Tuesday, June 09, 2015

Should Public Radio Offer Incentives to Attract New Digital Listeners?

The strategic use of incentives helps make public radio pledge drives more successful. They help boost the number of donations during key dayparts. They motivate some listeners to give at certain pledge levels and in ways that are beneficial to the station.

Incentives were successfully used in the late 1980s and early 1990s to encourage listeners to give via credit card instead of asking for an invoice. One of the most popular credit card incentives was an annual subscription to Newsweek magazine. Each subscription cost the station a dollar.

Incentives were successfully used in the late 1990s and early 2000s to encourage giving via the station web site. Stations held special “cyber days” to get listeners to give online. One of the most famous cyber days was in 1999 at WAMU when the station gave away a new Volvo.

Public radio has no problem offering incentives to generate contributions and encourage ideal giving behaviors.  Why not try the same for digital listening?

We know from decades of research that listening causes giving. And having more listening makes it easier to generate more underwriting revenue. Getting more listening, generating more public service, is the best fundraising a station can do. It might make sense to accelerate digital listening by offering some incentives for listeners to try it.

It’s an interesting prospect. There could be incentives for downloading an app or registering to listen online. There could be incentives for first use or the first ten hours of listening or a certain number of podcast downloads.

What types of incentives? That’s the fun part. We get to test.

Maybe it is offering bonus content or a coupon code for the NPR Shop. Maybe it is a dining discount with an underwriter or a digital coupon for a local bookseller. Perhaps it is a “vintage” t-shirt or mug from the back of the premium closet. Maybe a Bluetooth speaker is offered at a special discount price to digital listeners who use the station 10 times over two weeks.

Digital listening is supposed to be an essential component of public radio’s future. That means public radio’s finances will depend on it. It just might be worth the testing whether incentives can accelerate digital audience growth.

Sunday, June 07, 2015

Promoting Digital Listening Like Your Survival Depends On It

How would you promote your public radio station’s on-line stream if the station’s very existence depended on it?

It’s not a hypothetical question.  Every public radio station faces that situation today as more of its listeners and donors spread their listening across broadcast and digital platforms.

It wasn’t a hypothetical question five years ago for Classical KDFC in San Francisco.  KDFC was a commercial radio station and its owner decided to drop the format.  Classical music lost its home at 102.1 FM.

The University of Southern California and KUSC stepped in and acquired two lesser signals on which to broadcast KDFC as a public radio station.  Two frequencies.  Far less coverage.  More than 100,000 distraught listeners who could no longer hear the station over the air.

KDFC already had a good digital presence.  It had streams and mobile apps.  It was social media savvy.  It had a good database and a newsletter.

KDFC researched the many ways listeners could easily hear its programming through digital platforms.  It developed recommendations for Internet radio options and how to use Bluetooth to send sound to external speakers.  It developed the simplest possible narrative for communicating those options.  It heavily promoted that narrative across all available touch points.  This went on for months.

Listeners who could no longer hear KDFC reached out to the station as well and KDFC was prepared to help them with information and support. That support went as far as KDFC’s program hosts returning phone calls from listeners and walking them through the steps necessary to hear the station online.  It was a daily occurrence.

Embedded in KDFC’s story is a template for how all public radio stations should be promoting their digital listening options.
  • Start with the goal of helping as many listeners as possible learn to create a quality listening experience on a computer, to listen via an app, to use external speakers at home and in the car, and to find and listen to a podcast or on demand content.
  • Have up-to-date and easy to use digital listening options.
  • Develop a simple narrative describing the benefits of using the station’s digital offerings, including step-by-step instructions on how to get the most out of each option.
  • Promote the heck out of it using every possible touch point, including on-air.
  • Provide prompt individualized customer service when needed.
  • Rinse and Repeat.
That last point is really important.  Rinse and repeat.

KDFC ended up with five different radio signals throughout the Bay Area.  Most of its previous coverage area was restored three years ago.  In some areas the station has even better coverage. KDFC promoted those new signals even more heavily than it originally promoted online listening, including billboard and bus card advertising, and has rebuilt much of its audience.

Still, 5 years after losing its original signal and 3 years after restoring most of its coverage, a pledge drive doesn’t go by without hearing from past listeners who are just discovering that KDFC is back on the air in their community. They didn’t get the message.

