Leah Eustace, M.Phil, CFRE, ACFRE recently joined us for a webinar in which she explained the role that psychological, social, cognitive, and emotional factors play in donor decision-making, and how you can use this understanding to increase your fundraising revenue.
In case you missed it, you can watch the replay here:
Steven: All right, Leah. My watch just struck 1:00. Do you want to go ahead and get started officially?
Leah: Sounds good.
Steven: All right. Well, good afternoon, everyone, if you’re on the East Coast, and good morning if you’re on the West Coast or somewhere in between. Thanks for being here for today’s Bloomerang webinar, “How Nonprofits Can Use Behavioral Economics to Increase Fundraising Revenue”. My name is Steven Shattuck and I’m the VP of Marketing here at Bloomerang, and I’ll be moderating today’s discussion.
Before we begin, just a couple housekeeping items. I want to let everyone know that we are recording this presentation and I’ll be sending out the recording as well as Leah’s slides later on this afternoon, just in case you didn’t get those. So if you have to leave early, or if perhaps you want to review the content later on or share it with a friend or colleague, you’ll be able to do that. Just look for an email from me later on this afternoon.
As you’re listening today, please feel free to chat. Right there on your webinar screen, there’s a little chat box there. You can send any questions and comments our way. We’re going to save some time at the end for a formal Q&A session. So don’t be shy at all. We’d love to have that session be as interactive as possible.
You can follow along on Twitter today, #Bloomerang and @BloomerangTech is our username. If you’re listening today via your computer and if you seem to have any issues as the presentation goes on, usually the audio quality is a little bit better by phone. So don’t be shy about calling in if you can. There’s a phone number in the email from ReadyTalk.
In case this is your first webinar with us, I want to say a special welcome. We do these webinars just about every Thursday afternoon. But in addition to that, Bloomerang offers some donor management software. So if you’re interested in that, or perhaps in the market for that soon, we’d love for you to check us out, learn more about it. You can download a little video download. You don’t even have to talk to a salesperson to get a look under the hood of Bloomerang. So check us out if you’re interested. We’d love to talk to you about that later on.
I want to go ahead and introduce today’s guest. I’m super-excited. She’s our friend from the north. She’s joining us from Ottawa, Leah Eustace. Leah, how’s it going?
Leah: It’s going great. It’s relatively snow-free. I’m a happy Canadian.
Steven: That’s good. That was always my concern when we have Canadian guests. But Leah, I want to go ahead and brag on you for just a little bit before we begin. In case you guys don’t know Leah, someone you need to know, especially her consultancy at Good Works. She’s a principal over there. They’re a great resource for nonprofits. One of my favorite things about Good Works is they released a really cool benchmarking report on nonprofit websites. Even if you’re not Canadian, you can still get a lot of benefits and some tidbits from that report. So definitely, check that out.
Leah, like I said, she’s principal over at Good Works. She has been the Chair of the AFP Foundation for Philanthropy in Canada, and she’s also been the Co-Chair AFP’s Inclusive Giving Project. In 2014, you can see this on the slide there, she’s got her ACFRE, and she is the 101st person in the world, in the history of humankind to get that certification. It’s a really big deal.
So whenever we can get an ACFRE to join us, it’s always awesome and you’re going to see a lot of that knowledge and expertise come into play in her presentation. She was also honored with the AFP Ottawa Chapter’s Outstanding Fundraising Executive Award, back in 2014. So Leah, I’m just super-pumped to have you. It’s great for you to take time out of your day to share all your knowledge with us. So I’m going to pipe down and let you take it away for us, my friend.
Leah: Sounds good. Thanks very much, Steven. Hi, everyone. Thanks for joining us today. I’m very pleased to see we have so many people online. Given the title of my presentation, it could be seen as a bit of a snore. So I’m hoping that by the end of the presentation you’re thinking maybe it’s not quite so snore-worthy, because this topic is fascinating and I just love speaking about it.
So what I want to start with is what the heck is it that we’re talking about. I do get a lot of blank looks, kind of like this puppy dog here, when I start talking about behavioral economics. So I’m going to start with just explaining what exactly it is, because it’s a lot of big words for a fairly simple concept. By definition, it’s really a method of economic analysis that applies psychological insights, those are kind of the keywords, into human behavior to explain economic decision-making. Also, illustrated by way of this cartoon, one of my favorites, Dilbert.
So, Dogbert consults, “Your fake 50% sale prices make dumb customers feel like smart shoppers.” “Well, why am I paying you $400 an hour to tell me what I already know?” “Well, I usually charge $800 an hour.” “Yes, I’m a freaking genius.” That essentially is how behavioral economics works.
Again, even simpler, in other words what impact does your subconscious have on the decisions you make and the decisions your donors make? How can we use that kind of inside knowledge to increase our fundraising revenue? That’s really what I want to talk to you about today. I’m going to share lots of definitions, some examples from the corporate sector, which is really the sector that knows this inside out. And some examples from fundraising, how we can apply some of these learnings to bump up our revenue and better communicate with our donors.
