Tutorial 46: premiums: how to use them and abuse them

I love premiums. And it seems to me that donors continue to love premiums.

Written by
Jerry Huntsinger
Added
January 14, 2019

In fact, some of the most productive new donor prospecting through the years has been built around premium packages.

Of course, many organisations prefer not to become involved in premiums, some with sound philosophical reasoning and others because they don’t have the creative energy to come up with a premium that is representative of their purpose and goals.

And others fear premiums because, unfortunately, the abuses have generated negative publicity. So should we avoid premiums altogether? That’s up to you to decide.

I have heard executives say:

‘Premiums will cheapen our public image.’

And indeed that can be true.

And I’ve heard:

‘Premiums result in a lower average gift.’

Also true.

‘A donor who comes in from a premium mailing is not as faithful as a non-premium donor.’

True again.

However, the purpose of these comments is not to persuade you to use premiums but, rather, to report on what’s going on and to share with you how some folk use premiums.

First of all – here is my pet theory about premiums, based on the principle of tactile response. A human being listens, sees, reads, smells, feels the wind and often receives sensory information through handling an object with his fingertips.

So, if a donor is reading a letter and nothing else, it is easy for his concentration to waiver. Of course, you can’t blow wind in his face and the use of odours in direct mail has had some disastrous consequences. But if the envelope contains something that the donor can feel and handle, turn over and look at, and feel positive about that, combined with reading the letter, gives you a better chance of winning his attention.

I was thinking about that the other day when a letter came to my house from the Alzheimer’s Disease Research. Usually when I look at a fundraising letter, I’m guilty of giving it a quick critical analysis. But in this case, I was immediately struck with a thought, ‘I wish I had written that letter’.

Here’s the way the letter started:

The first sentence gives you a positive curiosity about the note cards. And then you suddenly face the contrast between the lovely cards and the burden of Alzheimer’s Disease.

Perhaps the individual with the most experience of all using premiums is Max Hart, long-time director at the Disabled American Veterans. He has tested pamphlets, certificates, membership cards, sweepstakes, name listing in memorial books, seals, decals, magazines, plaques, pens, greeting cards, note cards, seeds, note pads, shopping lists, rubber jar openers, jewellery, lapel pins, atlases, cookbooks, world almanacs, key chains, letter openers, bumper stickers, and more.

Max himself says that most of them were unsuccessful because they violated the basic rules for using premiums – and his rules are as follows:

1. ‘Use premiums that have a logical tie-in with your organisation.’ That makes sense, doesn’t it?

2. ‘Use premiums with the highest perceived value at the lowest cost.’ This includes printed premiums, such as name stickers, cards, bookmarks, seals, certificates, etc. And Max warns, ‘Do not confuse low cost with poor quality.’

3. ‘Feature the premium offer in the copy.’

4. ‘Use premiums which require periodic replacement.’ In other words, consumable items, such as greeting cards, name stickers, membership cards, certificates.

5. ‘Provide quality premiums.’ Poor quality will hurt future renewals.

6. ‘Use premiums only when cost effective.’ Again, that makes sense, doesn’t it?

Before wrapping up the subject, we must take a quick look at the tax situation with premiums. In countries where donors receive a tax receipt for their charitable gift, the market value of the premium will most likely need to be deducted before determining the value of the tax receipt. Make sure you know the law in your country.

© SOFII Foundation 2010-2014.

About the author: Jerry Huntsinger

Jerry Huntsinger

Jerry Huntsinger is revered in direct marketing circles as the dean of direct mail. 

Some years back Jerry gifted his archive of direct mail tutorials to SOFII and we’ve been serialising them ever since. All 50-plus are gems. Together, they add up to a complete ‘how-to’ guide to everything you need to know about direct mail fundraising.

These tutorials are edited and presented by Gwen Chapman.

Gwen_Chapman.jpg#asset:8990:urlGwen Chapman is a passionate advocate for donor-centric fundraising. She is a senior consultant with international experience in the non-profit sector in Canada, the United States, the UK and South Africa. She explains the importance to these tutorials here.

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