Why did SwipeGood fail?

I’ve written about SwipeGood in the past; I was impressed by the simplicity in which they allowed consumers to set aside a little money for charity. But SwipeGood will be shutting its doors soon, evidenced by this message they sent to their users recently:

Hey SwipeGoods,

It’s with a heavy heart that I say SwipeGood is shutting its doors soon. No new users will be able to sign up. However, existing users will be able to log into their accounts and see their previous donations for several months.

While you may not be able to give your change, please keep up the great support of organizations such as Room To Read by giving to them directly at http://www.roomtoread.org/.

Team SwipeGood

So why did SwipeGood fail? It wasn’t for lack of exposure. They had plenty of coverage, from Mashable, TechCrunch, Simon Mainwaring, Good.is, and Fast Company, to name a few. Backed by the well-connected incubator Y Combinator, endorsed by Ashton Kutcher (right on the home page, no less), and founded by what look like some pretty bright guys, SwipeGood certainly had the financial and human capital needed to get off the ground.

An easy answer might be that their business model wasn’t well thought-out. But I think it was. Here’s some simple math: Let’s assume that the average user charges their credit card 40x per month. Assuming an average “round up” of $0.50, that would equate to $20 of monthly donations. SwipeGood takes out 2.5% for credit card fees and 5% for operating costs, so 5% x $20 equals $1. Each user would be worth $1/month, or $12/year. Now, let’s make some assumptions about SwipeGood’s operating costs. I counted three employees – let’s pretend that the cost of salaries, taxes, etc. for each is $100,000, for a total of $300,000/year. Now let’s assume another $200,000/year for things like office space, legal work, servers, insurance, etc. SwipeGood would need $500,000 each year just to cover costs. Now let’s give them a meager 10% profit margin; they’d then need to rake in $550,000 each year.

Have you done the math already? With those assumptions, SwipeGood would need 45,833 users to make a small profit. Hardly an insurmountable user base to achieve. That is, of course, assuming  you have a compelling product. Obviously it wasn’t, so here are my thoughts as to why.

Getting users to try something new requires one of two things: it must allow them to do something they already do, but cheaper, or it must allow them to do something they want to, but can’t. SwipeGood did neither.

To the first point, SwipeGood actually made it more expensive to give to charity: by taking a 7.5% cut, SwipeGood’s model was necessarily more costly than giving directly to a charity. At best, a user might know that non-profits have to pay credit card fees too. But that doesn’t mean he’d be willing to pay additional fees on top of that. At worst, the user assumes that all of the 7.5% cut is money that a non-profit would have received otherwise. Regardless of what the user thinks, he’s not left feeling any better in either situation. Witness another new fundraising startup: rally.org, whose 4.5% fee charged to non-profits covers everything, including credit card fees. It will be interesting to see if they fare any better. At least they are up front about the costs – it is listed right on the homepage, instead of buried in the FAQs on SwipeGood’s page. Anyway, SwipeGood hardly made it cheaper to donate.

To the second point, the giving experience through SwipeGood was neither new nor better. Donors can already sign up for recurring donations nearly anywhere else, so this feature wasn’t novel. But here’s the real kicker – SwipeGood offered no real way for users to build relationships with charities. Instead, it was static experience – it could never improve, regardless of how much a donor gave. To me, the fact that SwipeGood didn’t allow users to further connect with charities reflects a deep misunderstanding of why people choose to donate at all. Giving isn’t a purely mechanical action that one simply turns on and off. It’s an emotional, altruistic action that requires real human connections to work well. A non-profit isn’t necessarily successful at fundraising because it offers the easiest donation process on its website. Instead, successful charities know how to build relationships with their donors, and they are able to create a bond between the giver and the receiver. They know how to thank donors for their support. And they know how to make them feel good about the experience so they continue to give. SwipeGood offered none of this, and left users with a sliver of the giving experience that they deserved and could easily find elsewhere.

SwipeGood wouldn’t be a bad idea, IF it were part of a larger service that cultivated relationships between donors and charities. In that case, it could be a GREAT idea. But on its own, it failed to provide the human connectivity that fuels philanthropy at its core. Hopefully the SwipeGood team will come up with something more compelling next time around – at least their intentions are in the right place.

What do you think – what could SwipeGood have done to create a more engaging giving experience?