So let’s start with a little bit of information on how we make decisions. This really outlines how we think we make decisions. So we start with a problem. We collect some information. We evaluate that information. We might look at a few different alternatives. We decide to implement a decision, and then we think back and decide whether we made the right decision. Very, very logical process, and if you ask the average person on the street to describe how they make decisions they probably describe it something like this.
But in actual fact, decision-making isn’t logical at all. Research has shown that our subconscious, if you can believe it, makes a decision a full seven seconds before we’re consciously aware that we’ve made a decision. As I’ll talk about in a minute, we’re really completely incapable of making decisions if our emotions aren’t engaged.
So over the last 50, 60, maybe 70 years, we’ve probably learned more about what goes on inside our brains than all of the 5,000 or 6,000 years of human civilization before it. We now know that all of our actions and decisions, good and bad, are guided primarily by intuition. Our conscious brain has a very, very small part to play in how we think and act.
So our decisions are activated by what we call the limbic system. That’s the unconscious part of our brain. The rational part, which governs our logical thoughts and our language, only comes into play afterwards to justify our decision. So in other words, we make giving decisions emotionally, and then we justify them logically.
Here’s an example. The CEO of a company decided not to renew the contract with their telecommunications provider, even though they were the cheapest. The account manager was kind of puzzled and sought out the CEO to find out why he’d made that decision. It turned out that the reason was because the CEO’s daughter had a very bad experience with the provider on her prepaid phone, and the CEO didn’t want to deal with a company that treats its customers that way. So in other words, his decision, a fairly big decision, was completely driven by an emotional response.
Here’s another really interesting bit of research I love sharing, and those of you who’ve heard me speak on this before will know this story. But it’s worth hearing again. So going back to how our brains make decisions, how can we be so sure that our intuition and emotions are calling the shots? This interesting bit of research comes from neuroscientist, Antonio Damasio, who studied people who had received brain injuries in which only the part where emotions are generated was impaired.
So it all started about 30 years ago, when Dr. Damasio was visited by a patient named Elliot. Elliot had gone through a surgery, where part of his brain in the frontal cortex had to be removed because of a small tumor he’d developed. He was a really successful businessman. He’d been a model father, husband, and citizen. But after the surgery, something really strange started to happen. He started taking hours for a simple decision that a normal human being like us would make in just seconds.
For example, even a decision to shave or not in the morning would take hours as he started analyzing the pros and cons of shaving, the effect it would have on his life. This very odd behavior led his business into bankruptcy and his wife ended up divorcing him. So Dr. Damasio was able to determine that during the surgery a really important neural connection, which connected Elliot’s conscious mind with the part of his brain that controlled the emotional faculty, was severed and he was left only with his conscious mind to make decisions.
So for every decision, his brain would go into overdrive. He didn’t have the luxury of consulting his emotional brain to make the intuitive decision. So fascinating stuff, and in other words it’s ultimately our emotional brain that makes decisions and if we don’t have that emotion involved, we’re incapable of making decisions and that includes decisions to give.
Emotional contagion is another really interesting fact of human nature. We feel emotions and physical reactions simply by reading a story. There’s actually a great book on this subject called The Storytelling Animal by a fellow named Jonathan Gottschall. So what he says is brains on fiction catch the emotions that are enacted on the page or in the screen. So, for example, if we watch Clint Eastwood get mad on film, our brains look angry too. When the scene is sad, our brains also look sad.
Research shows that whether we’re watching a passionate kiss on television or receiving a passionate kiss ourselves, our brains react the same way. We kind of live the story. In our fundraising, we want to make people feel. After all, I think we all know that giving decisions are made on that emotional reaction, not the logical one. So really, that Gottschall, his whole book is drawing on that neuroscience and talking about what it means to be that storytelling animal. The more absorbed you are in a story, the more it changes your behavior.
Interesting findings said children act out the same kinds of stories whether they grew up in a slum or in the middle of New York City. They act out the same kinds of stories. People who read fiction are more empathetic. We all have kind of a set of left hemisphere brain circuits that force story structure onto the chaos of our lives. When those circuits kind of run amok, we end up with things like schizophrenia, conspiracy theories, and sometimes incredible works of poetry and fiction.
So I could go on and on. But what we’re here for is, how is this relevant to fundraising? So essentially, the more vivid your storytelling through narrative or through imagery, the more emotionally arousing it’ll be. Emotions are what trigger the impetus to help. The more surprising finding is that showing statistics can actually blunt that emotional response by causing people to think in a more calculative way.
Another important emotion is sympathy, which is a function of changes, not states. So this is why we respond more emotionally upon learning that someone’s lost their home than upon learning that someone is homeless. So the thing about that is that change of state is losing the home you have. Someone who is homeless, it’s not necessarily a change of state. We react more to the change of state. Pretty interesting, and I think if you think about your own cause you can think of ways to tell the story of your cause that talks about that change in state and what you’re doing to change that state.
Scarcity theory, so really simply, we as humans put a higher value on something that’s scarce, and a lower value on something that there’s plenty of. So here’s an example of that in action. Again, a research study that suggested there were lots of job vacancies, and another one suggested that very few jobs were available. So a study was done that found that subjects who were presented with an ad that suggested there were very limited positions actually viewed the company as being a better one to work for than the one that implied that it had many jobs available.
