26 Steps Your Nonprofit Can Take To Create The Most Profitable Live Auction Ever!

Have you ever experienced the heart-wrenching disappointment of a live auction going awry during a fundraising gala? If you have, you know it’s an awful feeling. You planned for months. You chose a venue, your caterer, your AV team, your auctioneer and your theme. You invited hundreds of people. You showed up early to set up and decorate. You wrote a script, recruiting live auction items and then at the appointed time in the program, the live auction started, and the whole thing just fell flat on its face.

This was your one big chance in the year to get all those people in the room, tell them about the great work you’re doing and offer them some items that would entice them to bid high and bid often. But the live auction didn’t raise anywhere close to the amount you were expecting, and the whole thing was a professional embarrassment and a crushing disappointment. Your mission desperately needed those dollars.

The good news? It doesn’t have to be this way. Most of the factors that lead to live auction failure are completely preventable! And most of the factors that lead the super-profitable live auctions are completely executable. Yes, with a little bit of planning and a different strategy, your live auction can raise the money your charity needs you to raise. This document lays out 26 steps to totally CRUSHING your next live auction!

It may  seem silly to say, “Remember, your event is a fundraiser!” Of course, you’re going to remember that. Raising money is the primary reason that you’re hosting your event. Raising money is the reason that you’re considering holding a live auction during your event. It seems idiot to suggest that you’d need to be reminded that your event is a fundraiser.

But it’s important to keep this at the front of your mind because the “live auction” format of selling is traditionally used in two ways:

• LIQUIDATION
• WHOLESALE PRICE DISCOVERY

Liquidation is one of the auction format’s greatest strengths. Imagine a BMW dealership that accepts all types of vehicle trade-ins when people are purchasing new or used BMWs. That BMW dealership takes in Fords, Chryslers, Hondas, Kias, etc. and it ends up with a big collection of non-BMW vehicles that it has to get rid of.

So what do they do with all those trade-ins?
They ship them off to an auction house to be liquidated.

Liquidation is the process of taking physical inventory that you no longer want or need and turning it into cash. Liquidation does not deliver retail values. Depending on the product, the volume, the time of year, the economy, etc. you may liquidate inventory at 50-cents-on the dollar or even just 5 or 10 cents on the dollar.

So it’s important to recognize that the live auction during your fundraiser is NOT a liquidation event. You’re not trying to sell everything for half price or 10-cents on the dollar. You’re not trying to entice your donors to get the best “deal” at your event.

The second traditional function of a live auction format is “Wholesale Price Discovery”.
Who buys those cars that the BMW dealership sent to auction?
Used car dealers buy them.

Someone who owned a Honda Accord and traded it in for a BMW probably has a professional career. They probably dress nicely and have to look professional at work. So it’s likely that their Honda Accord was a fairly recent model vehicle and it was probably serviced regularly, washed regularly and generally well maintained.

A used car dealer who specializes in Hondas might be very interested in any Honda that was traded in at a BMW dealership. So he goes to auto auctions every week looking for inventory for his used car lot.

But he’s not going to pay full retail for the car. He’s there to buy the car at a wholesale price that might be 50% to 60% of the retail value. He has to maintain enough margin ensure that he makes a profit when he sells the car at full retail. So you want to make sure that the live auction at your fundraiser is NOT a wholesale price discovery event.

Your live auction is a FUND-raiser. The goal of your live auction is to sell things for more than their retail value. You don’t want to do anything that will trigger a discount-seeking mentality in your audience.

As we go through this A to Z Guide, we’re going to explain the various strategies and techniques you can use to ensure that your fundraiser remains a FUNDRAISER and doesn’t turn into a liquidation event or a wholesale price discovery event.

You can maintain the fundraising aspect of your event by selecting the proper items, having the proper number of items, putting them in the right order, describing them in the right way, etc. There are a lot of tools in this guide to help you achieve your fundraising goals.

Make sure you have the right number of live auction items. We believe that 5 to 7 items is never wrong. That doesn’t mean that 3 items or 12 items is absolutely wrong. It just means that 5 to 7 tends to be a suitable range for nearly every event.

