Wired Causes

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So here’s something the Nonprofiteer heard yesterday: if an agency’s response to every initial donation is to have a Board member pick up the phone and call the donor to thank him/her, the likelihood of a second donation increases by something like 80%. What’s terrific about that (other than the obvious, donor retention) is that [...]

I think pricing psychology is fascinating, and it’s worth experimenting with it in our sector.

I’ve blogged here before about one idea—that of anchors.  For example, if you see $50 vs. $5 is a common gift on a list, then $30 either looks like a small gift or a big one.  Or a $25 wine seems expensive if it appears halfway down a list that begins with a house wine priced at $10 yet cheap if the options on the list are reversed and start with a $50 wine first.

The first number we hear frames how we react to other numbers. 

Now, Inside Influence Report adds another dimension to these ideas.  This week, they summarized research on how we react to packages of several items.

It’s really useful in thinking about products you sell, services you offer, grants you seek and donations you request.

Here’s the idea, as the Inside team explains: A movie theater might offer customers the option to watch 15 movies for $99 or a lawyer may offer 10 hours of consulting time for $2500. A pair of researchers—Rajesh Bagchi and Derick Davis from the Pamplin School of Business at Virginia Tech University—wondered if the order of the price and number of items matters in how people react.  In other words, is it different if you offer $99 for 15 movies? What if the lawyer proposes 10 hours of consultancy time for $2500 or a smaller package of 2 hours for $500?  And what if the offer is hard to figure out?  For example a contract for $1700 results in service to 1,000 people vs. $1695 for 1,100 people.

The researchers presented these types of variations and asked the study participants how good a deal they thought they had been offered, the value for money it represented and, most importantly, how likely they were to make a purchase.

The results?

1. When the price came first and the offer was easy to calculate, people rated that offer as better value, regardless of the size of the package
2. But when an offer was more difficult to calculate AND the package offered was large, then the reverse was true. People were more likely to prefer and trial the ‘58 hours for $289.50’ offer compared to the ‘$289.50 for 58 hours’ offer

As Inside Influence notes:

When offered a choice people will typically anchor on the first piece of information presented to them and adjust (sometimes insufficiently) for the second piece of information that follows. Furthermore this effect is amplified the more difficult it becomes to calculate the offer, leading to different evaluations and preferences for what are essentially the same things… To think that clients and customers judge larger packages and offers as a better deal irrespective of how the price order is presented is a misconception.

The bottom line?  If you have a complicated proposal of different prices, put the price first, then the item/description.  If it’s easy?  Put the item first, then the price.

(NOTE: A quick correction - the report this post was based upon had a reversed sentence which contradicted a finding.  The report was just corrected online here in the comments.  I didn’t catch it when posting, which perhaps led to you scratching your head.  Hawk-eyed reader Willy noticed.  The bolded text below is now correct.  Thanks.)

I think pricing psychology is fascinating, and it’s worth experimenting with it in our sector.

I’ve blogged here before about one idea—that of anchors.  For example, if you see $50 vs. $5 is a common gift on a list, then $30 either looks like a small gift or a big one.  Or a $25 wine seems expensive if it appears halfway down a list that begins with a house wine priced at $10 yet cheap if the options on the list are reversed and start with a $50 wine first.

The first number we hear frames how we react to other numbers. 

Now, Inside Influence Report adds another dimension to these ideas.  This week, they summarized research on how we react to packages of several items.

It’s really useful in thinking about products you sell, services you offer, grants you seek and donations you request.

Here’s the idea, as the Inside team explains: A movie theater might offer customers the option to watch 15 movies for $99 or a lawyer may offer 10 hours of consulting time for $2500. A pair of researchers—Rajesh Bagchi and Derick Davis from the Pamplin School of Business at Virginia Tech University—wondered if the order of the price and number of items matters in how people react.  In other words, is it different if you offer $99 for 15 movies? What if the lawyer proposes 10 hours of consultancy time for $2500 or a smaller package of 2 hours for $500?  And what if the offer is hard to figure out?  For example a contract for $1700 results in service to 1,000 people vs. $1695 for 1,100 people.

The researchers presented these types of variations and asked the study participants how good a deal they thought they had been offered, the value for money it represented and, most importantly, how likely they were to make a purchase.

The results?

1. When the offer was easy to calculate, people rated that offer as better value with price first, item second, regardless of the size of the package
2. But when an offer was more difficult to calculate AND the package offered was large, then the reverse was true.  People preferred item first, price second.  People were more likely to prefer and trial the ‘58 hours for $289.50’ offer over ‘$289.50 for 58 hours.’

As Inside Influence notes:

When offered a choice people will typically anchor on the first piece of information presented to them and adjust (sometimes insufficiently) for the second piece of information that follows. Furthermore this effect is amplified the more difficult it becomes to calculate the offer, leading to different evaluations and preferences for what are essentially the same things… To think that clients and customers judge larger packages and offers as a better deal irrespective of how the price order is presented is a misconception.

