The Trinket Dilemma: Considering the Pros and Cons of Premium Incentives
Unfortunately, getting rid of premiums might not be as easy as it sounds. A lot of organizations have had premium-based programs in place for many years — and just walking away from them is simply not practical. Typically, those who try it find that simply reducing or eliminating premiums comes at a very high cost. While donor retention and average gift might increase without premiums, those gains all too easily can be offset by a precipitous drop in the total number of donors on your file.
What to do?
As Beethoven was fond of saying, sometimes the opposite is also true. The inconvenient fact is that the Trinket Dilemma is seldom an either/or proposition. And the most successful resolution involves time, patience and testing.
You might be surprised to find, at the end of the day, that what you really need are more control packages. In many cases, we have found that there frequently is a subgroup of premium-acquired donors who simply will not respond to nonpremium mailings. It takes some testing and analysis to establish the size and value of this subgroup, and the revenue potential that might be gained through operating your program with both a premium and a nonpremium track.
A two-track program like this usually can be conducted at relatively low cost by simply creating two versions of each house mailing — but the cost and value ultimately will depend on the size of the premium-required subgroup.
There are organizations out there that have had as many as five controls in a single mailing. These groups have adopted a best package/best list strategy, in which the best-performing packages are mailed only to the lists that have proven most effective.
Yes, this kind of package testing can be frustrating and expensive. But if you’re really interested in the long-term growth of your organization, it’s absolutely necessary to continue the search for a breakthrough. Start with a careful, thoughtful and detailed analysis of your past test results. Then assemble your best team to brainstorm every aspect of your program. Bring in stakeholders from different sectors of your organization — not just program and fundraising people. If possible, you might even want to involve a long-time donor or two in the process.
Willis Turner believes great writing has the power to change minds, save lives, and make people want to dance and sing. Willis is the creative director at Huntsinger & Jeffer. He worked as a lead writer and creative director in the traditional advertising world for more than 15 years before making the switch to fundraising 20 years ago. In his work with nonprofit organizations and associations, he has written thousands of appeals, renewals and acquisition communications for every medium. He creates direct-response campaigns, and collateral communications materials that get attention, tell powerful stories and persuade people to take action or make a donation.