Here’s the deal with your live auction: Most of your audience is not interested and doesn’t care about the live auction. They’re just waiting for it to be over.

Let’s say you have 500 people in the room, and you have 10 live auction items. That means that 2% of your audience members will win a live auction item, and another 2% will be the top losing bidder. So 4% of your audience is really interested engaged, while 96% of your audience is waiting patiently for it to be over.

You might say, “Well the cure for that is to add MORE live auction items so additional people in the audience have a chance to win, and more people will pay attention.”

The problem with that reasoning is that adding items doesn’t solve the basic problem -- the majority of the audience still won’t win anything. If you had 20 live auction items, that means 4% of the audience would win, 4% would be the first losers, and 92% are still disengaged. We can’t solve this basic math problem by adding items.

We have to remember the potential harm you’re inflicting on the vast majority of your audience who is not interested in the live auction. This big body of people is a group that you absolutely want to have in the room, engaged and motivated for your paddle raiser, which will typically come after your live auction, so you don’t want to squander their attention or good will.

In a gala setting, where people are drinking, socializing and not paying close attention, you should allocate 2.5 minutes per item to your live auction. That means our recommendation is that you commit no more than 17.5 minutes to your live auction. We think that’s about the maximum tax you can put on the attention of your overall audience if you want them to still be engaged and enthusiastic during your paddle raiser.

The other big reason for not having too many items, is that you don’t want your live auction to fall off a cliff. When you have 12 high profile items in your live auction, but only 8 people in the audience who actually have the means and desire to buy things, your live auction bidding will screech to a halt, and you will watch helplessly as your whole event falls into a pit of terrible, awkward pleading and begging. It’s not pretty. When your live auction falls off a cliff, the entire energy of the event is destroyed. You don’t want this to happen to you.

The simple secret to creating a memorable and profitable live auction is to not overcomplicate things. There are five super popular, super profitable items that you can include in your live auction that never go out of style.

Vacation packages can help your organization raise a lot of money because nearly everyone in your audience goes on vacation. So they know how much it costs, and it’s already something they budget for, so you’re not asking them to come up with additional money. You’re just asking them to allocate their vacation money to purchase the vacation you’re offering.

Your vacation package is appealing because you’ve eliminated the need to think about “where” they want to go, and “what” resort they’ll stay at, and “what” they’ll do while they’re there. They like the fact that you’ve made all the plans and everything is wrapped up with a nice bow for them at a price that fits their budget (or only exceeds it by a little). Vacation packages have broad appeal, and lots of people in your audience can bid on them.

Staycations are very popular items in fundraising auctions, because they’re easy, local getaways that most people in your audience are unlikely to purchase for themselves anywhere except for a charity event. We consider Staycations to be any overnight package in the city in which your donors live or within easy driving distance of that city.

A typical staycation will include:

• HOTEL ROOM - One or two nights at a trendy hotel
• DINNER - Gift Certificate for dinner at a nice steakhouse
• SHOW - Tickets to see a popular play or other performance
• MASSAGE - Couples massage at a spa either in the hotel or very near the hotel

Staycations are a great opportunity for the parents to get away and enjoy a romantic evening, but the best part is not what happens at night. The best part is in the morning you don’t have the kids rushing in to jump on the bed and jolt you awake!

This is the type of package that couples typically won’t go out and purchase anywhere else. Of course, they’ll make reservations at a restaurant, or buy tickets to a show, but rarely will a couple make all of these plans on the same weekend to create their own staycation. By offering this package, you’re giving them something that they value, but wouldn’t normally purchase for themselves.

Another fantastic live auction item is a unique dinner party experience. You can ask a local catering company to donate their catering services -- maybe the caterer who is providing the food for your gala will donate this service.

The winning bidder will receive a catered dinner party for 10 at their home. This item also fits in the category of being something that is desirable by many members of your audience, but not something they would normally purchase themselves.

The appeal of a catered dinner party is that you get a great meal, prepared and served in your home, but you don’t have to do the shopping, or the cooking or the serving or the cleaning afterward. You get to be pampered right along with your guests rather than spending your time shuttling to and from the kitchen.

