The use of freemiums in direct mail fundraising -- low-cost items sent to grab donors' attention -- can be a useful tactic. For some organizations, and in some fundraising sectors, it's a price of admission to the fundraising game.
Address labels, notepads, and other low-cost useful items can make the difference between an unsustainable fundraising program and one that works.
But there's a danger of sliding down a slippery slope: needing to send increasingly stand-out (and costly) items: nail clippers, gloves, blankets, calculators ... it goes on and on.
In the direct mail view of the world, these things are high-end luxuries ... but in the real world, they are low quality versions of what they are. You become a garbage factory, churning out crappy stuff and pouring it into the mail.
These things improve response rate -- sometimes by a lot. But they have some downsides:
- High cost of mailing.
- Low average gift.
- They bring in low-retention donors.
- They bring in donors who continually need more stuff in order to keep giving.
The garbage factory fundraising strategy gets you more donors, but they have lower value. And it costs you more to get them.
What makes the garbage factory work, in theory, is that hiding among that higher quantity of lower quality donors are a few more high-value people: People who can upgrade to major donor status or leave a bequest. It doesn't take a large number of those to make a difference for any fundraising program.
Thing is, once you choose the garbage factory path, it's very difficult to stop. You need the high quantity to push down the per-piece cost of your freemium mailings. You also need to keep sending freemiums to your current donors, because they're not very responsive to anything else. And because those donors are also on other garbage-factory lists, you're in an arms race, not only with yourself, but with dozens of other garbage mailers. Costs keep rising. Donor appetites for new freemiums keep growing.
Here's my advice on this complex topic:
If you aren't using freemiums now: Don't start. You're already tilted toward a value orientation (rather than volume).
If you're using low-cost freemiums: Keep your eyes open. Don't let average gift drop too low; that's the first sign that you're tilting to far toward volume over value. Stay out of the freemium "arms race" by keeping your freemiums simple and inexpensive.
If you're already a garbage factory fundraiser: Take a good look at the long-term value of your donors. Make sure you aren't just churning through donors and barely making net revenue. Try to wean yourself away from the dependence on the garbage factory by seeking different lists and making your message more cause-oriented.