To hear some people talk about it (including some recent ill-considered survey research), you might think raising funds by means of premiums is just about the dumbest, most self-destructive thing you could do.
Most people who have actually done it will beg to differ, as in this post from the Integrated Direct Marketing blog: How I Learned to Stop Worrying and Love the Premium.
Turns out it's usually not stupid or self-destructive. The average gift is usually lower, but not that much. Premium acquired donors often need no further premiums to keep on giving. In general, it's almost all good news:
The premium also allowed us to mail into new lists that we had not been able to make work with a non-premium offer. We did see a decreased life-time-value as we pushed further into new markets, but the trade off was well worth it since we were able to acquire thousands of new members who were previously unreachable.
I've worked with organizations that seemed to suffer terribly from premium addiction: Their donors gave tiny gifts and only responded to premium mailings. Retention was terrible. If they stopped using premiums, their numbers got even worse.
But here's the thing: Their real problem wasn't premiums, it was their steadfast refusal to be relevant to their donors. They only talked about their cause in the most general and abstract terms, because they didn't want to be limited by specificity or even imply that gifts would be used for anything in particular. They basically acted like they hated and feared their donors.
Premiums were probably the only thing keeping them alive. And just barely.
Much more often, I've seen smart, relevant, donor-loving organizations use premiums as one useful tool in their donor acquisition toolbox. And it worked just fine.
Don't fall for the anti-premium hysteria. Test it for yourself. There's a good chance you'll see the light. And the revenue.
