Let’s talk about premiums — those small gifts or incentives we send to donors in exchange for a gift. They can be a powerful tool in fundraising. But not every donor needs one and not every campaign should include them. The trick is knowing when to use premiums and when to skip them. Here is how you can refine your premium strategy to achieve better results and a higher return on investment (ROI):
1. Scale back to save and reinvest
If you’re using premiums in every campaign, you might be able to cut back without hurting your revenue. Premiums, and their storage and shipping, can be expensive, and reducing their frequency can free up funds for higher-ROI strategies. Test a few campaigns without them and see what happens—you might be surprised by how little impact it has on donor behavior.
2. Not all premiums are created equal
Choose your premiums wisely. When selecting premiums, choose items that resonate with your audience and align with your mission to build engagement and relationships. Thoughtful, well-chosen premiums can deepen donor connections and even inspire giving. Think about mission-connection — what would genuinely excite and engage your donors?
3. Don’t worry too much about “premium dependence”
A common concern is that donors will become “premium-dependent” and only give when an incentive is offered. Research shows, however, that this is rarely an issue, even for organizations that rely heavily on premiums. Donors who respond exclusively to premium-driven appeals usually account for only a small fraction of overall revenue.
What we learned from a year-long premium test
One organization put this to the test. Over a year, they stopped sending premiums to a group of 15,000 donors, while a control group continued to receive gift-of-any-amount (GOAA) and tiered premium offers. The results revealed:
- Retention for the no-premium group dropped by only 0.8%, a statistically insignificant difference.
- Average gift size fell by 5.5%, and net revenue decreased by 3.2%.
The takeaway? Premiums do provide a net benefit, but their impact is often overestimated. This organization streamlined its approach, keeping only the most effective premiums and cutting out the rest. The result? A simpler, more cost-effective strategy that still delivered results.
Test and tailor your premium strategy
If your organization relies on premiums, testing is essential. A strong premium strategy should be:
- Relevant: Connected to your mission and meaningful to donors.
- Cost-Effective: Driving results without cutting into net revenue
- Purposeful: Designed to meet clear goals, like boosting response rates or increasing retention.
A well-crafted premium strategy can enhance donor engagement. The key is knowing when, where, and why to use them. By taking a strategic, data-driven approach, you can maximize impact while keeping your fundraising sustainable for the long haul.
