The Trinket Dilemma: Considering the Pros and Cons of Premium Incentives

Sugarcoat it all you want, but offering premiums in an acquisition campaign is, essentially, bribery. And pretty unsubtle bribery at that. You’re saying to a prospect, “Look, I’m afraid you don’t care enough about my organization’s work to support it out of 
passion or principle, so I’ll offer you this trinket to try and buy your loyalty.”

The dilemma is obvious. You’re going to have much greater loyalty from people who support you because they believe in your cause. But those premiums sure can bring in more donors. At least in the short run.

To a development director, the promise of the premium can be very alluring. For a relatively small investment in mailing labels or tote bags or whatever, you can reasonably predict that significantly more people will respond to your mailing.

And, in fact, when you start seeing the results of your premium test versus your nonpremium 
mailing, you might be pretty happy. You’ll likely see that your premium, front-end or back-end, did in fact outperform your nonpremium control. The long-term return, however, is something else again.

It doesn’t take long to figure out that if you had to give someone a premium to make her first gift, you’re almost certainly going to have to give her another one to renew her. Even worse, the next premium you send probably will have to be “nicer” (i.e., more expensive for you) than the first one. 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 often they are bigger organizations with bigger budgets and — surprise, surprise — fancier premiums!

And for all that, premium donors still end up being a lot harder to renew. In fact, many organizations have found that they need to enroll up to four times as many premium donors as nonpremium donors to net the same amount of housefile revenue. So in the end, dependence on premiums often produces short-term gains at the expense of long-term, continuing revenues.