When Daily Deals and Causes Combine

This blog is all about finding innovative (and easy) ways for people to engage in philanthropy. Here’s a no-brainer – daily deals site Living Social has started to offer cause-related deals, in which your donation is doubled by a corporate sponsor. The current offering is for Marine Toys for Tots:

Today, we’re offering an opportunity to express our gratitude for all we have by helping those who have less. Donate $5 to the Marine Toys for Tots Foundation and Toys”R”UsHasbro, and other corporate partners will donate $5 worth of toys for a $10 total contribution up to $1 million.

It’s a great start, and an offering I hope Living Social will continue to pursue. Next time around, here are a few suggestions to make these cause-related deals even more compelling:

  • Offer users a choice. Marine Toys for Tots may not appeal to everyone, so why not take a note from PinkDingo and at least give donors a choice of a few charities?
  • Don’t exclude retail. SocialGoodies understands this. Why not set aside some of the savings from a traditional retail daily deal to causes?
  • Give some reward. Give buyers of cause-related deals some credit for their donations, like early access to deals, or a special “thank-you” from the charity. Something to make your cause offering more compelling than other ways to give.
  • Make them easy to find. If you don’t have the email offer, finding a cause-related deal on Living Social’s site is a bit of a chore. Look hard enough and you’ll find it under “Families”. Shouldn’t there be a dedicated section for these?
The exciting thing about cause-related daily deals is that they start to blur the line between pure philanthropy and pure retail. If companies find that they can better attract and engage customers by adding a cause-element to their retail offerings, we should start to see even more innovation in this space. Offers like this from Living Social are (hopefully) just the tip of the iceberg.

What do you think about cause-related deals? How else can they be improved, and who has the best offerings?

Ask or Engage?

I’m starting to realize how important personal relevancy is when charities ask for money. I believe that a donation appeal from a brand that hasn’t made itself relevant to donors would have to be 10x as effective as an appeal from an engaged brand, in order to have the same result.

Case in point: I received two solicitation letters in the mail this week – both of them mediocre. One was from the Leukemia & Lymphoma Society (LLS); the other from the Appalachian Trail Conservancy (ATC).

The letter from the LLS had a nickel taped to it (what?) and some cheesy Christmas-themed return address labels. I’m not sure what the tactic was, but I think that the money and labels were supposed to make me feel obligated to help the LLS in return. Maybe that’s some tried-and-true tactic in the direct-mail world, but to me it just felt manipulative.

The letter from the ATC wasn’t much better. It relied mainly on a four-page, single-spaced letter; who has team to read that? And despite the fact that the Appalachian Trail is one of the most beautiful parts of the East Coast, the appeal was surprisingly lacking of photos. That’s like dating a supermodel but only telling your friends how your girlfriend is a really safe driver. Kind of missing some key points.

So what did I do with each letter? I threw the one from the in Leukemia & Lymphoma Society the trash and put the nickel they sent me in the change bowl. Meanwhile, I wrote the Appalachian Trail Conservancy a nice fat check. Why such different treatment? It all comes down to relevancy.

I’ve hiked every foot of the 2175-mile Appalachian Trail, so I have plenty of personal interest in keeping it protected for future hikers. I’ve even visited the headquarters of the ATC, and I know first hand how important their efforts are. And while I’m sure the LLS does great work, I know no one whose been affected by those diseases, so I don’t have nearly the same connection.

The ATC could have sent me a cardboard postcard asking me for money, and the LLS could have delivered as glossy, well-produced report (free of money and address labels) and my actions wouldn’t have been much different. So I don’t think that these organizations are even looking at this the right way. Instead of coming up with fancy ways to mail me junk I don’t want or won’t read, these organizations need to focus their efforts on getting people engaged with their work – well before the solicitation letters go out. Anything else is probably just wasted effort.

What do you think? Should charities go straight for the ask, or should they focus on engaging people with their brands and their programs first?

3 Ways Zynga’s CastleVille Promo Could Integrate Causes Better

Zynga, the heavy hitter in the social gaming space, announced a new cause-promotion last week for one of their new games, CastleVille. While Zynga should be commended for making efforts to support causes through its marketing, they’ve fallen short of integrating charity into the promotion as well as they could have.

