Another Tom Ahern gem arrived the other day.

“What is a successful response rate for acquisition direct mail appeals, in which you ask strangers for a first gift?

[  ] .125% (for every 800 appeals mailed, you receive one gift)

[  ] .25% (for every 400 appeals mailed, you receive one gift)

[  ] .5% (for every 200 appeals mailed, you receive one gift)

[  ] 1% (for every 100 appeals mailed, you receive one gift)

Answer: .5% (for every 200 appeals mailed, one check returns)

Notes and assumptions …

Most of us quickly sort our incoming mail into two piles:

(1) Stuff I cannot ignore, or something bad happens to me. (Bills, checks, personal mail.)

(2) Stuff I can safely ignore, and nothing bad happens to me.

Direct mail appeals — i.e., your stuff — land in the second pile automatically. In truth, most of us throw away most of our mail most of the time. How do you succeed at direct mail? Welcome to one of the toughest games on earth.”

Tom goes on to explain how and why you can tilt the acquisition scales in your favor:

“…you can give me something like a holy medal or self-sticking return address labels or a pretty calendar.

In direct mail jargon these gifts are called premiums. There are front-end premiums (sent to you with the appeal) and back-end premiums (sent to you after you’ve made your gift) and all sorts of clever variants. Premiums will be the last man standing in the direct mail industry; when all else fails, premiums will continue to sputter and claim a few gifts per thousand.

Most premiums, of course, are junk you neither want nor need. But they work thanks to the coding in our minds. Premiums activate a mental impulse called reciprocity. It’s worth reading the Wikipedia entry; it’s a good one and cites the major research. “As a social construct,” it says, “reciprocity means that in response to friendly actions, people are frequently much nicer and much more cooperative than predicted by the self-interest model.” [Emphasis added, The Agitator]

Long-time Agitator readers know how negatively we feel about premiums — sometimes we refer to them to as the “crack cocaine of direct mail”.

HOWEVER … we do think highly of the concept of ‘reciprocity’. We thank Tom for pointing out its importance. And want to add a few words on how to make reciprocity work for you — without premiums.

Most economists assume that consumers/donors act in their own best interest. So, in the absence of a premium, many potential donors will simply throw the acquisition package away.

BUT … what if the ‘gift’ or premium isn’t a calendar, stuffed bear or tote bag? Rather, what if the ‘gift’ is something that puts power into the hands of the donor? In short, what if it appeals to the donor’s sense of reciprocity?

Here’s a notable illustration of the power of premium-less reciprocity.

In 2008 economists John List and Uri Gneezy, authors of The Why Axis, conducted a direct mail test for Smile Train to test the power of reciprocity.

In an A/B test to 150,000 prospects, the control group received Smile Train’s standard acquisition piece seeking a contribution. There was no special text or slogan on the outer envelope.

The test group received letters in an outer envelope that read: “Make one gift now and we’ll never ask for another donation again.”

The letter told prospective donors they could exercise this right by checking a box on the reply card that said, “This will be my only gift. Please send me a tax receipt and do not ask for another donation.”

Donors were given one more option; they could also elect to receive ‘limited mailings’.

The control package raised $13,234 from 193 donors. The ‘once and done’ package raised $22,728 from 362 donors, and its average gift of $56 was higher than the $50 average of the control.

Most interesting of all — and my point in using this example to illustrate the importance of ‘reciprocity’ — the ‘once and done’ donors continued to give subsequent gifts at the same rate as those in the control.

Economists List and Gneezy reported that, overall, the ‘once and done’ mailing produced 46% more revenue than the control. And that doesn’t take into account the savings that stemmed from not mailing to those who requested no future mailings.

Although the ‘once and done’ approach was mocked by many in our trade, the experiment was a gigantic success and is still in use today.

Regardless of what you think of the ‘once and done’ technique, you simply can’t ignore the power of reciprocity when it comes to donor satisfaction and commitment. Instead of the conventional one-way ask, employing reciprocity — in this case giving the ‘gift’ of being able to opt out — not only increases immediate giving, but lays the groundwork for greater giving in the future.

Please share some examples of how ‘reciprocity’ has helped your fundraising.

Roger