The subjects of the study also felt that the ad that suggested limited jobs translated to higher wages. No rationality behind that, it’s just the way our brains work. So in other words, the subjects placed a kind of positive higher value on a company that suggested that there were scarce job vacancies available. We see this in practice all the time.
Anyone who uses Expedia to book hotels will notice that very often you’re told there’s only one room left, maybe two rooms left. I mean, there’s a lot of kind of behavioral economic theories and things happening in this particular ad, because it also mentions 70 people have booked this hotel in the last 48 hours. So not only is it talking about scarcity, not very many rooms left at that price . . . to be honest, that’s not a great price for that hotel, even at that reduced price. So it’s really a bit of a sham.
But also, 70 people have booked this, which is really talking to social proof which I’ll talk about in a few minutes. Now, down to the left, a great way to sell webinar spaces is to let people know that seats are limited, “Almost sold out. Sign up now.” “You’d better act fast or you’re going to miss out.” It really works.
So again, this is all well and good, but how do we apply it to fundraising? Well, think about offering up sponsorships, naming opportunities, or giving deadlines. On the left here, a hospital lottery or raffle is the example where a limited number of tickets are being sold and you’ll notice they start advertising 70% sold, 80% sold, 90% sold. It’s great way to get people to make the decision to grab a ticket.
On the right, talking about naming opportunities, only one available at this level. You can see down along the right, there’s some green text. Those are the ones that are reserved. That chance is gone. You’d better act fast. This can really work in your fundraising.
Another interesting theory called the mere exposure theory. So essentially, the more we’re exposed to something, the more we like it. It doesn’t have to be rational. So this is, again, some research done by a fellow named Robert Zajonc, who showed Chinese characters to non-Chinese speaking people. He showed each character 1 to 25 times, asking participants to guess the meaning of the characters. The more often a participant saw that same character, the more positive meaning they gave to it.
This theory has a quick effect too. Other researchers, Kunst and Williams showed their study participants a picture of an octagon for only a second. Later on, though the participants could not exactly remember seeing an octagon, they showed an increased affinity for that shape.
So again, how do we apply this to fundraising? Well, often with the people I work with, the charities I work with, they will have a wonderful story. Or a story of someone who’s been helped by their charity, for example, and they’ll say, “You know what? We used it in the newsletter last year, and it was mentioned in a tweet last week. We’ve used the story too much.” “Oh,” we say, “no. Absolutely not.” If you have a great story, repeat it and repeat it, and use it again because this theory applies to our storytelling. The more we tell, the more positively they’re going to think about your charity.
Reciprocity theory, another fairly simple one with big words. So really, this is about the inclination people have to give back when they’ve received something. I think, it’s not very hard to think of the fundraising application of this. One is through the use of premium packages in the mail. So we’ve all received them, and some of us have sent them.
We send out address labels. We send out little notepads. We sometimes send out shopping bags, tote bags, all sorts of things. Guess what? People respond. You tend to get a higher response on these packages, and it’s the theory of reciprocity in action. Donors feel they’re receiving something and they want to give back, natural human instinct.
The same can work for matching gifts. So if you look at the idea of matching gifts through the eyes of a behavioral scientist, you can see that the success of that kind of program has to do with reciprocity. It’s very motivating if we know that someone else has pledged to match whatever we donate. What is interesting if you dig a little further is that we often assume that the higher the matched donation, the more effective it’s going to be at getting people to donate.
So this example here, “If you give today, your gift will be matched nine times.” But some research has been done by behavioral economist, Dean Karlan. He decided to test out this rule in a set of field experiments. He found that although matching definitely had an impact on response, it increased the response rate and the amount donated, larger matching ratios have no additional impact.
Whether you do a one to one match or a nine to one, there’s not really that need to go overboard or there’s no further effect the higher you go up. So just an interesting little tidbit of information. Matching gifts work really well. But you don’t need to worry about finding someone who will match 9 or 10, or 12 times.
Social proof, another interesting one, and really this is the phenomenon where people assume the actions of others in an attempt to reflect the correct behavior for a given situation. In other words, we look to how someone else acts in order to help guide the action we’re going to take. Really, I love this little experiment, this image mapping I found online.
If you look on the left, at the ad on the left, the baby’s looking out towards the reader and you can see this is a heat map, so it’s showing us where the eyes are drawn. In this case, they are drawn very heavily to the baby’s face. Now, if you look to the right, the baby is looking towards the text and look what happens. We glance at the baby, but then through social proof we want to be guided in what action we should take. Our eye goes to the right and starts reading the text.
Other ways this happens, have you ever walked down the street and somebody’s looking up at the sky? People start stopping and looking up at the sky. They want to know what’s going on. Or you start clapping because everyone else is clapping. You see something online that has 1,000 likes or hundreds of thousands of views, you’re much more likely to share it because everybody else has already done it. We do things that we see other people doing.
Again, how can we use this in fundraising? There’s a million ways. I could probably talk about this one thing all day. We use testimonials from donors. We show our target audience that people who are similar to them are supporters. We use giving clubs, and that kind of gives a bandwagon effect on our major efforts.
We tell success stories. Once you get some critical mass going, we might use fundraising tickers to show how many people are giving in real-time. We count our community, show how many people have taken action to create a sense of a growing community of like-minded people.
