Raise More Money from Businesses with Purchase-Triggered Donations

5 Hour Energy Pink Lemonade 172x300 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.

(Re)Defining Cause Marketing

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Last January I wrote a post on What is Cause Marketing? that got a lot of great feedback. Over the past year I've gone back to that post many time and reread the comments again and thought about how I was defining cause marketing.

I felt I had the first part right.

a partnership between a nonprofit and a for-profit for mutual profit

What I thought needed redefining was just what it encompassed. In last year's post I wrote that cause marketing involved three types of programs: point-of-sale, percentage-of-sale and licensing.

This year, I'm much more open to including most activities between a company and a cause. They include:

Point-of-sale. When a cashier either solicits a shopper for a donation (active cause marketing) or signage is prominently displayed at the register to encourage the shopper to make a gift (passive cause marketing) that's point-of-sale. Unless you're completely new to my blog, you know that POS, in the form of pinups, is my bread-and-butter program. But if you are new here's a primer.

Purchase or action triggered donation. When a consumer buys a product or service (like a latte at Starbucks on World Aids Day) a donation (5 cents) is made to a cause (Product Red) that's a purchase-triggered donation (I think this is a better describer of what happens when a shopper buys a cause product than the "percentage-of-sale" tag I used last year). Sometimes instead of a purchase, a donation is made when the consumer performs some type of action. For example, Macy's donated a dollar the Make-a-Wish Foundation for every letter to Santa dropped into their special letter boxes at Macy's stores.

Licensing. This is when a company pays a fee to use a nonprofit’s brand on its product. Licensing may include a certification process by the nonprofit before the company is allowed to use the logo. A longstanding licensing pact is Arthritis Foundation’sEase of Use Commendation for the Advil Caplets Easy Open Arthritis Cap. Cause marketing licensing is practiced by the only the biggest causes (e. g. Komen for the Cure, American Heart Association) and is not a tactic for your average or local cause.

Message Promotion. This is when a business puts its resources to work to promote a cause-focused message. David Hessekiel at Cause Marketing Forum has a lot of great examples in his Halo Award Archive.

Employee Engagement. This is when a company leverages its workforce for social good. I think of Home Depot's Partnership with KaBOOM! to build 1000 Playgrounds in 1000 Days, which involved nearly 100,000 Home Depot volunteers.

Digital Programs. The web, social media and especially location-based services will dramatically impact cause marketing and change the way we execute the above tactics. To leave this out is to leave out the future of cause marketing and how cause and companies will partner in the years to come.

I still don't think the "marketing of causes" or sponsorship are cause marketing. (Jocelyn Daw told me recently that while sponsorship is when the cause puts its resources to work for the company, cause marketing is when the company goes to work for the cause. I like that!) But there are some interesting and creative ways to integrate cause marketing with sponsorship.

Nor is cause marketing cause branding or corporate social responsibility, although it is a subset of the two.

Finally, cause marketing is not philanthropy. While it has philanthropic aspirations and goals, it's better described as marketing, and, in some ways, a business.

Those are my thoughts on cause marketing for January 2011. What are yours?

[Update 1/21/11: In the comments be sure to check out Jocelyn Daw's comments on how to distinguish traditional marketing from cause marketing. She makes it quite clear. Also, she outlines the 4 P's of cause marketing: Partner, Purpose, Passion & Profits.]