respond to premiums then send them premiums.  I reckon in ten years or so that could be the case in Australia and New Zealand, but it appears that is not an issue yet.

The Belgians told me that generally, because of the smaller sizes there, they tend to acquire using premiums but then send a mix of 'high value' premiums, 'medium value' premiums and non premium mailings; they have found that increasing the frequency of mailings makes more money.  Their current clients send ten to thirteen warm mailings per annum.

It takes years to test the right combination of premium to non premium warm, and the number of those mailings because of small population and donor pools.  In lieu of a better idea, I wonder if the Belgian approach is the right way to go in Australia and New Zealand too.

Sean

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.  

Sean

* 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...

Data Monkey Article