Marketing maven Seth Godin wrote The First Transaction, an interesting post about the need for cultivation to precede any ask for money. It’s a short post, so I’m reproducing most of it here …
"Digital transactions are essentially free for you to provide. I can give you permission to teach me something. I can watch a video. I can engage in a conversation. We can connect, transfer knowledge, engage in a way that builds trust… all of these things make it more likely that I’ll trust you enough to send you some money one day. I can contribute to a project you’re building, ask you a difficult question, discover what others have already learned.
But send you money on the first date? No way.
The question then, is how much time and effort does your non-profit/consulting firm/widget factory spend on pre-purchase transactions and how much do you spend on trying to simply close the sale?"
For almost forty years, direct mail prospecting has been the "mother’s milk" of fundraising and membership building for thousands of nonprofits. All predicated on the hope that only 1 or 2 or 3 out of every 100 individuals we solicited cold would in fact defy Seth and give us money on the first date.
Prior cultivation? We counted ourselves lucky if our issue or cause was "hot" (i.e., enjoying coverage in the mainstream media), believing our prospects would be more aware of our need and closer to the tipping point of giving. And we’d strive to make these donors profitable by hanging on to (hopefully) most of them, building relationships and earning repeat and upgraded contributions.
In other words, we prospected first, and then cultivated second. But traditional prospecting is getting tougher and tougher.
Seth asserts that the only winning paradigm these days is the reverse one … cultivate first, then ask for the money.
And he notes that digital media makes this easier — certainly far less expensive — to do (fortunately).
I think he’s right. Outside of natural/humanitarian disasters, I’d argue that raising money from new donors these days is entirely about engagement first, chiefly online, then solicitation … by whatever medium (mail, email, telephone).
The relationship must precede the ask.
"Buyer resistance" is on the rise. Prospects are skeptical, bombarded, over-exposed, frazzled, distracted, feeling hopeless or defeated, not seeing progress on the same problems they’ve been hearing about for years.
Websites and social media provide the cost-effective means to reach, educate and cultivate individuals before soliciting them. Arguably, the "prospecting lists" that matter today are the ones your organization builds for itself … digitally. Aren’t we seeing that "affinity lists" — the ones we’ve rented in the past for prospecting — are producing less and less viable returns?
Here’s a theorem for your consideration: A nonprofit that cannot build a file of engaged individuals online is an organization that should forget about about trying to prospect for new donors.
Any disagreement … at least from a list broker or two?
Tom
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Tom,
Ok, I’ll bite. I think your theorem of non-profits only prospecting online (“A nonprofit that cannot build a file of engaged individuals online is an organization that should forget about about trying to prospect for new donors.” ) falls into the typical trap of “all or nothing”. I’m surprised by this leap considering that your column routinely advocates that direct mail is not dead.
The fact is that direct mail acquisition is still the lifeblood for many, many non-profits as they attract new donors. While it is indeed becoming more cost prohibitive, there is still not a channel that matches it for acquisition efficiency of donors in a scalable medium. The vast majority of online prospecting consists of throwing out a fishing line and hoping someone will bite… versus the DM approach of proactively casting a net and raking in a large number of new donors, albeit a small percentage of what you mail.
A key thing to note here is that I refer to acquiring donors.. not warm leads. Godin is switching that paradigm and seeking warm leads which could be valuable for some, but our experience has been that non-profits are really struggling to convert a large percentage of online warm-leads into actual donors.
I don’t doubt that the time will come when alternative acquisition channels will play a more important role to non-profits but that time isn’t here yet for the majority of them to make any significant budget shifts away from DM and toward online if they want to continue to exist on the scale they currently do. Consider, how many non-profits you know that raise more than 10% of their total revenues online? And we are years (decades perhaps) after the “internet revolution”.
There should be an integrated prospecting approach in place for most non-profits for sure, but to say that online is more important than direct mail acquisition is silly at this point in time.
A final complication to online, is that while viral is very powerful, it makes it much more difficult for non-profits to track and therefore, it becomes a reactive versus proactive approach. As marketers, we are measured and compensated on our ROI for marketing activities.
I would pose a counter-theroem to you… Is the majority of online marketing (aside from email to house donors) by non-profits today really direct marketing? Or does it have more in common with traditional broad-base marketing than direct marketing?
In our rush to embrace social media I find too many are throwing the baby out with the bath water. I would agree that getting money on the first date is almost impossible. To me the real value of social media is establishing the relationship to make the “ask” for money. However, people are not stupid and they know ultimately that an “ask” is coming from any non-profit. I think I would agree that it takes a multiple pronged strategy to garner donations and to keep those donors. Use whatever means but by all means do not get so caught up in new technology that you abandon what has worked.
I don’t think Tom was trying to say that if you can’t prospect (read get new donors) successfully online don’t do it at all… but that if your organization can’t build an online file of engaged, passionate supporters (both donor AND non-donor (this is the key part)) then offline prospecting will increasingly become even more of an “investment”.
So many organizations have seen drops in their DM prospecting this year, but it is still an investment that should be made because it helps keep the file at a similar size while churn continues to grow. But along with that investment organizations NEED to add online prospecting, which like Seth points out is so much more than asking for financial contributions. Like Mark states in his comment, when it comes to engaging with nonprofits online, people know that the financial ask will come, but THEIR perceived relationship and experiences with the organization will greatly impact how and if they decide to give.
I completely believe that if you cannot build a file of engaged individuals online your nonprofit will be floundering in the future, struggling to find people who care enough about your cause to give a donation or even take an advocacy action.
Though I’ve been in fundraising for nearly 20 years, discussions like this seem to take place in a different universe from the one I know.
Aren’t there all sorts of prospects and donors, and don’t we have to adjust our strategy for each sort?
Some people want to give money on the first date. That’s how they express themselves. If the prospect is really excited about what you do, and you don’t ask him or her for money, aren’t you sending the signal that you don’t really need their money or involvement?
And aren’t you also adding an unnecessary step for all of those people who did want to close the deal (whether with a contribution of $10 or $10,000) in that first encounter? If I am in the market for a new tie, and I walk into a store filled with ties but then find out the salespeople won’t sell to me because they want to build a relationship with me first, I’m going to think the people in the store are crazy and I probably won’t go back. I wanted a tie. I wanted to spend my money.
Others want to wait and see. That’s fine — a good ask (online, direct mail, over lunch, etc.) should be as much an education on the organization’s goals and plans as it is a sales pitch. And we’re all used to spending lots of time cultivating donors, especially in the higher giving rungs. Cultivate first and ask later is not exactly a revolutionary concept in the world of major giving.
Clearly we want to build a sense of community with our supporters, whether they are donating or not. And online provides fascinating, inexpensive new ways to build that sense of community. But I’m not sure they’ll truly feel connected until they invest something in the organization. And we aren’t doing ourselves any favors if we get them into the habit of not giving, or if we endorse the idea that the giving part is a necessary but unpleasant evil that must be dealt with eventually.