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Why a Higher Profit Percentage is no Guarantee

By Clay Boggess on Oct 18, 2012
Why a Higher Profit Percentage is no Guarantee

Why there's more to fundraising than higher profit percentages

Groups that offer better incentives that motivate their students to sell will almost always out-perform groups primarily focused on obtaining a higher profit percentage. We recently talked with a school who was seeking a 5% increase in their profit percentage. Yet, they weren't interested in offering any additional incentives that would motivate their students to sell more.

This school failed to comprehend that sales performance was more important than profit percentage. Even with a higher profit, the total money they brought in was lower because they didn't do enough to increase student participation.

As a result, they ended up making a higher percentage off of a much smaller gross sale. Instead, they should've focused on ways to make their sale stronger.

Fundraising Profit can be Deceptive

Many fundraising companies are alike. Instead of attempting to offer more effective programs that motivate more students to sell, they continue to market average quality products with the same mediocre price programs. As a tradeoff, they offer a higher profit percentage. This is what schools have come to expect. Yet the result often leads to customers being dissatisfied, students who are disappointed and schools that are content with average sales results.

There's a Price to Pay for a Higher Percent Profit

There is always a price to pay. More profit given to the school usually means a lower quality fundraiser program in the end. Fewer customers will buy due to poor product quality. Plus, older students cease to participate because they become accustomed to how the prize program works. Therefore, less participation and fewer supporters leads to only one thing, lower sales.

Content with a higher Profit Percentage

Some sponsors feel that if they get a higher percent profit, they won’t have to work as hard on the sale. We’ve seen this time and time again. The mentality is, sell the same amount of items but make even more money. Plus, even if they don’t sell as much, they'll still receive more profit from the items that they do sell. This mindset will lead to fewer students participating.

In reality, your students are the engine that drives the success of your sale. They don’t care what profit the school makes but rather, what’s in it for them? So, how can schools make more money? Increase participation by offering a stronger incentive plan even if you have to accept a lower profit percentage. This approach has yielded great results for many schools for years.

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