Increasing Long-Term Value of Premium Donors

Oct. 4, 2005

By Jennifer Bielat

The use of premiums to acquire new donors and to cultivate and renew existing donors continues to be a proven technique in the nonprofit sector. Based on research done by several list-brokerage firms, mail trends indicate nearly two-thirds of fundraising mail contains premiums.

A premium in a mailing typically drives a higher response rate and lower average gift. As a result, premiums attract a significant number of lower-dollar donors, which can be difficult for organizations to renew and upgrade. Although the average gift for premium mailings is on the rise, the long-term value of these donors still presents challenges.

Securing a larger initial gift from new premium-acquired donors is key to increasing donor value. Following are some test strategies for increasing initial acquisition gifts and ultimately improving your long-term donor value.

Each of the following concepts is designed to increase overall program revenue in an effort to offset the decrease in response rate from securing larger acquisition gifts.

Test Concept #1

A bail-out technique often is used in packages containing high-value, upfront premiums. A bail out technique -- used typically in high-end premium mailings -- is an additional check box with a nominal gift amount positioned to help offset the cost of the premium located on the response device, usually directly below the gift array. The incremental revenue generated by this technique helps to offset the higher initial costs of the package, but it also creates challenges in that large numbers of lower-dollar donors are acquired.

If your premium package contains a bail-out option in the gift array, conduct a test removing the bail out. Your response rate will likely fall off, but the goal is to increase the average gift enough to offset the decrease in response rate.