Perhaps on your website, you have a little Facebook feed showing how many followers and likes you have on certain things. Same with Twitter. In your calls to action, choose wording that really demonstrates that others are already participating. So for example, you might say, “millions of other generous Americans,” or “hundreds of other concerned members in your community.”
Here’s an example. I realize it’s hard to read, which is why I’ve pulled out some of the text here. This is from a World Wildlife Legacy brochure, and this uses the idea of social proof. “Write yourself into the story,” and then the first line under that is, “Everyday people just like you have left incredibly meaningful marks on the world through their generosity.” There’s social proof in action. We’re guiding people towards the action we want them to take.
Authority, another really important one in fundraising. We feel a sense of duty or obligation to people in positions of authority. I know this is kind of tongue-in-cheek, this ad, but it was a real ad at one point in time. “More doctors smoke Camels than any other cigarette.” Well, if it’s okay for a doctor, it must be okay for us. People respect authority. They want to follow the lead of real experts.
So business titles, impressive clothing, even driving an expensive, high-performing automobile are proven factors in lending credibility to any individual. One example I can give, if I was standing in front of you, we were in a conference and I was giving this presentation in real life. If I was saying the exact same things I’m saying today but I was wearing my pajamas, think about how differently you’d view me and my authority, versus dressed in business clothes. That makes a huge difference.
One of the first people to actually test this was a fellow named Stanley Milgram. There was a lot of controversy around him because of this experiment he conducted. It was a series of experiments back in the ’60s. He used electric shocks. So what he found was that 65% of his subjects, who were ordinary residents of New Haven, Connecticut, were willing to give what they thought were harmful electric shocks, up to 450 volts, to a protesting victim simply because the scientist told them to do it and in spite of the fact that the victim didn’t do anything to deserve the punishment.
In actual fact, the victim was a really good actor who didn’t actually receive shocks. But the people didn’t know that, and that fact was only revealed to them at the end of the experiment. The results of that experiment surpassed all estimates of the percentage of people who would be willing to administer the increasingly large dosages of shocks, even though their subjects were begging to have the experiment stopped. Those who administered the shock found it really difficult to disobey the instructions of the lab-coated researcher.
In fact, many subjects protested that the shocks should end. But they still did it. They still carried out the orders. So, really a dramatic example of our obedience to authority. What is common, we find that that obedience to authority is more prevalent and stronger in older generations. Oftentimes, that’s our target audience for fundraising. So worth keeping in mind. It may be less so for people like you and I on the phone today.
So how does this work in fundraising? Celebrity endorsements, research and partnerships are all ways to use authoritative figures to build trust and confidence. Use quotes, pictures, videos, signatures from authority figures that support the work you do in your fundraising appeals. If you use email as a way to solicit gifts, try making your next email come from a person who has a known name. Essentially, just try to find ways to have authoritative figures tell your community of supporters how great the work you’re doing is.
Another example, just a sample of a mailing that uses this. So in this particular package, the letter itself was signed by the head of ophthalmology, again, a person of authority, the authority on the particular subject of the letter. There was an extra little note in here from the president and CEO of the hospital foundation, again, a voice of authority. That voice of authority we find is particularly strong for healthcare-related charities, hospital foundations, and so on.
I want to spend a few minutes talking about, anchoring theory is one of my favorites, and partly because there’s just so many ways to apply it to our fundraising. I find it fascinating how we behave as humans in this regard. So how this works is essentially, it’s our tendency to rely really heavily on the first piece of information that we see that’s offered. That’s what we call the anchor when we’re making a decision. Once that anchor is set, our decisions are then made by adjusting around that initial anchor, regardless of the legitimacy of the actual anchor.
So here’s an example of how that works. I tend to talk about wine a lot in my presentations, wine and puppies, and kittens. That says something about me. Anyway, so in this experiment, these two fellows or women, I’m not too sure, they were asked to say the last two digits of their Social Security number. The green person on the left, last two digits were 11. Blue person on the right, the last two digits were 99.
Then they were asked, “How much would you pay for this bottle of wine if you were to bid for it, exactly the same bottle of French wine?” Person on the left in the green, $30. Person on the right, $80. Person on the right, complete victim of anchoring bias. He or she thought of the number 99 first, so was willing to pay a much higher amount for this bottle of wine.
Another wine example. It’s used all the time with alcohol, this anchoring. So if you look on this list, if you can see it, you’ll see that the list includes a $465 bottle of wine. So seeing the $149 bottle and the $125 bottle listed below it suddenly seemed like a really incredible deal. You have to ask yourself, “Is that really the case?” You probably would’ve been just as happy with the $90 bottle.
But since you came into this situation without a clear idea of how much to spend, you’re likely to fall victim to the anchor price of $465. Restaurants totally get this. They understand this very well, and will often only keep one bottle of that expensive wine on the premises. It’s only there to sell the mid-priced wine. So no one’s really actually going to order it. I’m sure you’ve all went into this. I’ve certainly been a victim. Even though I know this theory, I’m still a victim.
