Bernard Ross Reveals the Next Big Thing in Fundraising!
By Michael J. Rosen, CFRE
Have you ever wondered what your donors are thinking? Life would be so much simpler if you could read their minds.
Now, we're actually a step closer to knowing.
To understand what your donors are thinking, you first need to understand how they think. That’s where veteran consultant and author Bernard Ross, director of The Management Centre, and fundraising consultant Alan R. Hutson, Jr., principal and Managing Partner of The Monument Group, can help.
In a preview of their session "Behavioural Economics: Everything You Know about Donor Decision Making is Wrong" at the AFP International Fundraising Conference (Baltimore, March 29-31, 2015), Ross told me the duo will show attendees how they can apply the work of Dr. Daniel Kahneman, author of the bestseller Thinking, Fast and Slow, to better understand their prospects and donors and, thereby, enhance their fundraising efforts.
Kahneman, a psychologist who won the Nobel Prize in Economic Sciences, says we have two complementary processes by which we make decisions in life, including fundraising decisions. He refers to these as System 1 and System 2. System 1 operates automatically and quickly, like an autopilot. System 2 allocates attention to effortful, conscious mental activities. We think System 2 is at work most of the time; however, Kahneman has found it is, in fact, System 1 that is operating most of the time.
Ross asserts: “Hutson and I believe that Kahneman’s insights are the next big thing in fundraising.”
Ross observes that most fundraising professionals think donors are making rational judgments when they are not. Think of the old sales axiom: “People buy based on emotion then justify, after the fact, with logic.” A similar process is often involved with philanthropic decision-making.
Donors make philanthropic decisions based on six to eight key mental heuristics—or System 1 short cuts—that we all use. Ross says that fundraisers can learn these heuristics and use them to transform response rates, gift sizes, and more. In their session, Hutson and Ross will introduce participants to these key heuristics and show them how that knowledge is being used to remarkable effect by charities around the world.
Ross promises, “The session will share examples that will utterly confound many of the ideas you have about fundraising, and at the same time explain why many techniques and approaches that seem counter intuitive actually work.”
One of the key mental heuristics that Ross and Hutson will explore is “anchoring.” Ross and Omar Mahmoud, chief of market knowledge at UNICEF, explain it this way:
“We respond to an initial stimulus in our subsequent choice. So, if people are willing to make a gift, and you ask for a larger gift initially then you are more likely to secure an actual gift at a higher level. So, the larger initial number ‘anchors’ the result.”
When I operated my pioneering phone fundraising firm, we referred to the process of “anchoring” as a “sight-raise ask.” To generate a high average gift, we would first ask the prospect for an amount we knew we would be unlikely to receive. For example, we might ask for a $1,000 donation. We then would respond appropriately to the prospect’s questions and objections before advancing a second ask and, possibly, a third. The results of using a reasonable “sight-raise ask” were higher response rates and higher average gifts compared with making a more modest, targeted first ask.
Kahneman’s concept of “anchoring” explains the effectiveness of the “sight-raise.” When prospects were called, they were not expecting a philanthropic conversation. So, their philanthropic thinking was set to $0. Any amount asked would be compared to the prospect’s initial $0-mindset, the pre-existing anchor. Compared with $0, a $100 donation is quite a lot. By asking for $1,000, we shifted the anchor. A $100 donation compared with a $1,000 is not a lot of money.
It’s important to note that the anchor amount needs to be reasonable. A ridiculously high anchor amount would not have been effective.
To learn more about the key mental heuristics, you can read a free copy of the article written by Ross and Mahmoud by clicking here.
You should also plan to attend the Ross-Hutson session during the AFP Conference. If you’ve never heard Ross present, you really owe it to yourself to hear him. You’ll learn a lot and have fun in the process.
By the way, I’m planning to attend the Conference. Let me know if you’ll be going. I hope to see you there.
That’s what Michael Rosen says… What do you say?