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Bigger up front: lures for giving getting larger. (Premiums).

Name label premiums have been hugely successful over the years and continue to reap solid response rates and average gifts. But, up-front, personalized umbrella and coffee mug acquisition premiums are being tested and rolled out by at least a few nonprofits.

Direct mail premiums are more commonplace today. They are being used by a lot more nonprofits as a way to engage new donors and keep existing ones. Organizations that may have been stodgy with their direct mail programs in the past have turned over a new leaf, with premium packages ranging from personalized pocket planners and notepads to pins, medallions, bookmarks and calendars.

The Humane Society of the United States (HSUS) in Washington, D.C., recently mailed close to 250,000 up-front personalized umbrellas in an acquisition package (yes, acquisition) after testing the premium to make sure it was viable.

The $1.90 cost for the umbrella may be affordable for some nonprofits but for others it's something that could never be done.

Although the fundraising consultant that directs the direct mail program for HSUS said the organization had "no comment" pertaining to response rates or other particulars of the package, experienced members of the sector talked about the premium rage, where it is, and where it may be headed.

According to Shawn McKenna, director of individual gift programs at the Juvenile Diabetes Research Foundation (JDRF) in New York City, premiums are more popular now because the marketplace is more competitive than ever.

"As the price of these things comes down ... because now everybody can pretty much print a pressure sensitive label, which makes it affordable. ... it's an old competition driving the marketplace," McKenna said.

McKenna used his experience at Cincinnati-based Disabled American Veterans to implement a successful name label premium program at JDRF. He said that the most expensive premium JDRF rolls out is a box of Christmas cards that run approximately $1.40 per name, plus postage.

McKenna said the $1.40 is about as high as he would go with a direct mail package. As for the up-front, personalized coffee mugs and umbrellas, "As that floods the marketplace it'll have it's own bell curve, it's own lifecycle. ...Name stickers (they've been around forever), they're going stronger if anything."

One nonprofit that uses many premiums in direct mail packages that's currently testing the up-front, personalized coffee mug acquisition premium is St. Joseph's Indian School. Kory A. Christianson, director of development at the Chamberlain, S.D.-based nonprofit, said it is definitely mailing more premiums now than it did during the early 1990s.

As far as premium packages becoming more expensive, Christianson said, "You just have to spend more than you used to attract donors to your mission. I think you see some of that playing out with those types of premiums that you're talking about (umbrellas, mugs, personalized stuff, etc.)."

St. Joseph's average direct mail gift of $17 is pretty good, according to Christianson, and he said it is currently testing an up-front, personalized coffee mug premium. The organization hadn't made any concrete decisions on whether to roll it out as of press time.

Christianson said it has been successful with personalized photo albums and pocket planners and theorized that personalized premiums are in vogue.

"We tested the two-year pocket planner to our acquisition, and we've got these personalized hard plastic key chains that will arrive in a box," said Christianson. "We've done things like that acquisition-wise. It was just a little too expensive."

He explained that while the initial response will be positive, "you really have to watch the long-term donor value, which we're just now starting to collect information on, with some of these. It will take a couple years to see how it plays out."

According to Howard Golberg, president of Pinnacle Direct in Montreal, typically up front premiums get a very high response because to a great extent there's a feeling of guilt among the recipients. The image is that the organization has spent a lot of money to send them something so they feel they should reciprocate in kind.

"Whether it's umbrellas or pins or any of the other myriad of elements people are using these days that you get low averages," Golberg said. "They are more difficult to renew for philanthropic reasons than are the donors who have given to an organization because they inherently believe in the cause based on an appeal without any of the premiums."

Engaging donors with premiums sometimes means having to up the ante, said Golberg. Even labels are going from one-color and two-color up to metallic-embossed, four-color labels, he added.

As for the larger up-front premiums, Golberg noted that there is a marketplace for each type of program, adding that t-shirts more than likely cost as much as an umbrella premium and they've been successful, too.

Larry May, president of May Development Services in Greenwich, Conn., gave a little historical perspective on premiums. The rage began a number of years ago when organizations began mailing books and calendars as up-front premiums. "And, it's now kind of evolved into pins and chains and pocket planners and all kinds of things," he added.

Asked if he would recommend to a client an up-front premium acquisition package featuring a personalized umbrella or coffee mug, May said, "Well, I haven't yet broken with my old habits to the extent where I'm prepared to recommend a mug or an umbrella. But, I can see the reason fir it and I admire people for trying. And, apparently it works."

What about the return on investment and the long-term value of a donor that is acquired by an up-front umbrella, coffee mug, or other high-perceived value premium?

JDRF's McKenna brought up the question that once you acquire a donor with an up-front coffee mug, or other high-perceived value premium what do you do with them?

"Assuming you did acquire somebody with a coffee mug, great, you got them, great," McKenna said. "Then what?"

He continued, "Frankly, if you shoot your load up-front like that spending so much dough, or giving them such a high-perceived value premium, yes you do have to question the renewability because how many personalized coffee mugs does this person need?"

McKenna said he questions the long term value of up-front umbrella and coffee mug premiums but noted that conservation groups and public broadcasting stations are likely candidates to use them effectively.

"They can do umbrellas because it's a different sort of animal," he said. "But I don't see somebody wanting to drink coffee out of mug with our (JDRF) logo on it."

McKenna said, "I couldn't put my logo on a coffee mug or an umbrella, or even a name sticker and have it sell or have people respond to it. If you're the NRA, you probably have a whole different spin on that whole story."

Christianson at St. Joseph's said they've changed the copy in their direct mail appeals but the main reasons why premium packages thrive are the premiums themselves. He said that when they personalize the premium and directly tie it to their mission, that's where they're most likely to see the most success.

"For example, we're an Indian school serving Native American children. If we do something related to Native American culture, dream catchers or teepees, or a buffalo, and tie in our premium around those cultural themes, we do better than if we have just a more generic premium item."

It has long been the norm that premiums bring in more contributions but at a lower average gift and May thinks that could be changing.

"A typical scenario or dynamic for a premium mailing is a higher response rate and a lower average contribution, and that's not necessarily the case now," he said. "Many organizations are mailing name labels and cards, and other premiums and getting very good average contributions. So to some degree what had been an absolute truism is changing."

May suggested comparing packages' actual number of gifts at all giving levels, because the premium may often be doing better at generating $15+ donors but it simultaneously generates a good number of people less than $10, which is what drags the average gift.

"I'll tell you that right now there are things being mailed, premiums that have the perception of being worth $10 or $15 dollars to the recipient like an umbrella or a coffee mug," said May. "And they say 'hey this would cost me $8 to buy in the store,' I would have never imagined that those things could be in mailing pieces."

The cost restraints of these high-perceived value premiums is as much a question of effectiveness as it is of an organization's budget, explained May.

"Smaller organizations are hung up in thinking, 'oh, I can't do that, that's only for the big mailers' but that's not necessarily true," he said. "There are some relatively small organizations that have gigantic mall programs because they've figured out a way to get it done."

Christianson said sometimes the cost is just too high for an up front premium package because of irregular postage rates. "You get great response rates, very solid average gift, but the cost is just too prohibitive," he said.

"For acquisition, the most we've ever spent in terms of a roll-out price for list and postage is about $800 a 1,000," explained Christianson. "That would be about 80 cents in the mall to list and postage."
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Article Details
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Author:Carpenter, Clint
Publication:The Non-profit Times
Geographic Code:1USA
Date:Jul 15, 2002
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