Here’s another one I’m totally a victim of all the time, another experiment using Campbell’s Soup. So in the grocery store, Campbell’s Soup advertised at 10% off, it’s on sale. Without any limit on the number you can purchase, the average customer bought three and a half cans. But if you say, “There’s only a limit of 12 per customer,” they would buy twice as much soup, seven cans of soup.
I do this all the time. I go into a store. I’m buying something that’s on sale and it says, “Limit of four,” I will buy four instead of two. I set out to buy two. I bought four because I figure they have a limited quantity. No, they don’t. They’re just trying to sell more of their stuff.
Here’s another one. This one’s actually pretty disturbing, but a really good example of how illogical some of our decisions are. So again, disturbing experiment, but judges with at least 15 years’ experience reviewed a description of a shoplifter. They were then asked to specify a jail sentence. But just before deciding, they were asked to roll a pair of dice.
The judges who rolled a nine specified a sentence of eight months. Those who rolled a three said they would sentence this person to five months. That’s an anchoring effect of more than 50%. Kind of terrifying and disturbing that a roll of some dice would impact so hugely on someone’s jail sentence. Fortunately, judges don’t base decisions on rolls of dice. But it shows you the impact that this can have.
Now, again, let’s talk about fundraising for a few minutes. How does this apply? It applies in all sorts of ways. So this experiment was done at the Exploratorium in San Francisco. Participants were told about environmental damage and asked about their willingness to make an annual contribution to save 50,000 offshore seabirds from oil spills.
Some of the visitors were first asked an anchoring question, “Would you be willing to pay $5?” Others were asked, “Would you be willing to pay $400?” Those who weren’t given an anchor at all were willing to pay $64 on average. When the anchor amount was $5, the average contribution was $20, and when the anchor was $400, the average contribution was $143.
So how does this apply to fundraising? Those of you who send out fundraising appeals with a reply coupon and a gift matrix will know there is really a science to producing gift matrices. So if we give a gift matrix starting at $20 versus one starting at $250, it will have a huge impact on average gift, because we’ve set the anchor at a certain amount.
I’ve actually carried this experiment out, live and in person a few times at conferences, where I will do a bit of a pitch for a fake charity and then hand out reply coupons and ask people to please donate. What they don’t know is that they’re getting three different versions of the same coupon.
Sure enough, when the ask is anchored at $20 or $25, the average gift is probably around $40. When it’s left blank, it’s close to this, $65, $70. When I start my ask at about $250, it’s up in the hundreds of dollars. So pay real attention to those gift matrices that you’re producing for your donors.
Also, be really thoughtful about what your first ask is. This is a story I want to share from many hats ago. I was working for a foundation that ran a national walkathon. Most pledge forms are online these days. But back in the day it was a paper form, similar to the one you see here. The fellow who raised the most money consistently, year after year, I happened to be in the office one day and I asked him what his secret was, “How do you raise so much money?”
He said, “It’s easy. I have a whole bunch of pledge forms, and I go around and ask my family who I know will donate to give at specific levels.” So he has one pledge form where the top pledge filled in at the top is $100. He has another one at $50. He had another one that was $25. He had another one that was $1,000. What he would do was match the pledge form to the donor he was approaching. So if he thought they were capable of $1,000, he would pull out the pledge form where the first line had that gift amount filled in.
Any of you who have ever filled these things out, you have one of your little neighbors comes by. They’re doing a bowl-a-thon, and they show you their pledge form. What do you do first? You look at what everybody else has given before you decide what to give. Usually, I certainly do it, I give something in line with what other people have done. So, very interesting. I don’t think he realized that he was using anchors. But he had figured out that it was a really effective way to fundraise.
Another interesting thing about anchoring is that there’s so many decisions we make when we’re choosing to give. So it’s not just the numbers. We’re making a decision, “Should I open a package? Should I read the letter? Should I agree to the meeting?” Decision after decision. So there’s a lot of different opportunities to use an anchor in our fundraising. It can be visual. It can be words. It can be numbers, as I’ve demonstrated.
Here’s one I wanted to share. Now, those of you who are familiar with Toronto, Toronto is an amazing city. It also happens to be, at this time, 52% or 53% of the population now is made up of visible minorities. Now, we could have a whole other discussion on whether “visible minority” applies when it’s 52% of the population, but we won’t go there.
But think about this image, your hospital foundation. This is the image, say, on the front page of your foundation website. What anchor are you setting for the 52% or 53% of the population who look at this picture and don’t see themselves in it? So be thoughtful. It’s a great picture. We might not even think twice about throwing it up on our website. But what impression is it leaving with our donors?
Here’s another example. This letter has been around for a while now, but I just love it. It’s one I wrote many years ago, and I probably am most proud of this letter and how it performed. This is what? Eight years ago now. At the time, I had no idea what an anchor was. But in looking back at this letter not too long ago, I realized that I actually have some really great anchors in here.
So this is a letter inviting people to consider a bequest, and look at some of the things I’ve circled here, “30 years with World Vision.” What am I establishing? I’m establishing a history of success, longevity. I talk about passion and my calling. Those are wonderful anchor words, especially from a president of an organization. It says, “Like you, I’m a loyal and longtime donor.” I’m making that donor feel really good about themselves and setting up . . . These anchors all set the letter up for success and for the donor to take the action we want them to take.
