Thursday, September 10, 2015

Enhance Variety in Nonprofit Donations

Like storefront retailers, nonprofits want to develop consumer loyalty. In the case of the storefront, the objective is long-term spending, while with the nonprofit, it’s long-term donations. As it happens, variety is key for both. A considerable body of research shows how shoppers are attracted by a perception that a store has a broad assortment. And researchers at University of North Carolina-Chapel Hill, Pennsylvania State University, and University of Virginia find that donors remain loyal when encouraged to sponsor a variety of initiatives.
     The data set covered twenty years of contributions to a nonprofit foundation. In those circumstances where the foundation’s outreach guided sponsors toward dedicating money to a different cause than with the last donation, the likelihood of subsequent donations and the donation amounts both increased. Also, compared to instances in which variety was not featured, the pattern of contributions maintained greater consistency in the face of changing economic circumstances over the years. Consistency—a behavioral indicator of consumer loyalty—can be as important to a nonprofit as the amount of donations.
     This research finds that winning the initial donation depends more on a cause fitting well with the donor’s personal preferences than on encouragement to spread the amount around a variety of programs. Still, even at this initial stage, the availability of a range is valuable. More options allow the nonprofit’s development officers to better customize the initial request to fit each individual’s preferences.
     Other research finds that a range in the dollar amount of the request helps, too. In a field study based at France's ESSEC Business School, a request for a small amount increased the willingness of the person to make a donation at all, and the larger the greatest amount in the same request, the higher the eventual donation. In a solicitation containing a scale of suggested contributions, a range of $5 to $1,000 would serve better than one of $20 to $500.
     A caution, though: With nonprofits as with storefronts, it’s not enough just to load on additional variety. Be sure to give your prospect a way to smoothly sort through the choices. Otherwise the abundance of alternatives will overwhelm and immobilize. As you expand options, give meaningful categories the shopper can use. The discrete dollar amounts listed on the contribution form are categories. With the nonprofit encouraging consideration of new programs to sponsor, place alternatives into categories. Categories give a sense of control.

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Sell More by Adding Variety
Collapse to Soles When Asking for Money

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