The Indisputable Advantage that Consignment Auction Items Have Over Donated Auction Items

There has been an ongoing debate among not-for-profits about the relative merits of donated auction items compared to consignment auction items. One common position is that donated items have a zero-cost basis so the amount of money raised is the amount of the winning bid.  Those in favor of using consignment items believe that they are a lot more interesting and bring more excitement to the auction experience for the bidders. Donated items tend to be more traditional and much the same in every other auction in town.

There is a different advantage that one of our customers recently mentioned to us that was interesting.  She said that the reason she recommended consignment items for her organization’s fundraising events is that since they can be sold multiple times* at auction they can raise more money with them than they can with donated items. We at BlueTree Marketing have certainly had customers sell an item multiple times at a significant profit. For example, a recent gala’s auction for an organization benefiting children in need located in Texas sold our Bali Trip 4 times and our Kentucky Derby trip twice, netting over $8,000 in funds for the organizations programs.

This is something that can’t be done with a donated item because the donated item, by its very nature is donated just the one time.

 

 

*If you are unsure about how an auction item can be sold more than once to increase auction proceeds, please click here or call 866-607-2616 and ask one of our fundraising consultants for assistance.

 

How to Sell an Item More Than Once at a Charity Auction

One of the most effective ways to turbo-charge your auction proceeds is to sell a consignment item more than once. This comes about because most consignment items have greater availability than the one unit. For example, if the consignment trip is a trip to Paris, there is no real limit on the number of people that can go on the trip. Even if there are tickets involved like a trip to the Country Music Awards, typically BlueTree can get more than one set. How this is implemented in a charity auction environment to increase fundraising proceeds can be a confusing topic but here is how it works:

A travel experience item has a consignment price of $2,000. During the auction there are three bidders that bid the item up like this:

  • Bidder A: $3,800
  • Bidder B: $3,900
  • Bidder C (the winner): $4,000

So, the winning bidder is Bidder C with the bid of $4,000. In an auction without multiple winners, the winning bid is the only winner and the charity would have a net revenue of $2,000 (the winning bid of $4,000 less the consignment price of $2,000). That is great but there is one issue: there are two other bidders willing to pay $3,900 and $3,800 respectively. They have the potential to provide more funds to organization, and the bidders have an unmet demand to buy what is being auctioned—they want to go on the trip!

What if you did this: Approach Bidder A and ask “are you still interested in the item at $3,800?” If they say yes, ask Bidder B, “would you be interested in the item at $3,800? (which is less than their maximum bid)” Then you would ask Bidder C, “if we reduce your purchase price to $3,800, would you be ok in our offering the item to the other bidders too we can raise more money?”

If Bidder C agrees, then sell the trip to all three bidders for $3,800. Now instead of bringing in $2,000 to your organization for the auctioning of the item once, you are now bringing in 3 x $1,800 or $5,400. This is the advantage of selling an item “multiple times” at a charity auction. Of course, there is no particular reason why we gave an example of the top three bidders. It could have just as easily been the two or four or five bidders. This works just as well in a silent auction or a live auction with an auctioneer.

Here are some considerations for selling something multiple times:

  • The winning bid must be sufficiently above the consignment price to make this worthwhile. In the same scenario, if the consignment price is $2,000 and the three final bids are $2,400, $2,300 and $2,200 the difference between having one winning bidder at $400 in profit vs. three bidders at 3 x $200 might not be worth the effort.
  • If every item or too many items are offered this way, the bidders will be conditioned to assuming that all items or all items of a certain type will be offered multiple times so there will be less emphasis on winning the auction. People may jockey for third position instead of trying to be the top bidder. This could lead to lower bids. In our experience, only those items bid significantly above their consignment price and those items that are the “signature” items of the auction (the most interesting ones) should be eligible for being sold multiple times.
  • When having a live auction, it is a best practice to determine in advance which items and at what final bid must be exceeded for an item to be sold more than once. BlueTree Marketing can help you with this. In fact, quite recently, we were on a conference call between the auction committee, the auctioneer and ourselves strategizing on which items and what target bid levels should be employed for selling items more than once.

Selling items more than once at a charity auction can be a very effective technique to multiply your organization’s fundraising.

Tips for Hiring a Great Auctioneer for Your Charity Auction

So, you have decided to hire an auctioneer for your charity auction. If you haven’t used a professional auctioneer before and are looking to hire one, the first thing we recommend doing is to find some referrals from trusted business associates who have used auctioneers at their events. There is nothing stronger than a personal referral!