In fact, this letter went out inviting people to consider a bequest, and got an 8% response rate. So 8% of the donors wrote back saying, “Yes, I’ve left a bequest,” which is pretty unheard of and World Vision is pretty special in its ability to have such loyalty in its supporters. But I think some of it had to do with setting it up properly in the beginning.
Now, here’s another example. What’s the anchor here? Think about that. Look at that teaser. “Throw me away. I’m used to it.” That hits me in the gut. Look at the photo. I’d have had a very, very different reaction if the child was smiling, if that child was crying, if that child looked really malnourished.
In this case, you open up the package and it’s a letter about a child being abandoned by its parents because of a deformity, and being taken in by SOS Children’s Villages. Really powerful, powerful package, and the best performing for this particular organization ever partly because of the anchors that were set up. We put the donors in the right emotional frame of mind to be receptive to the message and the action we want them to take.
Here’s another example of a friend of mine who’s very successful at major gift fundraising. I asked him how does he do it, how does he set himself up for success, and he actually uses anchors really effectively. So he might go in for a discovery meeting and he might say something like, “I don’t want to ask for $1 million and get thrown out of your office. But I don’t want to ask for $100,000 either if $500,000 is more your speed.” Then he goes on and by the end of the meeting he’s often got a request for a proposal for an amount larger than he might have thought.
What he’s done is he’s set them up by mentioning that $1 million first. Even though he sort of throws it away, it’s the first ask. So he’s anchored $1 million in that person’s mind, and it’s not always $1 million. It’s sort of tied to the capacity of the donor. But really interesting when you’re thinking about how you open a conversation or start talking about money with a prospective donor, think about those numbers that you’re throwing around.
Here’s another good example. This is one of my favorite charities. It’s a very teeny, tiny, little charity based here in Ottawa called the Ten Oaks Project, and they do an amazing, amazing job of storytelling. Just, they’re lovely. If you are interested in best practices, throw $20 their way and get on their email list. Here is an example of a thank you I got by email from them. “You are splendid, Leah,” in big, bold letters.
I opened this up and I felt amazing. I felt wonderful. They’ve anchored me so well to do everything they should be doing when it comes to donor love. It’s focused on me. I am certainly feeling splendid. The email goes on to talk about the impact of my $10 a month gift and give me a bit of a report back. They’re stuff is just wonderful, and I really like how they’re so focused on their donors in their thank yous.
Here’s another interesting one, and this is based on research that’s been done. Of course, you always have to have a kitten photo in a slide deck, so here you go. But think about yourself. People often are either dog people, cat people, or neither. Not so often do you have people who love dogs and cats equally.
So if you are, say, a Humane Society, an SPCA, some sort of animal shelter, think about the potential around segmenting your donors by the kind of animal lover they are. This was actually done down in the States. An organization would send out appeals with stickers in them.
The cat people would get kitten stickers, the dog people would get dog stickers, and the response rates went through the roof. Just think about it. I happen to be a cat person, I don’t like dogs very much. So if I get something with dogs all over it, I’m not that interested, even though otherwise I might support the organization because they do in fact deal with cats as well. So, interesting.
Another one, this is an example of a newsletter with some really good anchors in it. I love the headline here, “Facing cancer with a team behind you,” and there on the bottom right, “Meet Grady Hebert.” Now, if you’re not from Ottawa, and I suspect nobody on this call is from Ottawa like me, you won’t know this story. But we all have stories like this. Very, very high-profile story of a fellow who was a radio personality, who fought long and hard, and eventually lost his battle with cancer, leaving his wife pregnant.
She was fairly high-profile too just in her support of him. So this anchor works really well for this community, because they will recognize that face. They’re meeting this baby. It gives me shivers just even thinking about it. How wonderful. What a legacy. We’ve got this headline, “Fighting cancer with a team behind you.” Great use of anchors in terms of the words and the images you use.
Here’s another example. I like this for a whole pile of reasons. These are little snapshots from a case for support that’s about a difficult cause. It’s called Youth Services Bureau here in Ottawa, and it’s focused on youth homelessness and mental health. First of all, look at the photos, and look at the way . . . This is the social proof in action, the way your eyes are drawn to whatever the person is looking at.
So even in the top-left, we can’t quite see their face. But they’re looking down towards the words. Then, top-right, he’s looking up towards “Break the cycle.” Even the one with the feet, the feet are pointed up towards the words we want people to focus on. So this is all strategic. It’s not random.
Here are some of the anchor words that are used, “impact”, “Break the cycle.” “You make the difference,” “The time to act is now,” “Our programs work,” “There’s no better place to ask for help,” “We’re saving lives.” But really, I love this. The combination of the words plus the way the photos are all working together, there’s some wonderful anchors and use of social proof as well.
Now, another interesting aspect of anchoring, I think we all know that asking for a small donation can often lead to a small donation, and correspondingly a low level of funding raised. But asking for larger donations, too large, can also turn people off. So another strategy, another aspect of anchoring is the fact that when we make a choice we’re often affected by the context in which we make that choice and the other options that are available.
