Create Donors — Not Addicts
One of the most frequent questions I hear as a fundraising consultant is, “Do you believe in using premiums to recruit donors?” It disturbs me, because it almost always is positioned as a “yes” or “no” question. But it’s
really not that simple.
On one hand, premiums can be viewed as a wonderful cure to the problem of low response rates. The offer of a low-cost/high-value item as a reward for a contribution often will generate much higher response rates than offers that provide nothing.
But on the other hand, donors acquired with premiums can get addicted to them, and it’s hard to wean them off. Once a donor receives that cute plush animal or a tote bag for her donation, she’ll expect further rewards for further contributions.
Do you need a premium?
Explaining the effective use of premiums can’t be accomplished through a
simple answer. First, you need to determine whether you really need to use premiums … and then if you do, how to do so effectively. Begin with the mentality that using premiums in a fundraising program should be kept to a minimum.
Donors recruited with premiums usually aren’t as dedicated as regular donors, and they have higher attrition rates. Some of those who respond to a premium do so just to get the item, not because they truly support your mission. Attrition rates also are higher because premium donors often give lower donation amounts than those acquired through solicitations without such incentives. Statistics prove that the lower the donation, the less chance you have to retain that donor.
Also, premium donors often cost more to recruit due to the extra expense, which includes the item and shipping costs. And since such donors expect premiums in exchange for contributions, more premiums must be used to gain additional donations, which means the cost of maintaining these donors is more than that of traditional contributors.