In this difficult economy we often hear from fundraisers who are considering trying to offset a loss of income by raising their basic membership level or lowest gift ask.
We’ve been asked for advice on this critical pricing decision, and here it is: Don’t. Instead, you need to think about how to upgrade the gifts of high dollar donors, while discounting the basic rate so those who want to support you can find an acceptable level and frequency of giving – acceptable both for their pocketbooks and their pride.
Recent articles in the press, surveys and research back up this recommendation. “As Middle Class Shrinks, P&G Aims High and Low,” a Wall Street Journal article from September 12, 2011, details marketing plans of giant marketer Proctor & Gamble. Another Wall Street Journal article, from September 19, 2011, “Coke Tailors Its Soda Sizes,” reports on a shift in product development and pricing in reaction to the unfortunate trend of the shrinking middle class, and of middle class shoppers trading down to lower-priced goods.
The shrinking middle class is the bad news. The good news is that people who have money aren’t skimping on their purchases. They are being up-sold, with more costly products designed for their pocketbooks and tastes.
So P&G offers Charmin Ultra-Soft for affluent shoppers and Charmin Basic for cash-strapped customers. Coca Cola is coming out with “Mini Cans,” dropping the price by 20% to lure more customers who are counting their pennies. For those who want more beverage (and calories) and have the money to pay for it, not to worry; Coke expects stores to increase prices on its 16oz., 20 oz. and one liter bottles.
These giant corporations are pretty knowledgeable when it comes to their markets and sales planning. So we fundraisers need to take heed. This would be the wrong time to increase basic rates; middle class people are strapped for cash. And even if they really aren’t, they feel they need to be careful in how they spend their money. Plus there are fewer of them as the economy takes its toll.
I would venture a guess that people who are having a hard time financially or may be unemployed in part populate our growing lapsed files. So we want to go easy on them. Now is not the time to antagonize them by pouring salt on their wounds.
A case in point is the saga of what happened to Netflix, as reported in the NY Times, September 19, 2001. Before their plans to split into two companies, Netflix announced a $6 monthly price increase for their dual services of Internet Streaming and DVDs by Mail. As a result the company very rapidly lost 1 million of its 25 million customers.
Many fundraisers are actually accommodating the middle class donor who increasingly feels pressed, by offering introductory discounts of $25 to $30. This is working well; tests show that net revenue from these lower asks are better than those of $35 or $40.
As for the higher dollar donors, it appears they are happy to spend more on products and services that confer status and make them feel good. So let’s give them the opportunity to feel really special. Let’s think of ways to confer greater status by upgrading their gifts and/or by giving more frequently as Sustainers. Let’s invite them to glamorous events. Perhaps we should even consider bestowing titles on them no one else has; has any one tried “Sir Donor,” “El General Contributor” or “Princess Giver?”
We trust that these thoughts will provide guidance for you in your planning. Please let us know of any experiences you have had with both high value and lower dollar donors, and any conclusions you have come to.