There are now, as of last week’s Joe Biden announcement, 20 people seeking the nomination as the Democratic candidate for the US presidential race. Mr. Biden joined the field leading the polls ahead of the previous front runner, Bernie Sanders.
Bernie is a self-professed grass roots candidate– stating that, given the size of the field, “the candidate who comes out on top will be that candidate which has a very strong and effective grass-roots movement.”
And he’s asking for a very specific donation amount: Twenty-seven dollars (watch the official rallying cry, here).
He’s said that $27 is the average value of his donations. There’s speculation as to whether or not this is perfectly accurate, but either way, the frequency with which he makes the claim has been noted, even by Saturday Night Live.
There may be much more to the specificity of this request. It’s a classic example of using price to increase share-of-wallet.
The value tells a story
The price you set is, among other things, what you believe your target is willing and able to pay. It can also tell a story about you, your brand, and your beliefs.
“The cry of “27 dollars” was not only the campaign’s claim to moral superiority … [it] was also integral to the campaign’s argument that progressive policies could not advance without purifying how politicians fund campaigns.”
Having your preferred donation amount be a part of an anti-establishment rallying cry is a smart move. It’s a very specific call to action.
Volume is king
While donations to political parties are not uncommon, contributing a significant sum is.
In 2018, only 0.47% of Americans contribute more than $200 to campaigns and those donors contribute about 71% of all funds for federal candidates, PACs, parties and other groups. Only 12% of Americans say they have made donations in the past year – and those donors are more likely to be Democrats.
Getting a larger proportion of the 99.53% of Americans who don’t give large sums – or better, getting Americans who’ve never given anything – to give to the Sanders campaign is a volume play. It’s relatively affordable and it’s an actionable way to participate in a popular movement.
A couple bucks more
The trick with growing share of wallet is to get those who’ve already decided to buy to spend a wee bit more.
While the Sanders donation form includes a lower amount ($3, which shows openness to truly grass-roots donations), in practice, if you’re a potential donor and you’ve made it to the contribution site, it’s hardly worth punching in your credit card details for that low of an amount. It’s virtually negligible. The next price option ($27) is the sexy, storied one.
Other candidates also keep share of wallet and their relative donation request value in mind. Donald Trump’s campaign recommends no less than $35. Pete Buttigieg and Elizabeth Warren ramp up to $25 in their first three donation levels. Joe Biden came out of the gates asking for much more, recognizing that he’s the front runner and likely won’t win in a who’s-more-grass-roots tit-for-tat. Straight up volume is not his best approach.
That said, his lowest suggested contribution is $20.20 (a play on the election year). That extra $0.20 per donation could add up over the length of the campaign. For what it’s worth, he “raised $6.3 million in the 24 hours since announcing his presidential campaign….[and] more than 96,000 people sent money with an average contribution amount of $41. Of those who contributed online, 97 percent gave less than $200.”
Beyond getting bit of additional change from every donor, getting them to also grab a bumper sticker, or a magnet, or a t-shirt (also $27) would increase share of wallet. These, again, need to tell a story about who the candidate is (beyond what it says on the chest). The tees are “union made and printed in the USA”. The China-made “Make America Great Again” hats were a PR flub, at very least – and are now made in Southern California.
You need to be their first (and ideally, their only) choice.
As a candidate, being the donor’s first choice is essential. Better yet, you want to be the only one they’d ever consider backing.
If they’re not passionate about one candidate and one candidate alone, they’re unlike to contribute. For every other candidate that a potential donor loves, the value they’d contribute to either candidate diminishes.
Harvard Business Review did a really interesting article in 2011 regarding consumer loyalty and share of wallet (seriously, it’s worth a read – very interesting). In short, they calculate (yes, there is a formula) that relative rank is more important than anything, followed by number of brands (or in this case candidates) that are in the decision set. A brand’s focus on likability or customer satisfaction, for example, when measured in a vacuum, is relatively useless (i.e. a customer satisfaction score of 85% is great, unless you have three direct competitors who are over 90%).
What to watch for…
With 20 candidates in the race, the odds of being a run-away favourite are slim to none. I’m not a political scientist, by a long stretch, but from a share of wallet perspective, I’ll be watching a few things closely.
First, with so many candidates running, will the HBR theory hold? If there’s too much to choose from and not enough to differentiate each candidate, will overall donors & donations decline?
Also, if the lowest of Bernie’s contributions rises to closer to $27, his average contribution will increase. Will the public messaging around the average adjust? (Note: we may never know this for certain. From my understanding, “information about donors who give $200 or less is not required to be disclosed on FEC reports…[so] campaigns can keep private the number of unique donors).
I’d be interested to see how he spends all that cashola. In a recent interview with the New York Times, Mr. Sanders was quoted saying: “I’m not going to tell you that money is not important — we’re going to raise a great deal of money, but at the end of the day, I believe now — and I’ve always believed — that grass-roots activism is more important and more effective than 30-second television ads.”
We know that most money raised in politics is spent on advertising (and a large proportion of that advertising spend is still in TV). If he’ll not be spending it on 30-second television ads, what will he spend it on, other than 5000 “house parties” nationwide? He’s doubling down on his grass-roots approach – which will be very interesting to watch.
If Mr. Sanders becomes the Democratic candidate and faces the incumbent who also has a broad, populist appeal (i.e. Mr. Trump, the “candidate of the working class”), will the overall contribution matter? Will the number of Americans who contribute increase? Better funded candidates win the vast majority of elections (ex. they won 91% of the time in the 2014 congressional midterm elections) - would this still hold true? Finally, and most importantly perhaps, if there are two grass-roots candidates, popular with the masses, will voter turn-out increase?
Only 18 months left to find out…