Rinse and repeat.  There’s always someone who didn’t hear the message.  There’s always some who has just discovered your station for the first time.

Growing digital listening is too important to not be engaged in continuous promotion.  To borrow and modify an old slogan from PBS, if you aren’t going to effectively promote your own digital offerings, who will?

Thursday, June 04, 2015

If Digital is the Future, Public Radio Needs to Promote it Better Now

I just spent part of the last two days listening to 50 station breaks across 14 different large and medium market public radio stations. Every station is considered to be a top station in public radio and most are considered to be digitally savvy. Some quick numbers:
  • 43 of the breaks (86%) had absolutely no promotion for the station's digital listening offerings.
  • 8 of the 14 stations had no digital listening promotion. I listened to at least 3 breaks in one hour for each station.
  • Of the 5 stations that had some sort of digital listening promotion, 3 mentioned more than one type of digital listening in the same break.  For example, the website was promoted as a way to stream the station and as a way to hear the station's new podcast.
  • 1 station qualified as promoting digital listening only because it included the website in its legal ID, "...and online at WXZY.org."  That's more of a throw away mention than a promotion, but I still counted it.
There's not a whole lot to say here other than this is a woefully inadequate level of self-promotion given the importance of digital listening to public radio's future.  It is a notable lack of promotion given public radio's decades-long marketing lament, "If only more people knew about us."

When it comes to digital, even the people who know about us through the radio probably don't really know about our digital offerings.

It is going to be tough enough to win new listeners with the infinite number of media options now available in the digital space. Stations need to make it a priority to move as many current listeners as possible to its digital platforms. That starts with the station selling current listeners on those digital offerings. Right now, that doesn't appear to be happening in any meaningful way.

In the next post, a possible template for the promotion of digital listening.

Wednesday, April 22, 2015

The Well-Chosen Word Matters in Pledge Drives Too

One of the big challenges during public radio pledge drives is avoiding clichés. They pop into the appeals of even the most experienced on-air pitchers. Fundraising fatigue will do that to you. 

Pledge drive clichés aren’t effective at persuading listeners that their support is important. 

You are the public in public radio.

And it is unlikely a cliché ever motivated someone to drop what she was doing to make a contribution.

We meet our goal one pledge at a time. Just you and 19 other people in the next 2 minutes gets us there.

For the most part, pledge drive clichés are silly filler. However, there’s a new one going around that is downright ridiculous and, in my opinion, a bit damaging.

It’s time to begin your financial relationship with the station.

When I hear this on the air, I can’t help but think about how Paula Poundstone might react using her best “Wait Wait… let’s stop the show for a moment while I ask a few questions to sort this out” voice. It goes something like this:

Hold on a second. Did you say that you want to begin a financial relationship with me?  How does that work?  I give you 10 bucks a month and you go halfsies with me on my kid's college tuition?

On-air fundraising is hard. In some ways it is the most challenging programming to produce in public radio because it is live and, even when heavily scripted, subject to spontaneity.

Sometimes that spontaneity makes the fundraising more effective. Other times it undermines not only the fundraising, but also the larger effort to build a true relationship with listeners beyond the programming.

It’s time to begin your financial relationship with the station.

Who talks like that in real life?

Public radio is successful because the well-chosen word still matters. Listeners will hear poorly-chosen words on-air as long as stations do traditional pledge drives. It's one of the costs of doing business that way.

It’s important to remember that the pledge drive words are just as much a part of how listeners think and feel about the station as the words they hear while listening to programming. Stations should strive to recognize those poorly-chosen words when they inevitably happen and ensure that they don’t become clichés that hurt the station’s image more than they help it.

Tuesday, April 21, 2015

Shorter Pledge Drives... Again!

Public radio is in another cycle of conducting shorter on-air pledge drives. 
The latest cycle started at North Country Public Radio (NCPR) in upstate New York.  Last fall, NCPR produced what it called a Warp Drive, allowing it to meet its $325,000 campaign goal with just 3 hours of traditional on-air fundraising. The typical NCPR drive was five days full of fundraising interruptions. 
 
NCPR achieved this through weeks of more aggressive off-air fundraising (email, direct mail, social media) supported by short on-air announcements that didn’t interrupt the programming.  Several stations have followed NCPR’s lead and have been able to cut their drives from more than a week to mere days, even hours.  Vermont Public Radio managed to meet its $350,000 goal without having to interrupt programming at all.
 
