CONTINUE READING: 26 Steps Your Nonprofit Can Take To Create The Most Profitable Live Auction Ever

You should strongly resist the urge to add impromptu items to your live auction during your event.

Here’s the typical scenario:  The live auction is going gangbusters.  All the items are selling for great prices. The audience is really into the rhythm and flow. Then the development director come up to the stage to whisper to the auctioneer that there are a few silent auction items that didn’t get bids so we should try to sell them in the live auction.

That’s a terrible idea!!

The audience has already told you through their actions in the silent auction that they were not interested in those items. Don’t make it worse by putting these unpopular into the live auction, and begging for someone to take them.

When you add silent auction items to your live auction, you typically go from selling items for $2,000 each to selling items for $200 each. It’s a downer on the overall mood of the event, and it drains the patience of your audience.

Or maybe you have a donor who offered up a package at the last minute and wants to include it in the live auction. You should carefully evaluate that package.

• Will it sell for an amount that is worthy of your live auction?
• Is it an easy package to understand, and will the audience know what it is?
• Do you already have too many items in your live auction? With this addition tax the audience’s attention span and cause you to raise less money in your paddle raiser?

It’s tempting to always say “yes” to these last-minute donations, because you think “well we CAN make more money by doing this.” But you have to think carefully to ensure that you’re not accidentally sabotaging your live auction or turning off your audience.

We recommend that you develop a plan for your live auction and then stick with that plan. Don’t add things at the last minute, unless they are really special and a perfect fit for your event and your audience.

Even in the best of circumstances, you will sometimes have things that go wrong during the live auction that you didn’t expect. An item will get zero bids, or it will sell for a high price, but the winning bidder will disappear or it will sell, but the winner later says, “I don’t want it.”

What do you do when these things happen?

The good news is that most of these things are predictable risks and you can plan in advance how you will handle them if they happen.

Let’s say that an item does not even get an opening bid?

In the normal auctioneering world where items are up for liquidation or wholesale price discovery [See Step 3], the auctioneer would simply lower the starting bid until someone bit. It might look like this:

• Someone start us off at $1,000 … $1,000? ... $1,000? … how about $500? … $500? … $500? .. how about $250?

But in your fundraising auction, you may be selling a consignment trip with a reserve of $2,500, and your auctioneer is starting at $1,000 just to get the bidding started, but he or she isn’t going to sell it for less than $2,500.

If the audience won’t even make an opening bid of $1,000 on this trip, it’s better to just pull it and move on.

We recommend saying “Okay, we’re going to pull this item for now, and we may come back to it later in the auction.”

You just want to gracefully exit the item without making a big deal about it.

This is something that happens periodically. People at a benefit auction are not always paying close attention. They’re drinking and socializing and sometimes they bid as a joke or completely by accident. They’re telling a story, gesturing with their hands and because they have their bidder number in their hands, the auctioneer sees it as a bid.

Then the auctioneer says, “Sold for $5,000!” and they win the item. When your recorders go to them for the Concierge Service [See Step 17] to get their payment method, they say that they didn’t bid and they don’t want the item.

If your auctioneer is aware of this before moving on, there are two possible responses:

• 2ND PLACE BIDDER - The auctioneer should go back to the second place bidder and say, “Sir, your last bid was $4,500, are you still in at that price?” Hopefully, the answer is yes. But since the auctioneer has already said “Sold” to someone else at $5,000, that $4,500 bid is no longer binding.
• START OVER - If the second place bidder doesn’t want to stick with his or her bid, the auctioneer should just start over. Offer the item up again and start from scratch.

We recently did an event in Denver where a Broncos VIP package sold for $12,500, but the winner refused to raise his paddle to confirm the purchase. When the Concierge Service recorder went to the table the winner said that he hadn’t meant to bid. So the auctioneer went back to the $10,000 bidder, but he didn’t want to stick with his bid.

So we started over. Went back to $5,000 and worked our way back up. The item ended up selling for $13,000, which was $500 better than the original.

What do you do when there is lively bidding on an item, and it sells for $10,000. The concierge service recorder goes to them to gather their information, and they give their contact info, but they say they want to be invoiced for the purchase rather than putting it on a credit card. No problem.

Then later, the person reneges on the purchase and says, “I don’t want the item.”

In the best case scenario, they renege before the live auction is over, and you can alert the auctioneer and resell the item immediately. It stinks to have to do that, but it’s a blessing that you have the opportunity to put it up for auction again.

In the worst case scenario, they renege on the item the next day or the next week, when you have no opportunity to sell the item again. In that case, you probably have to speak with your attorney to understand what your options are.

You should probably try to negotiate some type of donation from the person.

We’re not sure that you would actually want to sue one of your bidders. If this person is a regular supporter, then you don’t want to ruin the relationship, or if this person is a close friend of one of your regular supporters, you may not want to ruin that relationship.

There are a few live auction games that you can play with your audience to get everyone involved. As we’ve noted earlier, only a tiny percentage of your audience can actually afford to win a live auction item, so auction games allow far more people to participate.

This is a simple game that is easy to explain and easy to play.

Basically, your audience members contribute a price that you’ve determined (usually $25, $50 or $100), and they’re in the game to try to win a prize. It could be something that has broad appeal like a staycation, airline tickets or tickets to a sporting event. Or it could be cash -- $250, $500, $1,000.

Everyone is on their feet at the start of the game, and the auctioneer instructs them to choose “Heads” or “Tails”. They indicate heads by putting a hand on their head. They indicate tails by putting a hand on their tail.

