Together with my former colleagues from Simon-Kucher led by Fabian Farkas, we just published an article in the Stanford Social Innovation Review on how behavioral economics can supercharge your online donations. Check out the article here.
Here are three simple, evidence-based quick wins for any online fundraising effort!
Interested in the details? Check out the full deck here, with specific instructions on how to set individual donation amounts on page 5:
Some charities give potential donors lots of flexibility when donating online (see below for example 1 by Wikimedia). After all, people love flexibility, right? Then why would anyone limit donors’ choices, e.g., by pre-filling the online donation form like Unicef does it with a very structured form (see example 2 below)? Ideally, you would give donors maximum flexibility by leaving everything up to the donor, as GoFundMe does it (see example 3), right?
Well, I used to think the same way, because consumers would tell us in focus groups and interviews how much they value freedom and flexibility.
However, when we would actually test both alternatives separately (i.e., one group of consumers would only see a very flexible choice and another group of consumers would only see a very structured choice), in every single case, more consumers would choose the structured choice!
Initially, our clients and we were so shocked by these counterintuitive results that we invested in a brain scan study to find out what secret thoughts drove consumers’ choice. As we have described in an article on LinkedIn, structured choice (what we often call “bundled portfolios”) clearly outperforms the “build-it-yourself” or flexible choice in terms of mental “attention” required. “Attention” is mentally demanding and leads to choice stress, which ultimately lowers the attraction to buy.
How much lower? Well, since this issue came up in many of my projects as a management consultant for leading telecommunication and insurance firms, banks, utilities, etc. I was able to test this about ten times. The results: By deploying a flexible choice for consumers, you leave between 40% and 80% of revenue on the table as opposed to a structured choice. Those tests were conducted in the context of commercial subscription products (something I shared on LinkedIn here).
Does this apply to online donations? Initial evidence says yes: A/B pre-tests with online donations I have conducted suggest very similar outcomes!
For now, let’s note my first cardinal rule for online donations:
Do not give donors too much choice in the donation form (even if they tell you that they want that choice).
Stay tuned for more rules to come…