The Give and Take of Premium Mailings

“The large print giveth and the small print taketh away.”

— Tom Waits

There’s this economics professor, a pretty cynical guy, who sometimes starts his classes by inviting a student up to the front of the room. He holds out a dollar bill and says, “Here, take this.” The student reaches out and the professor immediately snatches the dollar back. Then he holds it out again, the student reaches again, and again he snatches the dollar back.

After repeating this three or four times, the student gives up, annoyed and somewhat embarrassed. The professor turns to the class and says, “That, ladies and gentlemen, is capitalism in a nutshell. It’s all you need to know about how our economic system works.” Everyone laughs and the student sits down more uncomfortable than ever.

Then the professor balls up the dollar bill and, after a few seconds of dramatic pause, tosses it on the student’s desk. With an air of irritated exasperation he says, “Okaaay, you can have it.”

After a moment or two he turns back to the student and says, “Now think about it: Which made you happier? Getting the dollar or the promise of getting the dollar?”

This is the dilemma of premiums in direct-mail fundraising. The promise of the premium is always exciting. For a relatively small investment, it seems, you can reasonably predict that significantly more people will respond to your mailing, if you include a little present for them.

The long-term return on the premium is something else again. When you start seeing the results of your premium test versus your non -premium mailing, you might be pretty happy. You might see that your premium, front end or back end, did, in fact, outperform your non-premium control.

But then it happens. A year passes. Now you’ve got to renew all those premium donors. And it won’t take long to figure out that if you had to give them a premium to make their first gift, you’re almost certainly going to have to give them another one to renew them.

Worse, this year’s premium is probably going to have to be “nicer”, i.e., more expensive, than last year’s. Suddenly you’re in an ever-escalating cycle of having to keep up with your donors’ rising expectations. And to make things even more difficult, your competitors are out there doing premium mailings too. And they’re bigger organization with bigger budgets and – you guessed it – fancier premiums!

But that trade-off is the reality of premiums. Yes, they can bring in more donors, but those donors generally are going to give smaller gifts and be harder to renew.

On the other hand, donors who are brought in by the heart rather than by the trinket are much more likely to remain loyal, renew and have greater lifetime value. But guess what? There are also going to be a lot fewer of them.

So, really, the question is not so much whether premiums are good or bad. It’s what your real object is for your fundraising campaign. If you want long-term, loyal donors, then use your best creative minds and most strategic mailing techniques. Create powerful, mission-driven creative, then get out there in as many channels as you can. Get attention, tell your story and give your reader a compelling reason to take action.

If on the other hand, it’s more important to get your numbers up in the short run – and don’t get me wrong – there are many situations in which that is a very legitimate goal, then premiums are a great tool to help you accomplish that.

Willis Turner is a senior copywriter at Huntsinger & Jeffer. www.huntsinger-jeffer.com