Who Should Pay for Cause Marketing Expenses?

This story in the New York Times, Checking Out, and Donating Too, got me thinking on who should and does pay cause marketing expenses for register programs--like those at Safeway supermarkets described in the article. Lucy Bernholz from Philanthropy 2173 asserted "that embedded giving [Lucy's name for cause marketing] was largely unregulated, and that some retailers kept a percentage of donations as a 'finder’s fee.'"

I was surprised by this and tweeted Lucy for details. She replied publicly:

quote was misattributed. However, co's that use $ raised to cover costs of running these campaigns are basically doing this

Companies shouldn't be keeping a portion of the monies raised to pay expenses. But the fact that expenses are paid out of the revenues raised and not from some treasure chest unearthed for just this purpose shouldn't be surprising to anyone.

None of the retailers I work with pay for the printing of their pinups  (and maybe register signs and few other minor supplies). This usually consumes 5% to 8% of the revenues raised. At the end of the program, the company forwards me a check for all monies raised and I pay the bills. I've never heard of a company withholding cause marketing dollars or charging a "finder's fee" to pay expenses. If the company has purchased something that my nonprofit agreed to pay for, we reimburse them.

I don't require companies to pay expenses for two reasons.

First, I never would have recruited so many partners if I had insisted they pick up the expenses for a cause marketing program. This is especially true for the local and regional companies I work with that don't have deep marketing or charity budgets. They are happy to help, but when you add a price tag to helping they'll balk. But as you'll see, just because they are doing something for free doesn't mean it isn't valuable or doesn't come at a cost.

Second, I subscribe to this basic truth of cause marketing: the most valuable thing a retailer can do to help a cause is ask its customers to support it.

It's very generous when a company pays the expenses of a cause marketing campaign. But requiring them to won't win you any partners, and the upside of a register program is just too lucrative to insist on it.

When can you ask companies to pay expenses? When they offer and when your cause is big enough to turn away businesses that won't.

I haven't been able to confirm it, but I've heard that causes like St. Jude's Children's Research Hospital requires some partners to pay upfront "administrative fees" to cover expenses that ensure 100% of the money raised goes to the kids.

But what does the shopper at the register think about cause marketing expenses?

I'll hazard to say that they know fundraisers of all kinds have expenses. Do they really think the expenses from that charity gala they attended last night were paid by one generous donor, or supplied by leprechauns laden with gold at the end of the rainbow?

You might be thinking that while the consumer makes the donation in a cause marketing program, the retailer reaps marketing benefits without paying anything. Shouldn't they pay something? True, they don't help with expenses, but they do absorb a cost. The company donates its employees to the effort and their time at the register asking shoppers to support the cause.

[Remember, the retailer doesn't reap any tax benefits from a register program. They are merely handling the consumer's donation and can not claim it as a deduction.]

Shoppers only have so much patience and time at the register to answer questions from an already harried cashier. They want to pay for their stuff and leave. And if a cashier is asking the shopper to support a cause what's the business losing by not asking:

"Would you like to sign-up for our credit card today?"

"Do you need batteries with that?"

"There's 15% coupon at the bottom of your receipt for your next visit. Will we see you again soon?"

So, we're back to where we started. Who pays for cause marketing expenses? The answer for me is the company if they want to, but they provide enough value to be excused. Besides, you'll recruit more partners and raise more money if you don't look the other way and whistle when the cause marketing bill arrives. Would you rather raise more money or get your expenses paid? Do the math.

That leaves the generous consumers at the register to pick up the tab. They know that fundraising has expenses. And according to the The 2010 Cone Cause Evolution Study, 81% of Americans prefer point-of-sale programs (i.e. register programs, pinups). What they probably don't know is just how lucrative and cost-efficient register programs are for causes.

Cause marketing is an easy and cost-efficient way for consumers to donate to their favorite causes while they shop. The cost to companies is a modest investment as they earn a halo that has its own rewards. And the gain to causes is hundreds of millions of dollars each year.

Regardless of who's paying the expenses on cause marketing, its return-on-investment is something we can all take credit for.

Cause Marketing Case Study: St. Jude & Williams-Sonoma

If you follow my personal blog you know that my wife is a budding baker and has fattened me with cookies, cakes, muffins and scones. So when her birthday arrived the middle of this month I made a trip to Williams-Sonoma at Boston's Copley Place to pick her up a marble pastry board.

My timing was perfect because the store had just kicked off Thanks and Giving to raise money for St. Jude Children's Research Hospital. Thanks and Giving has been a significant cause marketing program for St. Jude since 2004, raising tens of millions of dollars for the hospital.