Here is a simple truth: Spouses love each other and they want to do special things for each other, but with the demands of work and family, it’s often difficult to plan romantic outings together. So anniversaries get overlooked, birthdays come and go with a simple “Happy Birthday” but not much else, and the couple shrugs it off. They know they love each other, and they know the reason they don’t make a big deal about things is because they’re busy. But what if you could take care of the planning for them?

What if you had a table for four already reserved at a cool trendy restaurant that’s always full on Valentine’s day?
That reservation will get transferred to the name of your winning bidder, and they can invite another couple to join them for a Valentine’s double date.
What if you had tickets to see a cool new show that’s coming to town?
What if you had tickets for a sporting event?
What if you had three sets of overnight stays at local hotels that you could pair with the Valentine’s dinner, the show and the sporting event to create mini-staycations?

These are the basic building blocks of a great date night package. Each date night could include a stay in a local hotel + a gift card at a local restaurant + and a fun experience like couples massages, a guided bike tour of the city, a bird watching experience, tickets for a parade of homes.

Unique experiences are things that are super appealing to your audience, but it’s not possible for them to go out and purchase the experiences at the mall or order them on Amazon or book them through a travel agency.

This includes experiences such as:

• DINNER WITH A LOCAL CELEBRITY
• RESERVED PARKING IN FRONT OF THE SCHOOL
• SIDELINE PASSES FOR A FOOTBALL GAME
• BASEBALL LESSONS FOR YOUR KID FROM A LOCAL PRO PLAYER ETC.

This issue is a real challenge for some organizations because they are in the habit of publishing the retail values of their live auction items in their program guides, in the powerpoint slides used to feature each item, and in any other printed material that they have.

Why do they do this?

Because it’s common practice to do it in the SILENT auction. In the silent auction, you’ve got packages that include gift certificates, so the value of those certificates is important information to share. There’s a big difference between a $50 gift certificate and a $500 gift certificate, so publishing values in the silent auction is fairly common. But when that silent auction tactic is transferred onto live auction items, it spells disaster for your live auction. Here’s what you have to remember: Your live auction is a FUNDRAISING event, and in a fundraising event, people might pay many multiples above the actual value of the item, because the item is rare, or special or hard to obtain or the package you’ve put together is especially convenient (e.g. airfare, ground transportation, and hotel all taken care of). Remember the example I shared earlier about the Terrell Davis Commemorative football that sold for $9,500? Do you think it would have sold for that much if we had published the estimated $300 to $500 retail value of the football? Of course not.

If you tell people the retail value of items, you’re essentially telling them that they should NOT pay more than that value. You will trigger discount seeking behavior. People will be trying to get a good deal on your live auction items rather than win them by paying far more than full retail.

The reason that football sold for $9,500 (actually we sold two of them for $9,500 each … but we’ll get to “selling it twice” a little later), was because Terrell Davis was at the event, and he was going to personalize the football for the winner, take a photo with them, and they would forever have the story of the night they got a football signed by Terrell Davis.

The football may have a retail value of $300 to $500, but the experience of interacting with Terrell Davis was priceless. The reality is that if you’re selling things that are rare, difficult to obtain and/or unique experiences, you don’t have to worry about retail values, because items like that don’t have retail values.

For example, suppose you were auctioning off the following package:

• 4 TICKETS IN A SUITE AT A DENVER BRONCOS FOOTBALL GAME
• VALET PARKING
• PRE-GAME FIELD PASSES TO GET AN UP-CLOSE VIEW OF THE PLAYERS
• POST-GAME DINNER WITH RANDY GRADISHAR, A MEMBER OF THE BRONCOS RING OF FAME.

What’s the retail value of this package?  You might be tempted to include the face value of the suite tickets, and valet parking and the cost of the dinner, but that’s not the real value.

