Premium Considerations
Premium Considerations
Oct. 4, 2005
By Abny Santicola, associate editor, FundRaising Success
Premiums in direct-mail campaigns can help pull better response than mailings without. But it's important to consider the added expense of mailing premiums in relation to the lifetime value of the donors those premiums bring in, according to Dennis McCarthy, vice president of relationship-marketing firm Epsilon. Generally speaking, he says, people who make gifts based on premiums tend to not have the same lifetime value as a traditional donor.
"The long-term value of a traditional donor tends to be higher because they care about the message of the organization -- they care about the reason it exists," McCarthy says, not because an organization sends them labels or a calendar or notecards. For traditional, non-premium-acquired donors, he adds, the branding is to the institution as opposed to the premium.
Through testing and research, McCarthy says, Epsilon has found that for client organization the National Multiple Sclerosis Society, premiums are more appropriate for attracting people who have had previous exposure to the organization, rather than as a broad-brush acquisition approach. When looking at the long-term value of donors, he says, non-premium packages are less expensive and work better for the organization.
McCarthy says that premiums often work for organizations that:
- have a good conversion package, or a good set of packages to convert premium donors to traditional donors.
- want to build their file quickly. "The response rate is quite strong," he says. "You're going to find more people who will do 'something for something' than because they feel good about it."
There are millions of Americans, he adds, who are wonderful donors and are moved not by the cause or the need, but rather by the premiums.
"So you've got a ready-made market," he says. "And when you're looking at lists, you can look at lists that are built on premiums so you know that there's a receptive audience for that offer, whether it's a calendar or notepads or labels, what have you."
McCarthy says NMSS wasn't interested in using premiums because it was looking at more traditional donors who are more focused on what they perceive to be the mission of the organization -- a more philanthropic donor as opposed to the more transactional donor acquired through premiums.
While the non-premium route is working for NMSS and netting a very high average gift, McCarthy adds that nonprofits need to be clear about what kind of donors they want and let that answer guide their strategy, as opposed to letting agencies or list brokers point them in the wrong direction.
Dennis McCarthy can be reached through http://www.epsilon.com.
