Online Charity Auctions: A Win-Win Business Strategy
By David Yaskulka
Can auction sellers help make the world a better place while helping their businesses?
Last week I attended a seminar by Greg McHale, founder and Executive Vice President of cMarket (http://www.cmarket.com), which has helped 850 organizations run their own charity auctions. Greg explained that while Americans gave $250 billion last year to charity, they spent over $7 trillion on household budgets.
Enlightened self-interest can move mountains, and for-profit companies can help nonprofits tap this market. For insights, I spoke to some colleagues who are doing just that.
eBay Powerseller and Trading Assistant Adam Hersh (http://www.adamhershauctions.com) sells posters. Adam told me, "I always try to keep a charity auction running, even if I'm not doing a campaign for a client. But your focus should be on doing something good, not on just raking in the dough."
Adam and his team spent five months running a campaign for Big Brothers and Big Sisters, helping them sell truckload after truckload of non-clothing donations on eBay (stuff they were previously liquidating by the pound). While they didn't make any money doing it, Adam explained that such campaigns have attracted tremendous media attention to his business. One specific result: the Korean government, "wowed" by the campaign's large-scale success, has since become one of Adam's largest clients.
According to Adam, "If you're an eBay expert, there's no better way to help a nonprofit than to leverage your skills and take a huge hassle off the charity's shoulders."
Jenny Kompolt, founder and Chief Creative Officer of the online auction agency bearing her name (http://www.kompolt.com), has helped clients such as Warner Brothers, Mercedes-Benz and Jay Leno raise millions for charity through high-profile eBay auctions. Jenny explained that, "if you can have a regular eBay presence, and pepper that with something high profile that benefits a nonprofit, then you have a real win-win." According to Jenny, eBay is a tremendous platform for companies to "drive awareness to your offerings, build your brand, and also generate revenue for a favorite nonprofit."
That sentiment was echoed by Greg McHale, who said, "We've helped businesses increase penetration, move inventory, enter new markets and associate their brands with important, strategic causes - all while raising millions of dollars for charity." Greg's company cMarket has generated over 100,000 bids and millions of new dollars for charity at the same time.
Our experience at Blueberry Boutique is that auctions designating 10 percent for charity (such as our current campaign for the National Center for Missing and Exploited Children, http://www.missingkids.com) have higher selling prices and conversion rates than the exact same non-charity items.
Sean Milliken, Executive Director MissionFish (http://www.missionfish.org), which is the provider of eBay's charity auction program, confirmed that early research validates our experience at Blueberry.
"Distinctive features such as the charitable ribbon icon, the enhanced search functionality, the placements on GivingWorks' and MissionFish's portals have resulted in some pretty fabulous results for sellers," Sean said. Specifically, "eBay's GivingWorks items average 40 percent higher selling prices and 50 percent higher conversion rates than like items in the eBay marketplace." New bidders and bidders willing to bid more for a good cause are classic benefits of cause marketing.
The results are very early (and it is still difficult to measure apples to apples, and cross tab based on the percentage donated), but this is promising.
Customer loyalty is another significant benefit of charity auctions, but the trick is to choose the right cause for your audience.
Tony Cicalese is owner of Wegotthebeats (http://www.wegotthebeats.com), a leading seller of dance / R&B CDs on eBay. Tony built charitable giving into his business model from the beginning, donating roughly 10 percent of profits to Aids-related charities. Corporate America averages under 1 percent of profits for charity, while Wegotthebeats and companies such as Patagonia (10 percent), Target (5 percent) and Ben & Jerry's (7.5 percent) built their brands and customer loyalty by giving much more.
According to Tony, "Aids affects the gay and African American communities who are my base customers. So the charity component encourages customer loyalty and repeat business. And all things being equal, if someone else is selling the same thing, it makes bidders more likely to buy from me."
Sometimes you can't even predict the far-reaching benefits charity auctions can yield. Shelly Hudson, VP of Marketing for eSavz (http://www.esavz.com), which provides software for consignment, charity and fundraising sellers on eBay, says, "For a drop-off store, selling for charity helps you get out and see people. And because we help the hurricane victims and others, people are more open to making our business successful, because they know our hearts are in the right place."
Shelly relayed a fascinating recent example. "We sold a flag that flew over the US Capital donated by US Representative Edward Whitfield (Kentucky) to help Katrina victims. That gave us a chance to talk to him about small businesses, and opened his ears to addressing the problems sellers would face from an Internet sales tax."
Shelly concludes, "Doing charity auctions really pays off. Do it for the right reasons and you'll be blessed because of it."
About the author:
David Yaskulka is CEO of Blueberry Boutique, the leading shirt and tie auction seller (http://www.blueberryboutique.net), and is principal of Blueberry Consulting, providing ecommerce marketing and strategic philanthropy services (http://www.blueberryconsulting.com). David also serves as Marketing Chair of the Professional eBay Sellers Alliance (http://www.gopesa.org), is quoted widely in the media, and is featured in five books. Previously, he served as Chief Marketing Officer for PR and ad agencies and leading nonprofit organizations. His favorite sales on eBay have benefited the National Center for Missing and Exploited Children, the Disabled Online Users Association, the Organic Exchange and other worthy charities. You can contact him at david (at) blueberryboutique (dot) net.
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