• Those suites are sold out, and all the tickets are owned by corporations, who use them as rewards for their employees or to wine and dine their clients. They’re impossible to purchase, so even though they have a price printed on them, that price is not indicative of their actual value. They’re literally priceless, because they’re unobtainable unless you have a connection to that corporation.
• The pregame field passes are not for sale. There is no market in which you can purchase them. You can only get them if the Broncos donate them to a charity and you purchase them during a fundraising auction.
• Now we get to the dinner, which obviously has a knowable price tag for the food and drinks, but how would your winning bidders get access to Randy Gradishar to sit and chat with him about their favorite Broncos memories?

Great live auction items do not have easily discernible retail values, because there are always things in the package that are unique, difficult to obtain or literally don’t have a retail value.

The next thing you need to do is ensure that your live auction is located in the proper spot in your timeline. A mistake that many nonprofits make is putting the live auction too late in the program.

Why do they do that?

I believe there are many reasons, but the most basic and fundamental is that most charities are terrified of making a direct request for money, so they feel that they have to spend a lot of time “justifying” their value before they ask the audience to support them.

This fear leads to decisions such as:

• The silent auction (which is a passive ask) isn’t getting as much action as we thought, so let’s extend the cocktail hour by an extra 15 minutes to give people more time to bid.
• We need to have our Executive Director speak, followed by a Board Member, followed by a Service Provider, followed by a Recipient of our Services, followed by a Video about our mission, followed by our keynote speaker, and THEN we’ll do the live auction.
• We’re going to have a 50-minute break in the program for dinner to make sure everyone gets served, and all the plates get cleared, and everyone has a chance to socialize at their tables before we intrude on them with the live auction.

Our advice is to put the live auction in the high energy portion of your event, which is generally between 7:45 p.m. and 8:30 p.m. for an event that starts with a cocktail hour at about 5:30 p.m.

We believe that 9 p.m. is the witching hour for fundraising.

That’s when your gala starts having to compete with a lot of other challenges, such as:

• People’s bladders are full, so they need to head out to the restrooms
• Smokers need to go outside and smoke.
• The slight buzz from the cocktail hour is starting to fade and some people in the audience are feeling a little yucky
• Parents start thinking about getting home to release their babysitters.
• It’s been a long day, and general fatigue is starting to settle in.

You want to get your live auction completed before all this starts happening to your audience. It may feel scary to move the live auction up in the program before you’ve done all the “justifying” for support, but you don’t need to be afraid.

When the energy is high, the audience will gladly accept something as lively and entertaining as your live auction, and their bidding will be much more energetic than it will later in the night.

When you combine putting the live auction in the high energy part of your program, having items that are “experiences” not “things, limiting the number of items to no more than 7 and selecting items that are the right “price” for your audience, you unlock the potential of your live auction and you might raise 10%, 20% or even 30% more in your live auction than you did the previous year.

The live auction and the paddle raiser are typically the most valuable in event fundraising. The live auction is obviously the act of making money by selling a few unique experiences, while the paddle raiser (aka Fund-a-Need, aka Cash Call, aka Special Appeal) is a technique to make money simply by asking for donations. The traditional order is to have the live auction first, followed by the paddle raiser.

That’s still the case in most events, and there are good reasons to support this order:

Traditions are important elements of any event, because people have come to expect them, and it can sometimes be jarring to the audience when some tradition has been removed. So it’s traditional to have the live auction before the paddle raiser, and in this case, the circular reasoning of “It’s there, because it’s always been there” does carry some weight.

Some groups feel that the live auction is a nice ice breaker before their paddle raiser. The audience gets warmed up on lower value items, then medium value items, then higher value items, and it gets the thoughts of big money in the air.

Some of your guests plan to purchase things in your live auction, and they also plan to make a contribution during your paddle raiser. So having the live auction first allows them to know what they’ve won and how much money they’ve committed prior to the paddle raiser.

