You want how much? Building revenue, loyalty and tenure by getting the prompt right

October 26, 2016 News & Opinion

Jon-square_monoJon Kelly is concerned about the way some fundraising organisations set their prompt strategies. Hear more at the IoF Insight in Fundraising Conference Conference in November 2016.

 

Wood for Trees is sometimes asked to help clients focus their prompt strategies and optimise ask levels. When working on these projects I’ve been struck by two beliefs that clients often express at the outset which, in the course of analysis, are usually shown to be enduring fallacies:

  1. ‘Average gift should be one of our main KPIs for measuring success of a campaign’
  2. ‘We should be on an endless quest to drive this average gift upwards’

Taking the first point first: average gifts vary across charities and causes, but typically sit between £15 and £25. However, deeper analysis will often show that this masks the true behaviour of supporters, with the majority (often up to two thirds of the file) donating £5 or £10. The average is skewed higher by just a few donors giving over £50. My problem here is that using average gift as a KPI can lead to the belief that donors are actually giving at this level. Programmes, messaging and prompts are then designed around these figures – but in fact the true audience is giving at a significantly lower level. A greater understanding of the true story behind the headline figure might help fundraisers to get closer to their audiences, leading to more appropriate communication and potentially improved campaign performance.

The second point is perhaps more of an issue. In the commercial marketplace, price elasticity theory suggests that increased price will lead to reduced demand, simply because certain consumers will choose not to pay the additional cost. The same is true of charitable donations. Most donors tend to be comfortable giving at a certain level, so repeatedly asking them for more and more will eventually stop them giving, potentially strangling a previously fruitful revenue stream. Strategies of asking more to increase the average gift are often referred to as the ‘ask ladder’. I’d take this metaphor a stage further and suggest that if you keep pushing somebody further and further up a ladder, eventually they’ll fall off.

Answers? Well, there’s no magic pill here but I would strongly suggest that anybody responsible for setting prompting strategies for their fundraising campaigns should look beyond the average gift metric before determining their approach. Understanding donor behaviour at a deeper level will help you to enhance your donors’ experience, ensure you are asking them for an appropriate amount, and most importantly increase their loyalty and tenure. In my experience there is often a lot more to be gained from asking more people for a small amount, rather than continually trying to push trusted donors beyond their means.

Andrew Lockett, Consultant Analyst with Wood for Trees, will be talking more about this at the IoF Insight in Fundraising Conference on 7th November, and we’ll be posting more information soon on the Wood for Trees website, so if this sounds interesting to you, keep checking back!

Jon Kelly is Director of Analysis at Wood for Trees.