The “less on-air fundraising” movement isn’t new to public radio. There was a lot of experimentation in the mid-1990s. We helped WBUR in Boston cut a drive from 10 days to 3 hours with More News, Less On-air Fundraising. The station managed to keep drives very short for a little more than a year.  WKSU in Kent, OH pioneered All the Money in Half the Time. Many stations tried variations of these ideas throughout the 90s with good results. 
 
In the early 2000s, WUWM in Milwaukee eliminated its entire Fall drive for 3 or 4 years in a row using strategies similar to NCPR’s Warp Drive.  Around the same time, WSKG in Binghamton, NY invented the 1-Day pledge drive. 
 
Sonja Lee, who is part of our firm Sutton & Lee, helped perfect the 1-Day drive concept while she was at KBBI in Homer, AK. She helped us create a 1-Day drive kit and consulting package used by more than a dozen stations.  A few of those stations have been doing nothing but 1-Day pledge drives for years, including five straight years for Northwest Public Radio in Pullman, WA.
 
Shorter drives, by themselves, provide no long-term fundraising benefit. The real fundraising benefit of shortening drives is the leverage it provides when trying to get more sustaining members and direct mail givers. These types of donors have greater long-term value to the station. The promise of shortening or eliminating drives helps change their giving behavior.
 
It should come as no surprise then that drive shortening efforts tend to work best at stations with under-developed off-air fundraising programs.  There’s more financial opportunity.
 
Really short drives don’t last long at most stations. There are several reasons including:
 
- Failing to upgrade off-air fundraising efforts or maintain them at the highest level. After a few big successes, pledge drives get longer again in order to capture lapsed donors and lost off-air revenue. 
 
- Increased revenue demands. Stations increase their spending over time more than they can improve their off-air fundraising results.  Then the pledge drive creep begins.
 
- Novelty. Short drives are at their most efficient the first go-around. The actual on-air part of shorter drives make less money over time as listeners get used to them. The first few drives bring in lots of additional gifts as current members reward the station for doing less fundraising. The novelty wears off and the additional gifts go away.
 
This is where NCPR has made an important innovation. Almost every past approach to less on-air fundraising had a "pre-drive" that helped shorten the drive. NCPR flips that and says that the weeks leading up to the on-air pitching *are* the drive. The on-air part is merely clean-up. That's a very good message.  It redefines the drive and might help create future additional gift opportunities when the novelty wears off.  Whether that pans out remains to be seen.
 
Acquiring new members can be an issue over time but it is not initially a problem for most stations. At first, stations sees a spike in renewal rates and lapsed donors coming back. So even when new member counts are down, the donor database grows through better retention and reacquisition. This can last as long as two or three years if the off-air fundraising efforts are firing on all cylinders.
 
Will this cycle of shorter drives lead to a lasting change in how public radio conducts on-air fundraising?  Probably not.
 
NCPR repeated its Warp Drive approach this Spring and needed 2.5 days of traditional fundraising to meet its campaign goal.  While that’s a lot more than the 3 hours it required in the Fall, it is still a great success.  It’s half as much fundraising as the station used to do.  That’s good fundraising and good stewardship of the airwaves.
 
And, as with every past cycle to shorten drives, this one is helping public radio learn new things about fundraising that will make more stations stronger in a future where traditional pledge drives could be as much of a liability as an asset.

Tuesday, February 17, 2015

The Impact of Sustaining Givers on Public Radio Fund Drives

The movement to monthly sustaining givers has been good for many public radio stations, improving annual donor retention and monthly cash flow. The impact on fund drives is less clear.

There's not a lot of readily available national data on the subject, but we've seen mixed results across a few dozen client stations over the past three years. It appears the increase in sustaining members has reduced fund drive efficiencies for two reasons.

The pool of donors who might renew their membership during the drive is smaller because many of the most loyal donors are now sustainers. And additional gifts are a tougher sell since part of the sustainer pitch is that the listener is already supporting the station every month.

These two issues seem to have a greater effect on stations that ran efficient fundraising programs prior to seeking sustaining members. Stations that were less efficient to begin with get a longer grace period before their on-air drives are affected.

