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. 

Monday, February 02, 2015

Difficult Pledge Drive Days Ahead?

It’s getting harder to generate contributions through public radio pledge drives.  Most stations are still getting good overall results, but the cost of getting those results is going up.

Sometimes the cost is more on-air fundraising. It is taking more of the station’s time and more of the listeners’ time to generate a contribution. Sometimes the cost is greater leverage. That is – stations are having to offer more, or more expensive, incentives to generate a contribution.

Probable Causes

Success with monthly Sustaining givers appears to be having an effect on drives by cutting into the potential number of annual renewals received during the drive. Declining AQH (Average Quarter-Hour) audience is another possible cause. Lower AQH means listeners are using the station less. That could result in listeners being less likely to give.  It certainly reduces the number of potential respondents to an on-air fundraising appeal.

There could be external factors as well. People are being asked to immediately part with their money at unprecedented rates these days. The junk mail and telemarketing calls of 25 years ago now follow us out of our homes and find us 24/7. The amount of daily asks is numbing. Public radio pledge drives appeals are fighting through much more clutter just to be considered let alone acted upon.

Measuring Pledge Drive Success

The primary metric we use to measure on-air fundraising success is Listener-Hours to Generate a Contribution. Using Nielsen Audio audience data, we answer the question, “how many hours of listening must we expose to fundraising to get someone to give?”

Or, put another way, how efficiently are we spending our listeners’ time to get a single contribution? A lower number is better. The goal is to maximize the pledge drive return against the expense of the disrupting the listening experience.

In a PPM-measured market, an efficient pledge drive for an NPR News station generates one contribution for every 300 hours of listening exposed to fundraising. That’s like putting 300 people in an auditorium and playing public radio content for an hour, except that their experience will be interrupted 4 to 5 times in that hour with 4 to 6 minute fundraising appeals. At the end of that hour, one of the 300 people will make a contribution in the amount of an average gift.

Two Trends

We see on-air fundraising following two trends. Some stations are adding more fundraising hours and exposing more listening to pledge drives to meet their goals. The fundraising efficiency metrics at these stations don’t improve, they get worse. The stations still meet their goals, or come relatively close, by applying more brute force.

The other trend involves applying more Leverage to the fundraising ask. We haven’t settled on exactly how to best measure Leverage, but we believe the broader concept is sound. For now, consider the Leverage to be the weight of the incentives offered to generate a contribution or to raise a dollar.

Here’s an example. Ten years ago a station offers a dollar-for-dollar match and the fundraising efficiency is 150 Listener-Hours (LH) per Contribution. That means the match is twice as efficient as the average hour of fundraising, which took twice as many LHs (300) to generate a contribution.

Today that match has an efficiency of 200 LHs per Contribution. It’s less efficient at turning listening in to contributions. So the station decides to offer a free tote-bag to anyone who gives during the match in addition to any other thank you gift they take. More listeners respond to the offer and the efficiency returns to its prior number of 150. The station achieved its prior efficiency by applying more Leverage.

This is happening at a lot of stations across the country stations. They are offering more incentives each drive and offering more of them  simultaneously to maintain fundraising efficiencies.

Is the Problem Too Much Talk About Stuff and Not Enough Talk About Mission?

Probably not.

Mission messages are great for convincing listeners that they should give to the station but they aren’t particularly effective at motivating people to actually pause their busy lives to give at that moment. The well-executed “Mission” focused fundraising hours tend to fall in the 400-500 LH efficiency range.

A pure Mission approach to pledge drives would likely require a plan that exposed listeners to 33% to 50% more fundraising to meet the overall drive goal. That’s like turning a 9-day pledge drive into a 12 to 14-day pledge drive. As you might imagine, longer drives tend to drive efficiencies down even more.

What’s Next?

Subsequent postings on this topic will go a little deeper into Leverage, Sustainers, and off-air fundraising including the use of email, social media and database solutions.

One final note. In the past we’ve observed that public radio might have more of a spending problem than a fundraising problem. The money stations are spending on increased local news offerings and digital initiatives is outpacing their ability to monetize those activities. They are currently money losers. That puts pressure on the core radio service to generate “profits” to subsidize those activities.

One of the possible answers to slipping pledge drive efficiencies is to reduce the revenue burden they must bear through smarter spending on local news and digital.

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Friday, November 21, 2014

Audience 98: Enduring Insights or Now Useless Information?

Yesterday's keynote speech at the Public Radio Super Regional meeting was by Paul Jacobs. He's a radio researcher, radio web app developer, and the incoming Board Chair of Greater Public -- the trade association for fundraising, development, and marketing professionals in public radio and public TV.

Early in his speech, Jacobs took exception to public radio's continued use of findings from a major industry research study published in the late 1990s -- Audience 98

Jacob's criticism was that the research was conducted in 1998. He accentuated that point with a pretty funny set of images of products and services from 1998 that are no longer with us... like Windows 98.

