"Let's try this on price promise lead forms!" - The “Once and Done” Option

Excerpts from Chapter 10 of "The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life" by Uri Gneezy and John List

By the time we got to know Brian, he had honed in on several unique ways to raise money, which were guided by his unswerving use of field experiments. He would send potential donors letters that would “invite” them to donate, or to “save the life of a child.” The messaging in the letters would reflect the learnings from years of field experimentation on direct mail that drove Smile Train’s annual donations up to nearly $100 million per annum.

Brian was intrigued by our ideas about behavioral economics and charity. He wondered if we could help Smile Train outperform the best direct-mail letters that he had personally spent years developing and refining. We decided to set out by starting with Smile Train’s best-performing letter and working to improve it. Though we didn’t know it at the time, we had begun a path toward one of the most interesting, large-scale field experiments we had ever run.

Back in April 2008, we started with a test. We sent letters to 150,000 households. The control group received a standard Smile Train solicitation asking for a donation. We had no special text or slogan on the outer envelope. The experimental group received letters sealed in an outer envelope that read, “Make one gift now and we’ll never ask for another donation again.” The letter told prospective donors they could exercise this right by checking a box on the reply card that said, “This will be my only gift. Please send me a tax receipt and do not ask for another donation.” Donors were given one more option; they could also elect to receive “limited mailings” (which could prove to be a boon for Smile Train in postage savings).

This mechanism might seem a little crazy. Many fundraising experts, manuals, and guides would mock the very idea, because one of the most important tenets in fundraising circles is to develop a so-called donor pyramid.

A visual representation of the types of donors a typical charity has and how numerous they are.

In a donor pyramid, the base includes dedicated donors who will give to your cause again and again. When you find such donors, why on earth would you tell them “thanks for helping our cause this one time! Now, we will never contact you again”?

In the months after the first test in which the mailing was sent out, the donations started to trickle in. And all signs pointed to one thing: our experiment had been a gigantic success. In response to the letters sent out in April, the standard letter raised $13,234 from 193 donors, whereas the “once and done” letter raised $22,728 from 362 donors. In total, the experimental treatment raised much more money and engaged many more donors than the standard letter did. Interestingly, only 39 percent of donors checked the opt-out box.

The “once and done” campaign was so successful that we decided to step back and use it in other field experiments. In total, we sent mail solicitations in five waves to more than 800,000 individuals between April 2008 and September 2009.

Again, we found a dramatic increase in giving under the “once and done” campaign. The “once and done” letters generated a response rate nearly twice as large as the standard letter. It also brought in slightly larger gifts (on average, $56 versus $50). Consequently, the “once and done” campaign raised more than twice as much initial revenue as the standard letter ($152,928 versus $71,566), yielding a remarkable $0.37 per letter mailed.

Of course, if subsequent donations were lower in the “once and done” group, then the conventional wisdom would have been correct. That is, we should not have been urging people to “bug off.” Interestingly, what we found was that the subsequent revenue raised turned out to be nearly identical across the “once and done” and the standard letters.

Combining the revenue from both initial and subsequent donations, “once and done” generated a total of $260,783 compared to $178,609 for the control mailings—an increase of 46 percent. In addition, because of the restrictions on future mailings dictated by checkbox responses, Smile Train also saved mailing costs because they were not continually sending to an uninterested donor.