The auctioneer flips the coin. Everyone who chose correctly stays standing, everyone who got it wrong, sits down. The auctioneer continues in this fashion until one person wins the game.

Auction Chicken is a game that has the ability to sell items for much more than they would make during a regular live auction item. In the example we shared earlier of the two Terrell Davis footballs that sold for $9,500 each, they vehicle for selling them was the Auction Chicken game.

A normal live auction item is an opt-in event. Nearly everyone in the audience is “out” of the game, but they can raise their paddle to put themselves into the game. Auction Chicken is powerful, because it’s an “opt-out” game. Everyone in the audience is automatically “in” the game, and they have to take an action to opt out.

There’s something about the psychology of this game that really increases values.

Here is how it’s played:

The auctioneer asks everyone to get on their feet because they’re all in the game. The cost of the prize is just $1. We’re going to slowly raise the price and when you hear a price you “wouldn’t” pay, you sit down. It becomes a game of chicken at the end because the last person standing buys the prize at the last prize.

Then we say, “Okay, the cost of this prize is $1, … now it’s $100 … now $200 … now $300 … etc. until we get a winner.

The last bidder game is another good way to raise money, but it’s definitely the most complex of the three games listed here.

Here’s how the game is played:

You select a prize that everyone is bidding on, and you tell them that the cost of that prize is $50. The prize will be sold to the person who bids “last”, but every time bidders raise their paddles they’re going to be charged another $50.

Eventually, the last person to place a bid will win the item.

We do this game periodically, but we don’t love it, and don’t recommend it for everyone, because it has some negatives.

• THE BIDDERS ARE CONFUSED - The Auctioneer must be extremely clear in explaining that “every” time the auctioneer reads off their bidder numbers,, they’ll be charged another $50. One of the challenges people have with this game, is that they don’t understand that if they raise their paddle 10 times during the game, they’re committed to paying $500 at checkout.
  • This can lead to some contentious conversations at the check-out table when a bidder says, “What do you mean I’m being charged $500 for the last bidder game? I wasn’t the last bidder! I didn’t win that item.”
  • The auctioneer must make sure that everyone understands the rules.

• IT’S DIFFICULT TO END - The Last-Bidder game can be tough to end. From the start, the auctioneer needs to be saying, “Bidder # 346 … going once … going twice … Bidder # 273 … going once … going twice … Bidder # 622 … going once … going twice …” And so on … and so on
  • The auctioneer has to be counting it down pretty much from the start. But as long as people keep raising their paddles, the game can go on.
  • Eventually, the auctioneer needs to count it down faster and faster and not leave so much space for new bidders to get in.
  • The actual end can feel unfair to bidders who have committed hundreds of dollars to the game.

That potential for unfairness is the reason we don’t “love” this game, but we recognize that it can be an effective fundraising vehicle. As long as the auctioneer clearly explains that every bid counts, whether you win or not.

If we had a nickel for every time someone suggested that the key to a great live auction is encouraging people to drink a lot, we’d have about $12.35. :-)

We’ve seen enough auctions to recognize that booze is not the answer. Yes, it’s good for people to have a drink in them. Both physiologically and psychologically, when people are trying to relax and have fun, a drink in their hand helps them relax, even before they take the first sip. So a drink or two is okay.

But there are two major things to consider:  The first is the ethics of your organization. You work in the nonprofit world, where you’re diligently solving problems to make people’s lives better every day. It would be inconsistent with your identity as an organization to take advantage of someone who was inebriated.

The second consideration is the reality that drunk people can wreak havoc on your live auction. We believe that any donor who is obviously intoxicated should not be bidding without the approval of a sober person in their party.

For example, we did a major fundraising gala a few years ago in which a woman in one of the front tables was clearly drunk. Even from the stage, the auctioneer could tell that she was like a caricature of a drunk person -- glassy eyes, laughing too loudly, talking too loudly, unsteady in her chair, etc. -- but she was also a major bidder in the auction who raised her paddle to bid for most of the items.

At one point the auctioneer said, “It looks like you’ve had a few drinks, so we don’t want to take advantage of you, and have you bid more than you’re comfortable bidding. Sir, are you her husband? Will you confirm that you approve this bid? Okay, wonderful, we’re at $2,500 … now  can we get $3,000?”

And each time she bid, the auctioneer would look again to the husband for confirmation. By doing that, the auctioneer ensured that she was not being taken advantage of just because she was drunk.

Her bidding clearly helped the auction, but she also talked a lot. She kept yelling out to the auctioneer, “Hey! … Hey! …. I’ve got a question.”

The auctioneer would stop, listen to her question, answer it, and then continue. She definitely extended the length of the auction and slowed everything down.

She’s one example, but we’ve seen dozens of instances in which drunk people just create too much noise, too much distraction and too much chaos during the live auction.

The other problem that you’re going to encounter with people who drink too much is that when they wake up the next morning, they might not remember exactly what they did, or they might regret what they did. So when you try to collect the money for the item(s) they purchased, the say, “I didn’t mean to do that. I was drunk, and I did not mean to purchase this trip. I don’t want it.”

Then you’re in a tough spot.

So the strategy for achieving your live auction goals should not rest on having an open bar and hoping that people will drink too much.

At The Gala Team, we are experts at all of the Steps listed in this document. We have helped hundreds of nonprofits make adjustments to their live auctions that have produced thousands and sometimes tens of thousands of extra dollars of fundraising revenue.