That was it. Audience 98 is old and therefore no longer of value.  "Get over it," he said.

It made for a good laugh. But it also got me to revisit my thinking about Audience 98 and whether its findings could help public radio grow and thrive in this never-ending age of digital disruption. I think the answer is "yes."  And, instead of getting over it, I'm thinking perhaps more people need to get into it. 

In the interest of full disclosure, I worked on the Audience 98 research and I contributed to several Audience 98 reports. After careful consideration of any bias I might have towards my past work, I still think the answer is "yes." 

That's because 16 years later, we continue to successfully apply the lessons learned from Audience 98 in our consulting work with public radio stations and producers. Audience 98 has become especially valuable as we work with people new to public radio who don't know much about the audience and the intersection of listening, values, and giving. It's amazing to see what they can accomplish in radio, in the digital space, and in fundraising once they have that understanding.

Why has Audience 98 endured?

I believe it is because Audience 98 wasn't really a radio research project. It was a research-based blue print for increasing public radio's public service and long-term financial self-sufficiency. Unlike commercial radio research, which is generally designed to help boost the immediate ratings and is expected to have a short shelf life, Audience 98 was designed to provide insights that would stand the test of time. 

What do you think?

Below are a few of the essential insights from Audience 98. Each insight is backed by very specific, actionable research findings to help public radio get more listeners, more listening, and increased financial support from listeners.

I encourage you to spend some time with each of these insights. Ask yourself, "Are these lessons stuck in 1998?" "Are they limited to radio only or could they apply to listening via mobile devices and the desktop?" "Could they apply to public radio generated content that people might read on a mobile device or the desktop?"  "What new information could make them even more valuable to the decisions public radio leaders face today?"

Public radio transcends simple demographics to speak to listeners’ interests, values, and beliefs.
  •       People listen to public radio programming because it resonates with their interests, values, and beliefs. This appeal generally cuts across age, sex and race.
  •       Appeal can also cut across program genres and format types. Different programs and formats may appeal to the same kind of listener as long as they stay focused on that listener’s interests, values, and beliefs.
  •       Changes in the sound and sensibility of programming can alter its appeal. When programming appeal changes, so does the kind of listener it attracts.

Public service begets public support.
  •       Listeners send money to public radio when they rely upon its service and consider it important in their lives.
  •       They are also more inclined to send money when they believe their support is essential and government and institutional funding is minimal.
  •       Public support, like public service, is the product of two factors: the value listeners place on the programming, and the amount of listening done to the programming.
What's your opinion?  Are you over it or into it?  Here's the link to the source material and the entire Audience 98 series of reports if you want more.

Wednesday, November 19, 2014

Is Local News the New Classical Music?

Digital News Guru Ken Doctor presented the opening session today at the public radio Super-Regional meeting in Las Vegas. 

His premise.  Local news presents a great opportunity for public radio.

His logic. There is great potential in the digital space for national news. Jobs are growing in this sector. There's more than $40 billion in digital advertising out there.  And local news in trouble. Revenues are way down. More than 20,000 jobs have been lost. There is a dearth of local reporting and this represents opportunity for public media.

This is the same logic that was used to program public radio in the late 1970s and early 1980s. Public radio was the place to program dying formats.

The problem, as public radio learned by the late 1980s, is that picking up the failed scraps from commercial media does not make for a viable business model.

We often forget that the success public radio has enjoyed over the past several decades came from inventing something new -- a national news, information, and entertainment service delivered locally that created a non-geographic sense of community among  like-minded listeners.  Public radio built a great multi-stream revenue model on this service.  It is the same model being pursued by the start-ups in the national digital new business.

Focusing on local to the detriment of national is to abandon what has made the public radio business model work.

So what does this have to do with classical music?

There has been somewhat of a classical music radio revival in major markets of late. Stations such as WQXR in New York, KING in Seattle, and KDFC in San Francisco flipped from commercial radio to public radio with great success.

These markets are sufficiently large to accommodate the financial needs of classical music radio stations. But most markets are not. That's why they import their classical from syndicated services.
More important, these are brands committed to classical music full-time. They succeed because of their singular focus, their singular appeal.

News is not the singular appeal of public radio.  National and local news can have very different appeals.

This valuable lesson, first learned in the 1980s, still applies today.  Putting too much local content into today’s service is the same problem as trying to have NPR News, Classical, Jazz, Folk, and 8 others types of programming on a single station. It works against the principle of focusing formats based on the appeal of the content. 

If there is a future in local news for public radio, it is establishing a separate service with a separate brand. It is inventing something new that stands on its own. Adding too much local to the current public radio station brand will diminish, not enhance, the brand.