Finding Fundraising Fanatics
12 August 2010 at 2:17 pm
Multi-donors give generous returns – donors who give to two or more charities are more generous over time than donors who only give to one charity. Derek Glass, Founder & Managing Director of Ask² and tutor for the Australian Direct Marketing Association (ADMA) DM for Fundraisers course gives the rundown on donor loyalty and finding fundraising fanatics:
One of the most successful marketing tools of the 1990’s was the loyalty scheme. They had been around in one form or another for a couple of decades but as cheaper, faster computing became more accessible they popped up everywhere – airlines, supermarkets, credit cards and banking to name a few. These schemes were designed to win a greater share of customers and the greater the share the higher the profit. At least that was the theory.
In practice however it was observed that a customer who was 100% loyal – i.e. they didn’t buy from anyone else – was invariably not the most profitable customer. Airlines for example found that customers who carried several frequent flyer cards were more profitable than customers who carried only one. How could this apparent paradox be explained? And was it just a feature of loyalty schemes?
|Derek Glass, Founder & Managing Director, Ask²|
Some years ago, I was contracted to work on some marketing programs with Ben & Jerry’s Ice Cream, whose biggest global competitor is Häagen Dazs. They had some interesting research findings comparing consumers who bought both brands against consumers who were “loyal” to one brand or the other. They found that their “loyal” Ben and Jerry’s customers actually bought less ice cream each year than customers who purchased both brands.
Why? Because people who buy both brands just eat more ice cream each year full stop. They are ice cream “fanatics”, to the dismay of their doctors and the delight of their personal trainers, no doubt. What we’re seeing here is the same, perfectly normal, consumer behaviour as that observed in a typical loyalty program, referred to in one academic study as “Polygamous Loyalty”.
Multi-donors give generous returns
I have also observed this same dynamic in fundraising. Every charity likes to think they are unique, and most truly are. Most successful charities are either the biggest at doing something, the most specialised, or uniquely positioned in some way to make a real difference with the public’s support.
Fundraising professionals sometimes mistakenly think that their unique value proposition means their donor database is also unique. Filled with names of people who only support them. Unfortunately, that is just not the case. Most charities, when they add their database to a data cooperative, participate in a benchmarking exercise, or engage in a list swap, find that at least half, and sometimes as many as 90% of their donors are also giving to at least one other charity, often several.
And, donors who give to two or more charities are more generous over time than donors who only give to one charity. That’s because “multi-donors” are basically fundraising fanatics too, just like those keen ice cream buyers. They just enjoy donating money more, and they get more out of it, than other people do.
Finding and motivating donors…
This helps explain another new trend in fundraising today which baffles, confuses and even shocks some fundraisers – list swaps between charities. At first glance it sounds mad! Why would a charity give its list to another charity, sometimes one that’s doing very similar work? Surely it’s a recipe for financial disaster?
That is only true if each person in the world only gave to one charity. But the truth is, the vast majority of people give little to no money to charity each year whilst a small group of caring committed citizens give the lion’s share. A list swap helps you tap into this “multi donor universe”. And the more “multi donors” you have on your file, meaning donors who give to you and to others, the more money you will raise over time.
Much of the work I do for charities is about helping them find more fundraising fanatics and motivating them to give. But it’s about far more than just list swaps. It’s about making the right targeting and investment decisions, choosing the right creative strategies and building testing into everything you do. These techniques and ideas form the basis of the new ADMA 1-day training course – DM for Fundraisers – running in 3 states this spring. Details on this course can be found at www.adma.com.au/dmfundraisers
Derek Glass, Founder & Managing Director, Ask²
Derek Glass has worked with many of the biggest direct response fundraising agencies and charities over his 20 years in direct marketing, including Amnesty International, Greenpeace, UNICEF, WWF. His experience spans Europe, the United States and Australia. Ask² specialises in advanced direct marketing, strategic consulting and corporate training in Australia and New Zealand: www.ask2.com.au
Australian Direct Marketing Association (ADMA)
ADMA is Australia's principal body for multi-channel direct marketing. Formed in 1966, ADMA is a national Not for Profit organisation based in Sydney. ADMA has been developing marketing courses for over 23 years for time tested effectiveness and lasting value. More details on ADMA education can be found at www.adma.com.au/education or 02 9277 5406