The money-back guarantee isn’t special any more. We expect it with almost everything we buy. There’s a reason for that, and it’s explored at the Neuromarketing blog at What’s A Return Policy Worth?. Turns out return policies cause customers to mentally add value to the thing they’re buying:
… there’s a specific value that customers apply to returns, or, more accurately, the OPTION of returning a product…. how much more the consumer will pay for a strong return policy.
That value varies. The higher the risk of the purchase not being right, the more value the customer places on a return policy. Men’s shirts — which you can generally count on working out — are seen as worth $3.19 when they can be returned. Women’s Shoes — a high-risk buy with lots of ways to go wrong — get an additional $15.81 in perceived value when there’s a return policy.
That’s why retailers offer and brag about their return policies. It’s like lowering their price without getting less from the sale.
So why not apply this to nonprofits? There is “risk” to charitable giving, as far as donors are concerned: Maybe it’s an unethical organization that won’t use their giving for the cause. Maybe the organization is inefficient, and little of their gift will make it to the cause. Maybe the charity is a scam. These aren’t unreasonable fears; these things happen all the time.
New donors especially don’t know you; that first gift is often a leap of faith — a leap many are unwilling to take in the first place.
You could lower these barriers to response by showing donors it’s possible to return a gift if it doesn’t “fit.”
You probably already have an unwritten and unproclaimed return policy. If a donor calls and says she didn’t want to give after all, you’re probably going to refund what she gave, right?
Why not get some value for the courtesy?
The not-so-dirty little secret in retail is that hardly anyone ever returns stuff. This is why we see “double your money back” guarantees. It’s not as daring as it looks.
An open return policy or guarantee on giving just might be the thing that frees nervous, fence-sitting donors to join your cause.
Update 3 May, 2011
Thanks to alert commenter Jonathon Grapsas who pointed out an article on SOFII about how Habitat for Humanity Great Britain tested a money-back guarantee in direct mail.
There was no impact on response, but the guarantee generated an astounding 50% higher average gift. The long-term value of upgrading new donors that much is huge. You’d be crazy not to try it. Unless you’re in Canada, where it seems you aren’t allowed to do it.
Jeff Brooks has been serving the nonprofit community for more than 35 years and blogging about it since 2005. He considers fundraising the most noble of pursuits and hopes you’ll join him in that opinion. You can reach him at jeff [at] jeff-brooks [dot] com.
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