It's also greatly increased St. Jude's visibility with holiday consumers. Cone's Holiday Trend Tracker has Thanks and Giving in third behind the Salvation Army's Red Kettle and Toys for Tots, which combined have been part of the holiday season for over 150 years.

St. Jude has a lot to be thankful for.

Thanks and Giving is primarily a register program, which means cashiers ask shoppers to donate a buck or more. You've might have seen the green pinups in stores that people can write their names on. I saw them at CVS this weekend.

But Williams-Sonoma ain't no CVS so there were no pinups. There wasn't even any signage, except for these register signs, which I'm sure nobody read. What Williams-Sonoma did have is well trained, motivated cashiers that asked every shopper to donate. My cashier told me the kitchen supply store hoped to raise $10 million, an amount, she said it fell slightly short of last year.

I visited the store twice. On both occasions they asked everyone at the register to donate. They also left it up to shoppers to decide what they wanted to donate. I donated a buck, but the woman beside me donated ten.

The cashier said that a lot of shoppers were rounding up their purchase to the nearest dollar or ten. With each donation, cashiers also rang a little bell in celebration. Nice (because everyone knows every time you hear a bell ring an angel gets its wings).

Here are the key takeaways from Williams-Sonoma's execution of Thanks and Giving.

The ask is everything. No signs, pinups, posters, buttons, fliers. The most important thing is the cashier asking the shopper to give. While every register at the store had credit card machines with the Thanks and Giving logo on it, they don't get reach into shoppers' wallets. Technology informs, it facilitates. It doesn't persuade. That's when you need a human being asking the question, "Would you like to donate to St. Jude?"

Retail is retail. I admire Williams-Sonoma for doing register programs. So many retailers dismiss cause marketing because they think their clients are too upscale or it won't mix well with their brand. Retail is retail. If Williams-Sonoma can do register programs (and Brooks Brothers too, which has raised $3 million for St. Jude) anyone can.

With upscale stores, leave the ask amount open. I've written before that I think limits in cause marketing work, but in some settings, like upscale stores with affluent customers, you may raise more by leaving the ask amounts open. I'd love to hear from someone else that has more experience working with upscale retailers on cause marketing programs.

Trained staff gives you a big edge. This is another topic I've written about. What I saw at Williams-Sonoma supports that trained and motivated staff can offset the hit you'll take from dips in foot traffic. We all want department and grocery stores as cause marketing partners because they have lots of foot traffic. But you shouldn't write-off stores with less foot traffic if they have well trained and motivated staff. Yes, they see fewer customers, but they'll get more yeses.

Brand, brand, brand. I wish I had asked, but I wonder just how many shoppers knew anything about St. Jude beyond the warm, fuzzy, kid-friendly brand that envelopes it? I wonder how many could tell me that St. Jude is in Memphis? That it had just 78 beds?

No matter. The name itself warmed the heart and loosened the purse strings. That's the kind of consumer experience we should all be striving for.

Cause Marketing Success may be as Close as Your Next Oil Change

Our friends at Cone this week shared that Jiffy Lube had already reached more than 65 percent of its $1 million national fundraising goal for the 2010 Maintenance Partners for Life campaign. Thanks to customer support at the register for a $3 savings book, the fast lube franchise has already raised $658,655 for the American Heart Association’s Go Red For Women movement in just three weeks, as of February 22. More than 1,700 Jiffy Lube locations across the U. S. are participating in the campaign that kicked off February 1 and runs through March 14.

I love this program because it highlights a few key points I always talk about on my blog.

Point-of-sale works. Pinups, savings books and register programs in general are not sexy or cool but they can raise a boatload of money.

Combine cause with coupons. I'd have to ask Cone if they track this info, but my team and I are strong believers that cause combined with savings and coupons at the register give shopper that added incentive (and just reward) to make a gift.

Fast lube businesses are great partners. I've written all about them here. But you need to set realistic expectations. Here's why.

Locations + Foot Traffic = $$$. The fast lube companies we've worked with average 50 to 60 customers a day. That's a not a lot of traffic compared to say a supermarket, which can checkout 100 customers or more an hour. Fewer customers means fewer asks at the register, and fewer asks means less money for your cause. Fortunately, Jiffy Lube, like the other fast lube businesses I've worked with, has committed employees, skilled sales people and a whopping 1,700 locations to drive fundraising.

Lots of locations is why Jiffy Lube will raise a million dollars  for AHA. Lots locations AND lots of foot traffic is why Chili's raised $6.4 million for St. Jude. Either way, both are great partners. But you should know how to measure what you can expect from each.