• For example, let’s say you have a couple who attends your event, and they were planning to spend $10,000 between the live auction and the paddle raiser. There’s a trip to Mexico they’d like to win, and they’re willing to pay up to $5,000 for it, and then they’ll donate $5,000 in the paddle raiser.
• If the auction is first, and it only cost them $4,000 to win the Mexico trip, they may increase their paddle raiser contribution to $6,000. So overall, your organization received $10,000 from them.
• But what if the paddle raiser is first? What if they want to contribute $5,000 during the paddle raiser, but they’re worried that they might need $6,000 to win the Mexico trip. So they only donate $4,000 in the paddle raiser, then during the live auction they end up winning the Mexico trip for $4,000. All of a sudden, your organization has lost out on $2,000 because the paddle raiser happened before the other spending questions were resolved.

So those are the reasons to keep the live auction first and the paddle raiser second, but there are compelling reasons to switch them up as well.

Yes, people love traditions, but people also love pleasant surprises. So many organizations are looking for new things they can do to shake up their events and make them feel fresh and new again. They try out different themes and different venues trying to find that edge. Well switching up the order of your live auction and paddle raiser is a new strategy that we see more and more organizations deploying. It’s exciting, it’s different and it seems to work. Your live auction items will sell just as well after the paddle raiser as before it.

Unlike the live auction, the paddle raiser includes everyone in the room. So doing it first allows you to get the attention of everyone in the room to raise their [paddles to support your organization. THEN you can do the live auction for that handful of people who actually have the resources and interest in winning your live auction items.

Making this switch keeps the focus on your mission rather than on the live auction items. You first ask people to simply make a donation to your organization. After you’ve sweat every dollar out of that room, THEN you offer up your handful of live auction items – almost like a prize for being a great and generous audience.

We’ve conducted hundreds of charity events, and time and time again we have seen a mistake that is incredibly aggravating to watch as it unfolds, nearly impossible to stop once the wheels are in motion, and can kill a live auction faster than yelling "sold" after the first bid. The mistake?

Inviting a donor on stage to talk about the item they donated.

Now this may not seem like a live auction killer. In fact, you may have a board member who is so eloquent and so well-loved, that when he or she takes the stage, everyone cheers, listens intently and then bids like crazy. We’re not saying that doesn’t exist -- we’re just saying that our experience has shown us that a good result is the exception not the rule.

Here are the top three risk factors

• LACK OF PREPARATION: The donor is not a professional speaker. He generally will underestimate the need to prepare. He owns the house he's donating, knows how much fun it is to vacation there, knows about all the local eateries and activities, so, he plans to just get up and tell people about it. Such lack of preparation nearly always means that the donor goes on longer than is necessary and includes too many details.
  
  As Mark Twain famously stated, "If I'd had more time, I would have written a shorter letter." Brevity is the result of preparation.
  
• ALCOHOL: Your gala is a social event. Your donor is a social person. Plus your donor knows that he has to give a speech in front of a big audience, so he has a couple of drinks just to settle his nerves.
  
  QUESTION: Does alcohol make people less talkative? QUESTION: Does alcohol cause people to eliminate extraneous details from their stories?
  
  It’s risky to put the microphone into the hands of someone who came to your event to have a good time and is having a good time.
  
• EMOTIONAL ATTACHMENT: The donor of the item is often too emotionally tied to the item. After he introduces the item, he stays on the stage, and if the bidding isn’t as high as he’s expecting, he grabs the mic again and offers more incentives or persuasion to get people to bid. The whole auction slows down and turns it into a beg-a-thon. If this happens, your whole auction may die.
  

Of course, as we mentioned, there are exceptions. Sometimes the donor does a great job. But on a scale of 1 to 10:

• We’ve occasionally seen someone who was a 9 or 10. They lit up the room and the item went great because of them. That’s maybe 10% of the time
• Most of the time (say 60%), the donor is a 5, 6 or 7. Not much impact, but not any harm.
• Sometimes (say 30%), the donor is a 4 or lower, and the impact can range from an audience that’s slightly annoyed to an audience that’s downright hostile.

We just don’t think it’s worth the risk when the options are that 10% of the time it’s going to be very impactful, but 90% of the time, it’s going to have little or no impact or be demonstrably bad..

We recommend that you keep the microphone in the hands of professionals, and have the donor provide talking points prior to the auction.

Let your auctioneer put the spotlight on the donor and praise him for his generosity. Just don't put the microphone in the hands of the donor.