The strange truth about address labels and other freemiums in fundraising

Lift Monday: A series about the art and science of “Lifts” in direct mail fundraising.

Liftmonday

Probably the most common type of lift in direct mail fundraising is the humble and maligned freemium.

You know, address labels and other inexpensive things such as notepads, bookplates, pens, coins, and greeting cards.

I’m calling them “freemiums” to differentiate them from “premiums,” which are items donors are offered in return for a gift, like the classic public broadcasting totebag. Similar, but meaningfully different.

Freemiums can work for many organizations.

They might work for you, but you have to be on top of the economics and the psychology of using them. Unlike other lifts they you can just include in the envelope and hope they more than pay for themselves, freemiums require a wide-awake approach.

Here’s the main thing to know about freemiums: They increase response to direct mail fundraising. Sometimes by quite a lot.

Here’s the other thing to know: They decrease average gift. And, sometimes, they lower subsequent donor retention.

You get more donors, but lower value donors.

Whether that’s good or bad is the big question. Obviously, you’d like more high value donors. But sometimes getting a higher volume of low-value donors pencils out because you end up with more candidates to upgrade to major-status, more who convert to monthly, and more who make bequests.

It works in some cases, not in others.

And the only way to find out is through testing.

One thing you should not do, though: Reject the whole idea of freemiums just because you think it’s tacky.

They work very well for some. Maybe for you.

The Lift Monday series concludes next week with a look at the question you may have been asking all along: Are lifts wasteful?

Read the other Lift Monday posts


Comments

2 responses to “The strange truth about address labels and other freemiums in fundraising”

  1. This post contains an error that’s common in the evaluation of “freemiums”, that you get lower value donors. That’s technically true but you get those lower value donors IN ADDITION to donors of normal value. That’s why the average gift of the whole group is lower: the additional donors bring down the average. But the freemium mailings attract just as many high-value donors as do non-freemium appeals but the extra low value donors help to subsidize the cost of acquisition, and some of them can even eventually turn into high-value donors over time. Remember, the prospects don’t choose the package you send them, they respond because they want to support you, and most of them should not be labeled “low-value” donors just because what you sent them included freemiums.

  2. This post contains an error that’s common in the evaluation of “freemiums”, that you get lower value donors. That’s technically true but you get those lower value donors IN ADDITION to donors of normal value. That’s why the average gift of the whole group is lower: the additional donors bring down the average. But the freemium mailings attract just as many high-value donors as do non-freemium appeals but the extra low value donors help to subsidize the cost of acquisition, and some of them can even eventually turn into high-value donors over time. Remember, the prospects don’t choose the package you send them, they respond because they want to support you, and most of them should not be labeled “low-value” donors just because what you sent them included freemiums.

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The future of fundraising is not about social media, online video, or SEM. It’s not about any technology, medium, or technique. It’s about donors. If you need to raise funds from donors, you need to study them, respect them, and build everything you do around them. And the future? It’s already here. More.

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Jeff BrooksJeff 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. More.


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The future of fundraising is not about social media, online video, or SEM. It’s not about any technology, medium, or technique. It’s about donors. If you need to raise funds from donors, you need to study them, respect them, and build everything you do around them. And the future? It’s already here. More.

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About the blogger

Jeff Brooks has been serving the nonprofit community for more than 30 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.