Purchase-triggered donations is a long name for a simple cause marketing promotion. When shoppers buy a product or service from a business a portion or percentage of the sale is donated to a good cause.
A recent example I came across is this promotion from the makers of 5-Hour Energy. Living Essentials, the marketer of 5-Hour Energy, has released a new pink lemonade flavor that benefits the Avon Foundation for Women. Avon will receive five cents for each bottle sold and is guaranteed at least $75,000.
You can check out other examples of purchase-triggered donations on my Pinterest board.
Here are a few of the common questions I get about purchase-triggered donations.
Q. Who donates the money, the company or the customer?
A. The company makes the donation on behalf of the shopper that made the purchase. But let's be clear: it's the company that makes the donation.
Q. What's the incentive for businesses to participate?
A. In addition to being a great way to raise money for a cause, businesses are banking on selling more products or services because of the tie-in. Take the example of "Pinktober." During October you see all sorts of pink-ribbon products on store shelves. There's a reason why pink is so omnipresent: it sells. During October, sales go up when products and services are connected with a breast cancer cause. Yes, companies are doing the right thing and helping a good cause. But purchase-triggered donations are why they call partnerships between a nonprofit and a for-profit cause marketing not corporate giving. Businesses want to help causes AND sell more stuff.
Q. Does the business increase the price of the product or service to cover the donation?
A. Not that I've seen. If they did, the donation would be coming from the shopper, not the company. As with point of sale programs, the business would be handling the donation, not making it.
Q. How do I keep track of how much is donated?
A. In a local program at a store or restaurant, you'll use the businesses' point of sales system to track donations. They can use product's barcode or dedicate a button on the register to track sales. To make it easy, some businesses will host a one-day event and donate a portion of all sales to the cause. For example, on World Arthritis Day on October 12, Massage Envy donated $10 from every massage and facial to the Arthritis Foundation.
Q. Are purchase-triggered donation programs lucrative?
A. For national charities such as Komen for the Cure and Product Red, purchase-triggered donations raise millions of dollars from Kitchen Aid mixers and Starbucks tumblers. For local nonprofits with small business partners, purchase-triggered donation programs are a good fundraiser, but they finish a distant second to point of sale programs (e.g. pinups). In a good pinup program, just about every shopper is asked to give at the register. But if a party store is donating 100% of the sales from balloon sales to a local children's charity you'll be raising money from a smaller pool of shoppers that are only buying balloons. Fewer prospects means fewer donations.
Q. How can I ensure a successful program?
A. First, the business and nonprofit both have to promote the partnership to shoppers and supporters. Special packaging - such as the bright pink wrapping on 5-Hour Energy bottles - and signage help. Second, negotiate an upfront commitment from the business. This is common with purchase-triggered donation programs. The makers of 5-Hour Energy, for example, are guaranteeing the Avon Foundation at least $75,000. This ensures that even if the promotion isn't a success, the charity will receive something from the company, which has used its name and leveraged its brand. This is a good segue into my final point...
Q. What should I know if I'm a small, local nonprofit?
Branding matters. If your nonprofit isn't well known to consumers, a purchase-triggered donation program might not be the best option. That's why 5-Hour Energy is supporting Avon Foundation for Women. Consumers know and respect Avon's work and millions have participated in their walks. One last point: how consumers feel about different causes may explain why 5-Hour Energy chose Avon and not Komen for the Cure, which has been mired in controversy this year.
You don't have to be national charity and known to millions of consumers to be successful with purchase-triggered donation programs. If your brand is strong locally (e.g. I think of The Jimmy Fund here in Boston), or if the product you're receiving support from is already a great seller (5-Hour Energy is part of a $1.3 billion industry), you'll do well. Just remember that these programs are called cause marketing for a reason.