Perhaps a bigger issue now facing many stations is the multi-year impact of sustainer programs on fund drive cash flow. Every station has to manage the initial cash flow hit of starting a sustainer program. That's because the pledges that used to fulfill all at once now take 12 months to fulfill. The later in the fiscal year a sustainer is acquired, the less cash flow value that listener has in the current fiscal year.

In theory, the station is trading short-term fund drive cash for ongoing monthly sustainer cash. In practice, we are seeing stations trying to increase both. As a result, fund drive cash flow expectations are no longer being adjusted proportionately to sustainer pledges received during the drive. Drive goals are going up in a more difficult fundraising environment.

Here’s an example using a station with a drive goal of $300,000 in pledged dollars. Sorry about all of the numbers.

Prior to its sustainer program the station could count on $270,000 or more of that $300,000 to fulfill in the fiscal year. With a sustainer program, at least $100,000 of the pledged dollars are now being paid monthly (1/3 of pledged dollars).

If that drive occurs halfway through the fiscal year, then only half of the sustainer money fulfills in the fiscal year. That’s a $50,000 hit to fiscal year cash flow. Now only $220,000 fulfills in the fiscal year. Over three drives, on-air fundraising contributes $100,000 less per year to cash flow.

What we’re starting to see is that after the initial implementation of a sustainer program, stations aren’t willing to take that big of a cash flow hit on the fund drive revenue line. Rising budgets keep putting pressure on fund drives to deliver more immediate cash. So fund drive cash flow expectations are no longer being reduced deeply enough to account for sustainers. In some cases cash flow goals are approaching the same levels as the pre-sustainer drives. 

The consequence is that the station has to raise its overall fund drive goal to meet the cash flow projection for the drive. Going back to our example, to raise $270,000 in current fiscal year cash with the sustainer model, the drive goal now has to be $380,000. That’s 27% higher than the pre-sustainer model. In a tougher on-air fundraising environment.

As a rule of thumb, the more successful a station is with sustainers, the less reliant it must become on fund drives for cash flow. It also must become better at multi-year, multi-channel revenue planning. If it doesn’t, then drive goals must be increased with the understanding that getting more immediate cash out of a drive and getting more sustainers from that drive are conflicting goals.

The problem, as we are seeing it, is that an increasing number of stations want both and that's not working.

A few decades ago, when public radio was investing considerable resources in on-air fundraising research and training, I posed the question, "Pledge drive or Fund drive?” That is - is the main purpose of this drive to get donors or money? It is an important question that impacts fund drive strategy, tactics, and messaging.

It turns out that public radio's incredible audience growth over those decades made that question less important than we thought. Most stations picked raising money as their primary goal and got enough new members along the way to grow, even though the percentage of new member donations was quite low.* 

The success of sustainer programs and the importance of acquiring sustainers through on-air drives just might be making "Pledge drive or Fund drive?" a more relevant question today. 

---------

* New givers in most fund drives range from 25% to 35%. It has been that way for a few decades. Flip that number around and it means that 65% to 75% of givers during an on-air fund drive are already in the station’s donor database. These percentages are a result of focusing on raising money during drives over acquiring new givers.

Thursday, February 12, 2015

It’s Taking More Leverage to Generate Pledge Drive Contributions

Our last post covered how it is getting more difficult to generate contributions during public radio pledge drives. We introduced the idea of public radio pledge drive Leverage.  (Pleverage?)

Leverage is the weight of the incentives offered to generate a contribution or to raise a dollar. Leverage is the stuff – premiums, challenge grants, dollar-for-dollar matches, sweepstakes – offered during the drive to spike response rates and influence average gift.

We’re still working on the best way to measure this, but it is an important concept.  On one hand, incentives are a cost to the station – financial and in terms of listener perception. We know from Listener-Focused Fundraising research that commercial-like fundraising tactics create negative perceptions among many listeners and that is a cost.

On the other hand, incentives create an important value proposition for an significant subset of potential givers. This post focuses on the idea of value proposition.

But Wait There’s More!

It used to be that using one incentive at a time was sufficient leverage to meet hourly and daily on-air drive goals. Sometimes two incentives, such as a premium and a dollar-for-dollar match were offered simultaneously. Now, more stations are offering more stuff, simultaneously, to meet their goals.