So we anchor to the extremes, and we’ll often pick the middle option of a compromise. This is called extremeness aversion, or extremism aversion, and this is a good example. This is from Oxfam in the UK, where on their website they present three preset options for giving. The $100 ask probably seems a little high for the average person, even for a one-off donation. But the $25 kind of feels a little low as well. So donors are kind of subtly directed to opt for the middle option of $50.
The other interesting thing that’s happening here is that if you look down below, look at where that bright orange Donate Now button is placed. It’s under the $50, so again subtly drawing our attention to that. In fact, their average donation from this page is much closer to $50 than to $25 or $100. Kind of think back to that wine example. It’s a little bit along the same lines.
Now, I’ve thrown this in here because I just love this. As I was leaving that page, I didn’t make a gift because I just wanted a screenshot. I went to leave the page and this popped up. Isn’t this amazing? “Please don’t leave.” There’s all sorts of principles of behavioral economics happening here.
Look at that picture. That’s tugging on my emotions. I was moments away from helping and I’m about to leave. I feel a little guilty. I want to give back. I want to donate now. I didn’t, but I bet they get a whole lot of people who click on that Donate Now after they were just about to leave. Good stuff.
So I’ve given you a whole pile of different concepts, a little taste of a bunch of stuff. I hope that both my corporate examples and then some nonprofit examples have been helpful in giving you some ideas and some takeaways, little adjustments you can make to help your fundraising. I know certainly in our practice, we are trying really hard to incorporate some of those concepts. We’re starting to see that it’s just nudging the fundraising up little by little, just by understanding how our brains work in those kind of illogical ways.
Now, I’m really happy. I wanted to leave 10 or 15 minutes for questions. So, Steven, I’m happy to have some conversation about some of this.
Steven: Yeah, great. That was awesome, Leah. I can honestly say in all the webinars that we’ve done, I think this was the most interesting and thought-provoking, and I mean that honestly. So, thanks for sharing all that good stuff with us. Love all the examples for sure. Yeah, we’ve probably got about 10 minutes or so for questions.
So if you are thinking of something and you haven’t typed it in, please do so. We’ve got Leah here for the rest of the hour. So don’t be shy at all. Leah, I thought I’d kick things off with a question of my own, if I can be selfish for a moment.
Steven: You mentioned premiums, and I know there’s a lot of debate on whether premiums are good or bad, or useful, or whatever. I know you do a lot of direct mail campaigns at Good Works. What’s kind of your feeling on premiums? Can they work for some people and not others? Or is there a certain time when you should try them? What’s your thoughts there?
Leah: Yeah. You would ask me the million dollar question. You know what? At the end of the day, personally, on a really personal level and as someone who respects premiums and all that, I’ve got enough notepads and address labels. But they work, and I have to let the data speak for itself. They still work.
Particularly as acquisition becomes more difficult, you’ll get a higher response rate with premiums. You will, almost universally. Now, the trick is that you can get your donor base quite used to getting premiums. So you kind of have to keep experimenting occasionally, mixing them up with your message or appeal. The long-term value of those donors is a little bit less.
Well, but at the end of the day, they really work. I think my challenge is always to find a fine line between something really over-the-top and something that’s cause-related when it comes to premiums that helps share the message. So we could probably talk about this all day, but the numbers speak for themselves.
Steven: Makes sense. Speaking of walking a fine line, we’ve had a couple people ask about this idea of manipulation, for lack of a better word perhaps. How do you kind of balance that tightrope of being impactful and emotional and real, and not being too manipulative of the donor or the prospective donor?
Leah: Yeah. You know what? I think I get asked that question every single time. My view is that as honest, ethical, moral fundraisers, we need to share what is true and what are the facts. I think it’s manipulation when you twist the facts, or portray something that’s not quite accurate. But I think as long as we stay true, then it’s not manipulation. It’s real life. Right?
Leah: We’re dealing with causes that are heartbreaking, and I don’t find anything wrong with sharing some of that, as long as it’s hope as well. You have to balance it with hope.
Steven: You talk a lot about anchoring, and all that data and examples is really interesting. You kind of made the case that having those high anchors really kind of raises the average gift size. But do you have any sense of what it does to gift quantity?
Steven: In other words, does it generate more gifts than there would’ve been, or less gifts but at a high dollar, and any sense of what’s going on there in terms of quantity?
Leah: Yeah, really good question because I didn’t talk to response rates. Typically, the more you ask for, the higher you’re trying to push people, the lower your response rate. So what I always recommend is if you can, test. Test a few different gift strings. See what happens. Tie your gift strings to the amount that the donor’s given in the past. Be cautious. Go forth cautiously and see what works for you.
The anchoring works in terms of dollars for sure. Response rates, yes, you need to play around and find that perfect middle ground for your organization.
Steven: Makes sense. I love testing.
Steven: For sure. Here’s a question from Greg. Greg says, “Naturally we think in pictures and not words. We’re visual thinkers and we respond visually. I know you do a lot of direct mail. Do you have a sense of the sort of ratio between imagery and text? Can you be too heavy on text? Or is there sort of a nice formula or something you recommend there in terms of balancing those two elements?”
