Price Testing – Everyone Wants a Good Deal
By Carl Bloom
Marketers repeatedly make the mistake of thinking too logically. For example, that buyers of high ticket merchandise or donors of large contributions can always be counted on to pay a higher price or write a larger check for a contribution.
The truth is everybody wants a good deal or will go for a discount – no matter who they are or how much money they have.
CBA conducted an interesting test of this premise. For a nonprofit client we took a group of donors and split them into thirds based on the size of their most recent gift – basic or small, middle sized and relatively large. We also created a matrix of “asks” for an upcoming additional gift test consisting of asks ranging from a small gift, a step up to a moderately larger gift and third, a relatively large gift, but appropriate for the group.
The theory was, if we suggested all three asks to all three donor groups, there would be a correlation between the “size of the donor’s previous gift” and the current one being suggested. We believed that the larger the gift request (even for people who had been giving similar sized gifts) the lower the percent return, but revenue would still be higher from large gift donors.
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