Here’s how the promo works: visit the CastleVille page on Facebook and “Like” the game. Then, select one of three non-profits to whom you’d like to designate a donation from Zynga. If CastleVille reaches 5 million “Likes”, then Zynga will donate $100,000 to these causes. The non-profit with the most votes will receive $40,000, while the other two each receive $30,000.

Again, it’s great that Zynga has decided to integrate charitable support into the promotion of a new game. But they could have done a much better job on making the integration with causes more meaningful. Here are three ways they could have turned a single into a home run:

1. Integrate with the product: Three causes are presented for voting: clean water (via water.org), disaster relief (via Direct Relief International), and Education (via Save the Children). Try to find any relationship with the game, which is about exploring a medieval world with your friends, and you won’t find much of a connection. Not that there has to be an overt link (is there even such a think as a medieval-based non-profit?), but some attempt to connect the two would have made the causes much more relevant. For example, are there characters in the game that Zynga could have associated with each non-profit? Even a loose connection would have been better than nothing at all; instead, the causes feel tacked on to the promotion, without much thought.

2. Provide context: You might have expected that Zynga would have provided some further background information about the three non-profits they’ve presented. But there’s almost nothing to provide any context around these causes. For clean water, for example, all users see is a generic water icon, which turns into a water.org logo when the moused over. Users don’t need a complicated set of information to read through, but some additional background would have added some real meaning. How about a picture of the people who are being helped? Or maybe a tidbit of information about where in the world the money is being used? Taking a page from Donorschoose.org or GlobalGiving.org would have made the causes much more real.

3. Allow users to step it up: Liking content on Facebook is a sure-fire way to allow users to show their support of something. Great. But what if someone really wants to see that $100,000 get donated? Short of spamming their friends to Like the CastleVille page, there’s not much else a cause-advocate can do. So how about allowing users to buy more Likes buy pre-purchasing virtual items in CastleVille? Or give fans a CastleVille character to use as their Facebook profile pic to drive further awareness? At the very least, Zynga could have offered users the chance to donate to those charities directly, by providing links to each non-profit’s site right on the Facebook page.

Will Zynga’s latest cause campaign obtain the 5 million Likes they’re striving for? It’s too early to say, but at the time of this writing (about a week into the promo), there were about 300,000 fans. What do you think? What are some ways Zynga could have done a better job of integrating with causes?

How does choice affect donation behavior?

How many times have you seen a donation box like the one below? Pretty standard, right? This is from United Way’s website. I’d like to question whether this is the best way to present a donation request.

The issue I have with this approach is that it turns the donation process into a complex decision. The logic flows like this: (a) ‘should I donate?,’ if yes, then (b) ‘is one of the preset options the right amount?’. If that answer is yes, then (c) ‘which option should I select’, or if no, (d) ‘how much should I give instead?’. So there are at least three points at which the donor is given the chance to exit the decision making process and avoid making a donation altogether. To me, that’s a less than optimal user experience.

Now, here’s something from the other extreme:

Granted, this is from Amazon, not a charity. But it provides the easiest possible way to complete a transaction – one click. This is literally the simplest user experience a site could offer.

I have to caveat this by saying that I haven’t seen “one-click” giving implemented anywhere. But what if it were? There would be no complexity: as long as the suggested donation was within a potential donor’s reach, all he would have to do is click a button. It’s a binary decision (yes/no) instead of a complex one. While this approach might put a cap on the amount of a single donation, might that be offset by driving a higher quantity of donations?

I don’t have the answer, since I don’t have any data to go on. But I’d really like to see someone experiment with “one-click giving”. Do you know anyone who has?

Why culture matters in building community

Punk rock bands. Star Trek enthusiasts. World Cup soccer fans. Communities of real people, each of which have their own set of behaviors and norms. Anthropologists call this “culture”. Now let’s look at a different group of communities: Quora, TED, Google+. Do these online communities also have a culture? Of course they do. Let’s take a look at how each established a culture early on, and what this means for new communities:

Two former Facebook employees founded the Q&A site Quora in 2009. Quora is all about thoroughness. Why? First, Quora encourages using your real identity, not an alias, so you’re accountable for your work. Second, users vote up or down answers based on their quality. Finally, many early adopters were from the tech industry, where meritocracy rules. Glib contributions don’t get you far in that field. The combinations of these three factors, established early on, meant that Quora became a place where meaningful information is the norm. You can imagine what the site might like otherwise – just take a look at the comments under any YouTube video. Want to hear what happened when these norms were broken? Read this post by Robert Scoble.

