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February 04, 2009

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Adrian Salmon

Hi Jason

Agree in principle, but it's not quite that simple in my view. It's about Income per Decision. And that means a constant balancing act of participation rate vs average pledge - a "Phonathon Dialectic", if you like, resulting in the synthesis of increased total income. Apologies for slaughtering Hegel!

So if you have a segment of 1,000 people, you ask for $500 and get an average pledge of $250 from 5% of them, you have total income of $12,500. Income per decision of $12.50.

But if as a test you drop your ask level to $250 to that segment and as a result get 10% of them pledging an average of $150, you have raised $15,000. Income per decision of $15, double the pledge rate and thus a much happier call room, which will feed the more difficult calls!

Of course it only works if the Income Per Decision *does* turn out to be higher. If in the same scenario we had dropped the ask level to $200, got the same uplift in pledges, but an average pledge of only $100, it wouldn't have worked - our Income Per Decision would only have been $10 as opposed to $12.50. So happier callers but not happier managers!

Hope that makes sense. And of course it's an iterative process of testing to find the sweet spot between average pledge and pledge rate - you have to be prepared to test at least one segment to failure to be 100% sure.

Adrian Salmon
Annual Fund Manager
University of Leeds
United Kingdom

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