Raise More by Moving Beyond Pro-Premium and Anti-Premium

By Nick Ellinger, Chief Brand Officer

Reciprocity is a core principle of persuasion — if someone gives you something, you feel psychologically obliged to reciprocate with a gift. 

This works. Including a small gift with a mail appeal increased giving by 17% for a small gift and 75% for a large one at a net profit for the nonprofit. That’s one study, but you see the evidence around you at nonprofits. I have personally put about everything in an envelope that doesn’t require air holes. 

Of course, because premiums can work, they are also done repeatedly and to diminishing returns. Some organizations report that premium-acquired donors do not retain as well as “mission-based” donors, or their retention cost is too high. Others debate the nature of a premium: front-end versus back-end, whether supporter cards or buck slips are premiums, and so on – these probably exist on some sort of how-premium-is-this-premium spectrum. 

Determining Where Someone Sits on the Premium Spectrum

But more critical than the spectrum of premiums is the spectrum of donors. On one end, you have people who will only give when given to. On the other end, you have those who will never give when a premium is involved. In the middle, shades of gray: For example, a study of American Red Cross emergency donors found they didn’t increase their giving when receiving traditional premiums but did respond well to supporter cards.   

This paints in broad strokes, but fortunately, it is knowable where each individual sits on the premium spectrum.  

With co-op data, you can look at someone’s giving history across organizations, not just your own. From these data, you can model, segment, and customize for where someone sits on the premium spectrum. When you do this with SimioCloud, you have these, and a thousand other variables going through AI-based offer assignment modeling and can have a fairly precise view of who will donate to what. 

For example, we modeled for premium reaction for one client. Those who didn’t need a premium got a straight letter package instead of their notepad mailer. Their response rate dropped 60%, but the average gift increased 128% for a negative $.10 per piece in revenue. Fortunately, the cost per piece dropped by over $.80. Customizing by donor caused a significant improvement in net revenue and ROI. 

With Great Modeling Comes Great Responsibility (to Donors)

The challenge, and opportunity, is that this is not a one-time modeling exercise. Let’s say you started with a premium-heavy direct mail program, where premiums were used to acquire new donors and heavily in mail packages throughout the year—labels, calendars, notepads, bumper stickers, etc. You realize you don’t have many non-premium donors, and you want to be more inclusive. Let’s try three scenarios: 

• Scenario 1: You try a non-premium mail piece, but don’t change your audience. This likely will not work. If you try it with your current donors, most are premium-based donors or donors you have trained to expect this. If you try it on an acquisition audience, your models and list strategies are all calibrated for your premium audience and will meet the same difficulty. 

• Scenario 2: You try a non-premium audience, but don’t change the appeal. Same thing in reverse—the message doesn’t fit the audience. 

• Scenario 3: You try a non-premium mail piece and intentionally pick a non-premium audience. It works! You’ve acquired a new donor segment … who will run and hide when they see the premium-heavy rest of your mail program. 

In other words, you must customize your message consistently — across time and across channels. That sounds hard. But the upside is that you can increase your results, save money, and get more valuable donors every time you communicate.  

Often, the discourse on premiums is pro or anti. Hopefully, this look at a more customized strategy allows you to be pro for those who are pro-premium, anti for those who are anti-premium, and at the appropriate middle ground for those in the middle.