A new study from M+R Strategic Services in conjunction with Andy Stocking investigates the effects of discounted membership rates on long-term giving rates. In the first part of the study over a year ago, M+R shared that when the nonprofit in their study reduced membership rates in a discount from $35 to $25 for new members, a comparable amount of money was raised, but from a larger number of new members.
- If you’re offering a discount, say it’s a discount.
- When it comes to past donor-activists, run a test before you decide to offer them a discount membership.
- Fundraise from your activist-only list. This is an important point because a recent study by Blackbaud showed that activists are seven times more likely to donate, compared to supporters who did not previously take an online action for the organization.
- Experiment! Just because you’ve asked for $20 from new donors for the past decade doesn’t mean it’s still the best amount to ask for today.
Reflecting on the first phase of the study Marc Ruben admitted that important questions remained:
“Of course, we haven’t answered the elephant-in-the-room questions. Will the bargain-hunters renew their memberships next year at the normal level? How will the discount membership affect their future donations?”
Well with 18 months later, the verdict is in. “Supporters who donated in response to the discounted membership offer performed identically to those who gave to the standard membership offer.”... “And since the discount offer generated more donors, it raised 11 percent more in the long term.”
The fact that donors initially receiving membership for $25 and $35 gave at the same rates long-term is really interesting. You'd think that people making higher gifts would ultimately donate more over time, but at least in this case, that wasn't true. M+R and Andy Stocking highlight the importance of testing as one of the key lessons of the study. Not every nonprofit will see the same results and your success with this tactic will depend on lots of factors including, who you initially reach out to and the makeup of your existing list of activists. So test, test, test!
We also wonder what the limits to the discounting effect the study describes are? If you undervalue the membership too, it’s unlikely anyone will pay to earn it the second year. You ideally, want people to take out their credit card and make at least a small donation so they are in the habit of giving to your organization since past donors are far more likely to make a donation than someone who has never donated before. But what if you offered membership for $10, $5 or even $2?
Could discounting that steeply still trigger the past donor experience organizations hope to create? What do you think?
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