Not every auctioneer you will find is an expert in auctioning items to a charity audience—it isn’t the same thing as auctioning cattle, foreclosed real estate or even artwork. Charity auctions, which are known as “benefit auctions” in the auctioneering industry, require some different skills. In fact, the National Association of Auctioneers (the “NAA”) has a special training and certification program for benefit auctioneers. A member of the NAA, with the benefit auctioneer designation will typically have a “BAS” after their name. Here is a link to their website.

There are nuances to charity auctions that make them different.  For example, the audience which is made up of more non-bidders than bidders and they are looking for the entertainment value of the auction. They don’t want to be bored—they want to be entertained! Additionally, the items are varied and the bidders need more seduction. They don’t “need” anything being auctioned and there are no professional bidders. At a real estate auction or cattle auction the audience is dominated by professional buyers that simply won’t bid on something they don’t need. They don’t need to be seduced. It would even come as a surprise that a recent art auction at the venerable auction house of Sotheby’s each lot is auctioned in an average of 45 seconds. Most art sales at art auctions are made up of bidders who are professional buyers—no seduction, or entertainment required.

If you don’t have a referral for an auctioneer, we have two recommendations on finding one. Firstly, contact the development director of a local charity that has recently had an event and find out who they used. There is really no reason why the other charity will keep it a secret. You can get a referral and a reference in one call as they can also tell you the auctioneers strengths and weaknesses and some best practices.

Another way to get the names of local recommended auctioneers is by contacting the state or regional chapter president of the NAA and ask him/her for a referral.  Google “{state name} auctioneer association”. Nearly every state has a state association. Make sure to ask for a BAS certified auctioneer.

With any auctioneer you are introduced to, it is very important to ask for and to check references. When checking references ask about results, of course, but also ask about how easy it was to work with the auctioneer and whether they were helpful in giving advice for organizing the event. Auctioneers who truly have a lot of experience in benefit auctions have been to a lot of charity events and should have a sense of what works and doesn’t work and should be forthcoming about advising you and your team. The auctioneer should be a resource committed to the event’s success, not just a gun for hire to do the auction itself.

Ultimately, you are looking for, not just an auctioneer, but a member of your team. It may be time consuming to get some auctioneer referrals but it won’t be difficult. The difficult part is going to be finding the best auctioneer, not an adequate one easily. Finding the best one is going to be based on checking references and spending the time necessary.

What to Look For in a Mobile Bidding Solution for Your Fundraising Auction

Technology has changed every business and the mobile bidding/online auction platforms (“OAPs”) have made a significant impact on charity auctions for fundraising. OAPs provide a number of basic features and then each of the products provide some or all of the advanced features.  These features include:

  • Mobile bidding – bidding from mobile devices (smart phones) during the auction is a basic feature. A more advanced feature allows bids to be recorded by text message.
  • Early bidding – bidding from PCs and smart phones before the event is a basic feature.
  • Silent Auction in Room Registration
  • Post auction processing – this allows the processing of credit cards to winner of auction items.
  • Event ticketing – this allows the generation and processing charges (cash, check and credit cards).
  • Event staffing – Some OAP companies can provide staff to run the auction for you entirely.

What is important is to understand what your needs are and then make sure you don’t pay for more system than you really need. Other considerations to think about:

  • Will you have WIFI and/or a strong cellular signal (from all carriers) at you event? If you will be dependent on internet connectivity for smart phones and tablets at your auction, it is important that there be a strong signal.
  • Do you have a strong group of volunteers available for your event? If not, you may want to consider using an OAP that can also augment your staff with their own paid staff.
  • Contingency planning is very important in case the Internet isn’t available. Make sure you have confirmed with your venue’s staff to ensure that the Internet is enabled during the event time. Also, perform an event walk-through in the afternoon before the event to confirm that the Internet is functioning. If you are using a paper based back up plan, have the paper bid sheets printed out and a box or two of pens at the ready.

When it comes to selecting an OAP system, it is important to do your due diligence about the system and the company that makes it and provides support for it. Prices for supporting a single event can vary from a few hundred dollars to a few thousand to paying for features you aren’t going to be using isn’t wise. Furthermore, it is important to realize that with most events happening on Saturday nights, the OAP company may be having to support all those events at the same time. If something goes wrong in the software for all those users, they will drown in the customer support and your event will be down the drain—contingency planning is critical. This is why checking references is so important. Ideally, you can get a reference from someone who had called customer service and can tell you about their experiences with customer service.