The bottom line?  If you have a complicated proposal of different prices that are hard to calculate, put the item first.  If it’s easy with a smaller number of units?  Put the price first.

Rob Stuart shared my birthday, Jan. 11th.  We were both part of the 1-11-11 club.  But we also shared more than that – the nonprofit technology field.   Rob was the godfather.  The last time I saw him was in 2009 in San Francisco at the NTC – he attended almost of them from the [...]

Kudos to the Nonprofiteer’s nonprofit consulting colleagues Campbell and Co. for sponsoring a study by the Indiana University Center on Philanthropy to determine the impact on giving of increased marginal tax rates and a cap the charitable-giving deduction.  While some of us have been arguing that both of these moves toward social justice should be [...]

Guest post by Laura Quinn Idealware created the Nonprofit Social Media Decision Guide to help organizations like yours determine what results and benefits you can reasonably expect from social media, and to guide you through the process of identifying the right channels for different goals. To help you turn the theoretical into the practical, we [...]

We’ve got a great story posted at Network for Good.

Ken Hayes of Give2Give Hope has graciously allowed us to use Give2Give Hope’s site as an example of before and after. Thanks to the organization for the inspiration!

give2givehope.org Before:

I gave feedback on this site:

Things I loved:

  * Photos of children
  * Donate button above the fold (meaning, you don’t have to scroll to see it)
  * Email signup above the fold
  * Tangible results are highlighted
  * Social sharing links top right, where they belong
  * Address is easy to find
  * Navigation is easy to understand and donor-centric

Here were the things I cited to improve:

* Make the home page a little less busy to avoid the paradox of choice
* The site had a carousel of constantly changing photos that made it hard to really stare at and connect with one – I’d stick with one child, who you change on page refresh
* The photo to the left with “sponsor and child” and the photos to the right on the carousel competed with each other and confused the visitor.
* I wasn’t crazy about the childlike font—hard to read and not inspiring of trust. 
* Reduce the number of reading options.
* Drastically shorten the text in the center of the page.  Remember, people skim, not read, online.

Here is the revised site - which is stellar:

Beautiful work!

In addition, I admire Give2Give Hope’s use of email signatures.  Ken’s email signature reads as follows.  It’s extremely well done:

In 2009, on my first trip out of the country, I came face-to-face with poverty and suffering unlike anything I had experienced before… I held a child in my arms who had gone days without a full belly, who never owned a pair of shoes, who drank water filled with parasites, who didn’t even have a bed to sleep on. My heart was broken. God gave me a job to do that day, and with the help of many generous people along the way, Give2GiveHope is working to feed children both physically and spiritually and making a life-long impact on an entire community. Help Give2GiveHope provide hope for a better tomorrow by supporting us prayerfully and financially. Sponsor a child today for $30/month or visit our website at http://www.give2givehope.org for more information on how you can get involved.

Great job!

It’s late at night. Someone is visiting your website and they like what they see. They want to donate to your cause, but it’s too late to call the office and too bothersome to write out a check. Where is the “Donate Now” button? You do have one, right?

Most nonprofits are heavily dependent on donations from the public to sustain their programs. A nonprofit’s website is increasingly the first public face of a nonprofit - and an excellent channel for receiving donations. Not quite sure? Watch this TechSoup webinar on making it easy for supporters to give by accepting online donations.

So, how does your organization choose from a bewildering number of systems for benefiting from the goodwill of people who want to give online? There are numerous providers of online financial services, but we’ll take a look at a few options that have been well-received in the nonprofit world. Questions on which donation service is right for a particular organization or situation abound on online forums like Quora (2, 3) and LinkedIn (2, 3), including in the NetSquared LinkedIn group. And on our own blog, community members have written about how to take credit card payments with a mobile phone, distributed donations, and even contests for paperless fundraising.

Idealware, which helps nonprofits choose effective software, looked at this topic last year. For the budget-conscious nonprofit that only wants basic donation capabilities they recommend Click and Pledge and Network for Good’s Basic DonateNow. Network for Good’s custom version of DonateNow is recommended as an “all-around good tool”, along with GiftTool and QGiv.

Idealware goes on to look at the pros and cons of using systems that aren’t tailored towards accepting donations, like PayPal, Google Checkout and Amazon Payments. They also have information for organizations that are looking to handle online payments for more than just donations and groups that need an integrated package of website management, donor management and donations tools.

That article from Idealware is pretty thorough in its treatment of the pros, cons and wherefores of online donation handling. And the forums provide a personal perspectives on the best tools for how to handle the intricacies of a specific organization’s needs. Are there any great tools missing from those recommendations? Let us know in the comments.