TED Conversations was developed just earlier this year. It’s a debate forum for TED enthusiasts. This community strongly encourages quality discussion. The “TED community” is very much a reflection of the TED talks that have been taking place for several years – intellectual, well thought-out, and poignant discussion around complex issues. As you might expect, TED Conversations is a very polite place, a behavior no doubt influenced by the fact that TED talks encourage sharing and appreciating different viewpoints. Take a look at TED’s guidelines, and you’ll see plenty of statements like “if you choose to start (or join) an Idea conversation, it’s important to maintain a polite attitude toward what’s working and what needs fine-tuning.” This community will obviously be a place where intellectuals thrive.

Finally, Google+ is a nascent community whose culture is still being developed. See if you can imagine where it’s headed, though: “Circles” allows you to arrange your contacts into relevant groups. “Hangouts” and “Huddles” are features that allow groups to easily video chat or IM together. And “Sparks” is a way for users to find content relevant to them, particularly if it’s shared by people within their Circles. It’s too early to tell exactly what Google+’s culture will look like, but it’s obvious that informal group sharing will be at the core. My guess is that Google will allow its users to establish the sites culture as much as Google will itself.

So why make a point of understanding these online “cultures”? Each of them has been successful (in their own way), by being very intentional about how users behave within each community. Think about how difficult it would be to change any of these cultures, after norms were already established. Having trouble? Just review the negative feedback Facebook dealt with when it changed its privacy settings.

If you are planning to build your own online community, sites like these are worth paying attention to. The culture you build for your community is primarily defined by the norms you establish early on. Since it’s much easier to do this right the first time, ask yourself: “What kind of culture do I want to establish? How do I want users to interact with each other and with my organization?” Pick whatever behaviors you’re looking for, and set those as the default way for taking part in the community. Don’t pay attention to this, and you may as well not even start!

What do you think – how does establishing the right norms early on establish the long-term behavior of an online community? What are some other examples that have a done a particularly good (or bad) job of this?

The Somalian or the Squirrel?

How relevant is this to you today?

Facebook founder Mark Zuckerburg is oft-quoted for saying “A squirrel dying in front of your house may be more relevant to your interests right now than people dying in Africa.” It’s a troubling thought, but absolutely correct. This week illustrates his point exactly: a famine in Somalia is killing hundreds each day, yet there is little media coverage. Case in point: the New York Times‘ feature today is about luxury goods. The Wall Street Journal? No mention on the home page. How about Huffington Post? Slightly better, if you scroll down far enough.

But this treatment isn’t all that surprising. Unfortunately, people don’t have the capacity to constantly hear about emergencies. When they do, it results in “donor fatigue“, and people end less likely to give than they were before the call to action.

The problem with this cycle it’s that it’s reactive. An emergency prompts pressing public campaigns for support, and people react by giving. They give once or twice, and then move on, even if the problem persists. So why do they stop? A reactive cycle relies on triggering guilt, and people give to relieve themselves of this burden. This can be very effective in the short-term, but after too much, people tune out.

But a much better cycle is a proactive one in which giving happens before an emergency. Proactive giving is when one chooses to regularly donate, regardless of the state of emergency. It means that giving is part of everyday life – built into your monthly budget or done using easy tools like SwipeGood or GoodSearch. It’s giving because you’ve decided it’s important, not because someone else has told you it is. When proactive giving occurs, some good things result:

  1. It helps aid workers prepare for emergencies ahead of time. This is ultimately more effective – why not prevent someone from falling ill instead of only treating them once they do? Helping alleviate poverty in the first place is one of the best ways to avert future crises.
  2. It creates a level of giving that is sustainable for your own situation. I’d argue that it’s easier for many people to give $20/month for a year (for a $240/year) than to part with $100 annually in one fell swoop. You’ll actually give more, but it will feel like less.
  3. It creates a better sense of awareness about the world and the challenges it faces. By supporting causes more regularly, you’ll find yourself more interested in the world at large, and less reliant on sensational crises to keep you informed.
What do you think? What are some of the good things that can come out of giving proactively instead of reactively?

By the way, if you DO want to support the crises in Somalia, I’d recommended heading over to Save the Children’s site or visiting their campaign on Causes.com.