The New Abnormal
In case you missed it, BusinessWeek just ran a terrific article, The New Abnormal, on the current state of consumer spending and psychology.
The teaser sub-head says it all: “Americans are broke and depressed — and also swilling $3 lattes and waiting in lines for iPhones. Welcome to the schizophrenic economy.”
It’s a marvelous article, with some intriguing theories and wonderful examples of individual consumers engaging in their schizophrenic behavior … like the couple who buy towels at a discount store on their way to a spa vacation in Oregon! It seems like American consumers are genetically wired to spend.
Interestingly, companies with “premium” brands like Mercedes, Starbucks and Apple are doing very well in 2010, whereas household goods marketers like Proctor & Gamble are still in the doldrums, as their “name” brands are abandoned for generics. The explanation seems to be that where consumers perceive real differentiating value, they will still pay for the premium brand, but where they perceive a commodity product, they go for the cheapest.
Is there a fundraising point to all this?
In the broadest sense, I’d posit that marketers (of which fundraisers are a subset) should always be avid students of consumer psychology and behavior. As consumers, individuals choose to devote some share of wallet (or none at all) to charitable contributions, making that decision in the full context of their other spending. I think it’s useful to have some understanding of the full context, and consider whatever questions that might raise for you.
For example, accepting the picture painted by this article, would you want your nonprofit to be perceived as a premium brand or the commodity product? What should you do about it?
Or, during this economic downturn, should you be hesitant about asking for donations (perhaps even yourself viewing the donation as an indulgence), or might your prospects actually see the opportunity to give as an aspect of their determination to be “normal” — expressing, even rewarding, themselves? Does the tone of your fundraising signal hesitancy or affirmation?
I say, understand and engage your donors as the consumers they are.
Tom
3 responses to “The New Abnormal”
Behavioral Science Q & A
Integrating an individual giving appeal with other communications from a charity can have both positive and negative effects, and the outcome largely depends on how it’s executed. Advantages of Integration Brand Consistency: Maintaining a consistent appearance and messaging across all communications can reinforce the org’s brand identity and strengthen brand recognition and trust among your […]
Read Full Answer
I’m not aware of any in-market tests specifically comparing recurring vs. gift frequency language. I suspect the answer might not be the same with all gift frequencies, nor with all people. It sounds like a great opportunity for you to test and find out what works for your audience. Based on the literature, here’s a couple […]
Read Full Answer
Based on what we know from existing data, those renewal notices can actually be pretty effective in getting people to donate. They tap into our psychology – creating a sense of urgency, reminding us of past support, and using personalization to make the message hit home. They’re playing on our natural tendencies to feel obligated […]
Read Full Answer
Interesting question. I had a quick look at the testing done on this topic. On the positive side, in all cases, over half of donors decide to cover the fee. In some cases, it goes as high as 65%. Not a negligible percentage at all. Here’s another test from iRaiser showing consistent results (see point […]
Read Full Answer
There’s just one thing to consider when designing a supporter journey: the supporter. More specifically, you need to take into account: Who the supporter is i.e. their identity, which is the reason they support this cause, and their personality, which describes the way they “see” and process the world. These will determine the kind of […]
Read Full Answer
I’m not an expert in this but a quick search surfaced this article on the effect of tax reforms on 2019’s charitable giving. The researchers didn’t find a reduction. Actually, they observed an “increase in charitable contributions in 2019, even with the lower tax rates and the dramatically smaller number of taxpayers who itemize their […]
Read Full Answer
For obvious reasons, the marketers of consumer products have for decades chased the emotional reward that one typically experiences during and after a charitable transaction — that unmistakable sense of inter-dependence, pride, and purpose. Their darts are striking closer to the bulls eye lately.
But is this really a wake-up call for those engaged in working directly on social change? I’m not convinced.
Remember, during the Depression more people of lower and middle class gave charitably than in any time since. It’s the wealthy who historically adjust their percentage of giving during transient economic swings.
If there’s a lesson here, it is to remind ourselves that we’re in the business of actually delivering to consumers/donors the kind of world they want to live in, not the Iphone App, or the t-shirt, or the perfume that reflects such values.
Wonderful piece. Thanks Tom!
I’ve always been abnormal by this definition and many others! I buy generics so I can spend money on luxuries.
To me the parallel for fundraising is the pattern we are seeing with the concentration by donors on a limited number of carefully chosen charities. So acquisition and first-time renewal rates are in the doldrums while the response rates and average gifts of the core of loyal donors climb.
The problem, of course, is that there is perpetual attrition among the core of loyal donors. With 10 percent of the US work force officially unemployed and many others retiring early or dropping out due to the discouragement, the lapsed sets are growing and becoming harder to reach.
On top of that, the US savings rate is moving up because those with jobs are fearful about future employment and want to have larger cushions.
So the answer for now for fundraisers should be quality rather quantity. We need to focus on building good relations with our current donors and any that we are able to acquire. If we do so, we will be the ones chosen among the many options our donors have. Even if we are doing well at this, as is true of both my professional and pro-bono clients, there is always room for improvement.