Leah: Oh, another good question. That one, it’s a little hard to answer because it depends a bit on the format. Pictures are incredibly powerful, and I try to use them wherever I can. A picture is worth 1,000 words, as they say. Pictures tell stories. But it has to be a picture that’s related to the stories you’re trying to tell, not just a random picture of a check-receiving ceremony or someone’s executive head shot that you have to put in because they said you had to.
The picture has to be meaningful. In terms of balance, I worry more about the readability of what I’m putting out. Again, this can be a whole other session on how you make things easily digested and comprehensible. So things like, if you’re sending direct mail, using a 13-point or 14-point font, using indents, strategic use of a bit of bolding and italics, short paragraphs. There’s all sorts of things you can do, lots of white space that just makes things really much more easy to comprehend and absorb.
I think if you send something out that has tiny text and is full of photos and kind of difficult to follow, you get people thinking logically. They have to think too much to absorb your message. It’s like they hit a brick wall, and they may not give because of that. So there’s a science to that as well, the layout, and there’s a great book “Layout and Typography.” I’m trying to remember the author. It’s years old. Maybe someone could type it in for me who will know. Like Bethanne Locke, I notice is on the phone and she knows this book.
Steven: Beth’s on it.
Leah: But “Layout and Typography,” I can’t remember the name of it. Anyway, someone will add it in.
Steven: Leah, what about demographics? Do you find that these things work better on a certain age group or background, or other demographic category? Would you do certain things when sending something to a millennial versus a baby boomer, or do you think a lot of these things are just sort of universal?
Leah: Well, I think a lot of the principles of behavioral economics are universal. I think the format by which you share it is where the difference is. So I may use . . . Let me think. So for example, that World Vision piece I shared, that worked really well for an older audience who was getting it by mail. I might say the same things and use those same anchors, but in an e-appeal format, or on a webpage more for my millennial audience. I might put some more pictures in there. It’s tweaking the medium, not the message.
Steven: Right. We had an attendee named Peter find that book for us. It’s by, it looks like Colin Wheildon I think is the name there. I sent it out to everyone if you’re interested in that.
Leah: That is amazing. I highly recommend it. It’s very hard to find. I found it for a couple of dollars used on Amazon. It’s an old book, but it’s a must read for everybody in our business.
Steven: Here’s one from Jennifer. Maybe it’s a good way to end things, because I know we’re running short on time. Leah, you mentioned repeating stories when they’re super-effective stories. But Jennifer is wondering what is the ceiling on reusing things? I assume there must be a ceiling at some point. Or maybe there isn’t if you have a really good story and you’re repeating it and it’s working. What’s your sense there?
Leah: I don’t know. I haven’t found I’ve had to stop with any stories yet. Usually, what I say is just when you’re sick and tired of hearing the story is about when your donor starts listening to it. So if it’s a really great story, there’s so many different ways you can use it as well. You can tweet it. You can Facebook it. You can make a video out of it. You can put it in a letter. You can put it in a newsletter. You really can use it often. I’ve yet to come across an organization that I felt used a story too much.
Steven: Okay. There you go.
Leah: So it’s probably out there. I just haven’t come across one yet.
Steven: Well, Leah, we’re getting close to 2:00 and I want to be respectful to everyone’s time, especially yours. If folks haven’t had lunch, I don’t want to get in the way of that as well. We didn’t get to all the questions, and I feel bad about that. But, Leah, would you be willing to take questions via email or Twitter, and all that good stuff?
Leah: Yeah, sure. I’ve got my Twitter address in there. It’s @LeahEustace. Always happy to have a conversation over Twitter, and my email address is there. So please send your questions my way. I’d be very happy to have some conversation offline.
Steven: Great. Well, Leah, this was great. Thanks so much for being here and taking time out of your day to share knowledge. It was really fun. We’ll have to have you back for sure.
Leah: All right. You’re very welcome, and thanks everyone who hung on there for the hour.
Steven: Yeah, thanks everyone. Yeah, exactly. I know what a busy time of year it is, the New Year and all, so thanks for hanging out with us. We’ll keep the conversation going. We have lots of good resources on the Bloomerang website. We’ve got our daily blog posts. We’ve got our webinar series, of course, our newsletter. You can check out all that good stuff. We’ve got some new e-books that have recently come out that you may enjoy.
I want to turn your attention to next week’s webinar. We’re keeping on rolling every Thursday. One week from today we’re going to talk about special events. We’re going to be sharing some tips of how you can kind of determine whether your events have a positive ROI, whether you should keep doing them or maybe ditch them if they’re not performing well. Alice Ferris and James Anderson are our guests.
A dynamic duo, you might recognize their names. They typically co-present at lots of different conferences. So check that out. It’s going to be really interesting. We’ve got lots of other webinars scheduled in advance. So check out our webinar page. You’ll find some other topics there that may be of interest to you, and we’d love to see you again next week or sometime in the future.
So, like I said in the beginning, we’ll be sending out the recording as well as the slides in just a little while, later on this afternoon. So look for an email from me, and when the presentation concludes today you’ll be forwarded a little survey. So please share your thoughts. I would love to hear your feedback, because we’re always looking for ways to improve or maybe bring on new topics and new speakers that are interesting to you.
So don’t be shy about that at all. We’ll say a final goodbye. Have a great rest of your afternoon, a great weekend, and hopefully we will see you again sometime soon.