The questions before us are how much leverage is really necessary for a station to get the results it needs?  And, is there a point where so much leverage is needed to meet the pledge drive goal that it is a sign of an unrealistic goal?

In the interest of full disclosure our company, Sutton & Lee, provides on-air fundraising consulting services to nearly a dozen public radio stations. We are helping many of those stations use increased leverage to meet their goals.

Below is an example of what one major market station offered as sweepstakes prizes during a recent campaign. The example below is not one of our client stations but it represents how a handful of stations have been operating over the past decade and we think it represents where much of the industry is headed.
  • Trip for two to Paris
  • Tanzanian Safari for two
  • Trip to Iceland
  • WWDTM Trip to Chicago
  • Galapagos trip
  • Rome and Florence trip
  • Mercedes Benz
That’s something like $60,000 to $70,000 of prize incentives for just one pledge drive. The station also had several challenges and dollar-for-dollar matches ranging from $10,000 to $50,000. Additionally, a few premiums were set at “loss-leader” pledge levels to boost response rates.

Depending on when a listener was asked, the enticement to respond during this drive would have been entry into sweepstakes for multiple trips, a chance to win a Mercedes, a $50,000 challenge grant, and an attractively priced premium.

The value proposition to the listener is this:

“Give $10 per month now to get a great thank you gift at a special pledge level and also support the station you depend on so you can maintain access to your favorite programs. You’ll also get many chances to win a dream vacation and a chance to win a luxury car all while turning that $10 per month into a $50,000 challenge grant the station can earn if you do it by the end of the hour.”

While this might seem extreme to the outside observer, leaders at this station obviously felt all of these incentives were needed to meet the goal over their planned fundraising footprint. That’s a lot of leverage.

And this station is not alone. Many stations are giving away multiple trips. Others are giving away cars and even tens of thousands of dollars in cash.

It’s Not a Bake Sale Anymore

And it’s not just the sweepstakes that are getting extreme. Some stations offer “early bird” discounts on premiums, where the pledge level starts low and goes up later in the drive. While very commercial sounding, this technique does boost immediate response rates.

Some stations offer “two-for-one” matches where every dollar contributed generates two additional dollars in match money. To the listener this is, “give $100 right now and the station receives an extra $200 donation from a generous major donor to the station. Right now your pledge has three times the buying power.”

These two-for-one matches can be very effective at generating immediate response. They are often four times more effective than incentive-free fundraising at generating contributions and dollars.

The value proposition of matches is also quite good from the listener perspective. Unlike a sweepstakes, which the listener may or may not win, there is an instant benefit to responding. The listener gives and the station gets even more. Instantly!

The primary downside of two-for-one matches for the station is that a dollar of leverage returns just 50 cents in revenue. The pledges come in faster, which is good, but the cash return on the leverage is lower than the value proposition to the listener.

We’ve seen stations raise less money in an entire day than they used for a two-for-one match during that day. For example, $30,000 in match money generates $15,000 in contributions over a few hours. Then the rest of the day generates $10,000 in pledges. The daily pledge total is $25,000 but it took $30,000 in match money to get it.

It’s a reasonable argument to point out that the any match or challenge in a pledge drive is worthwhile because the station leveraged the pledge drive to obtain the match money commitment in the first place. We agree. That’s one of the great strategic benefits of matches and challenges. They raise money twice for the station, once before the drive and once during the drive.

But from the potential donor’s perspective a two-for-one match is the antepenultimate pledge drive offer. It’s big leverage. The only thing that makes it better is getting a discounted premium and a chance to win a great sweepstakes prize while getting your gift tripled.

Circling back to the big question in front of us, “how much leverage is too much?”

Are we at the point where meeting goals requires offering incentives worth more than the value of the contribution itself?  Is there an ideal ratio of pledge drive dollars to incentive value.

Defining leverage in this way could help underperforming stations get better results or at least better manage their expectations. It could also help stations efficiently meet their goals without going overboard.

Another benefit is improved pledge drive benchmarking. It’s almost impossible to compare results across stations without considering the leverage applied at each station.

Finally, we can’t leave this discussion without asking if there is a point where greater reliance on commercial tactics makes pledge drives even less-listenable and/or erodes the bond between the station and listeners who value the non-commercial nature of public radio.