Finally, remember that using an OAP is about raising more money for your fundraiser and not about just increasing the cost and the work involved. We see a lot of event boards make the investment in using a system and only find out that few people actually used it and the overall impact on the auction money raised was minor.

To Get an Auctioneer or Not to Get an Auctioneer…That is the Question!

To use or not use an auctioneer is a catch 22 type of situation.  Should you spend more money to hire a professional auctioneer for your charity auction or just have a board member act as the auctioneer or just have a silent auction?

Let’s look at some of the pros and cons.


An Auctioneer vs. No Auctioneer:

Pros:

  • There is no question that an auctioneer can raise more money. They can cajole the audience into getting higher bids and they can “sell” an auction item to the audience to generate more interest.
  • An auctioneer can be entertaining and provide the “life of the party” and a number of laughs at a gala. A live auction and a bidding war can be fun to watch and more fun to participate in.

Cons:

  • Live auctions are time consuming and can easily consume too much time during the charity event.
  • An auctioneer is only helpful if you have the right kind of items. It is a waste to use an auctioneer for auctioning off a dinner for two at a local restaurant or any item with a value of just a few hundred dollars or less.

Best Practices:

Limit the number and type of items. It doesn’t make sense to use an auctioneer on an inexpensive item. Where possible, have the auctioneer sell things multiple times. For items on consignment, this means that more than one bidder can get the item. Imagine auctioning off a consignment trip or a piece of sports memorabilia. Verify if the provider can handle the sale of more than one copy of the item and if the bidding goes high enough offer the top few bidders the opportunity to take the item.


Professional Auctioneer vs. Volunteer/Amateur Auctioneer:

Pros:

  • Charity auctions are known as “benefit auctions” in the auction world and auctioneers that specialize in benefit auctions typically have specialized training and a certification from the National Auctioneer Association.
  • Auctioneers that specialize in charity auctions have a lot of experience in charity auctions and galas and can add great suggestions from things like room layout, item auction order, staffing, catering, etc. and offer the benefit of their contacts to make your event more successful.
  • In all but some exceptional situations, a professional auctioneer will give you better results than an amateur. There are certain skills that auctioneers have and develop over time that an amateur is unlikely to have acquired.

Cons:

  • Professional auctioneers are expensive and the incremental gain that a professional auctioneer provides has to exceed the cost. For example, if you are only auctioning off items that may just generate a few thousand dollars, how much more can a professional auctioneer raise? 50%? 10%? How much is that worth and does it provide a reasonable return on your investment.

Best Practices

The bottom line is that a charity auction has to have the chance to raise a significant amount of money for it to be worth having an auctioneer and more than that for a professional auctioneer. Professional auctioneers add value but they do so at a cost of typically several thousand dollars.

What Kind of Donations Should You Be Looking for in Your Charity Auction?

A successful charity gala starts with great planning and the auction is a key part of the fundraising. The best way to go about getting donated items is to come up with a plan that targets types of items your committee thinks should be at the auction and then assign individuals to solicit these items by category. This way there is an accountability because it will be clear that if there is a shortage of items in a particular category who is responsible. Of course, if a committee member or event volunteer has an “in” at a company outside their category, they should solicit them in coordination with the category leader.

In a charity auction, a wide range of donated items and these items tend to fall into one of several categories:

  • Beauty: Salons gift certificates, Botox and other rejuvenation treatments
  • Health: Massage, fitness gift certificates
  • Dining: Restaurant gift certificates, home catering gift certificates
  • Hospitality: Hotel gift certificates, use of a vacation condo, trips and once in a lifetime experiences
  • Donated Goods: most commonly things like art work from the artist but can be as different as a set of tires!

Like any sales effort, a sales person needs good marketing material and soliciting donations for your event is no different. Business owners or managers need to be convinced that making the donation is in their best interest and marketing material should answer the question “what is in it for me?” on behalf of the business owner.

Marketing material should highlight the mission of the charity, the specifics of the event and the planned attendance and demographics of the event. For example, volunteers soliciting donations benefit from being able to tell the business owner the mission of the charity, that the event is a black-tie gala and that there will be 400 high net worth individuals in attendance being introduced to the businesses product or services. For some volunteers with less experience it may also be helpful to provide some scripts of likely conversations they will have with business owners so they get the feel for the conversations they will likely have.

Online Auctions: A New Source

Since we’re discussing auctions it seemed a great time to introduce a relatively new service in the world of Auctions. BlueTree Marketing now offers charity organizations, schools and churches and turnkey solution to efficiently take their fundraising efforts online. This week I received an email from the  Read More