How Direct Mail can benefit your organization

HRC-outer-envelopeAt Mal Warwick | Donordigital, we have had the opportunity over nearly two decades to work with hundreds of groups and causes across the country. We’re proud of our record in using that extensive experience to benefit our clients. We also believe that what we’ve learned can benefit other organizations. Our approach to direct mail fundraising is based on the conviction that donors are intelligent, sophisticated, and discerning. Donors understand much more about the fundraising process than they are usually given credit for. Further, we believe direct mail fundraising is a potent vehicle for public education. Our own research as well as data gathered by others suggest that for a great many Americans, fundraising letters are a vital source of information. Because donors are intelligent and compassionate, they respond to:
  • direct mail packages that accurately reflect an organization’s mission and program … are accessible to readers … and strive to be attractive and striking in design.
  • frequent opportunities to support those organizations they believe in — with less frequent mailings for those who are less responsive or who have requested they be approached only once or twice a year.
  • invitations to increase their impact by giving larger gifts — because we know donors who make larger gifts are more loyal and are more likely to make additional gifts.
  • thank you letters and expressions of appreciation in appeal letters, annual reports, and other mailings.
  • highly personalized packages that communicate courtesy and consideration, and use excellent graphic design and high-quality printing.
Investing in long-term growth Yes, postage rates keep going up. Yes, printing and paper cost more. And, yes, there’s increased competition as more organizations than ever are using the mail to raise money. But direct mail fundraising is still the most cost-effective way to build a stable base for a nonprofit organization. Direct mail enables organizations to raise the maximum net income and secure long-term financial support for their programs. For many organizations, direct mail provides a constant, predictable stream of unrestricted income. In most cases, acquiring new donors or members through the mail means losing money on the initial effort. Typically, acquisition or prospecting programs — if they are more than a one-shot or occasional mailing — return only 50-75% of their costs. Acquisition mailings are a long-term investment because these newly acquired members will remain members for an average of two to three years. And during that time, these donors will make three or four additional contributions, and their average gifts will be 1.5 to 2 times the size of their initial gifts. Our own research shows that members acquired through direct mail are twice as likely to remain members as are those acquired through other means. For most organizations, the greatest value of direct mail fundraising is that — among these newly acquired members — there will be individuals who will eventually leave charitable bequests in their wills or make some other kind of planned gift. Others will make major gifts. Still others will make regular, monthly contributions. Member acquisition versus member resolicitation In the broadest terms, mailings either acquire new members or resolicit previous members for additional support. In our work over the years with dozens of organizations, we’ve found it helpful to use the term “members” for all donors — even when those members have no formal role in governing an organization. For many donors, being a “member” involves making contributions and receiving newsletters or other publications. Some organizations we work with choose to call their donors “friends,” while others prefer to retain the term “donor.” Thus, whether designed to acquire new donors or new members, acquisition or prospect mailings seek to persuade individuals to take the step of giving a first gift. Acquisition mailings tend to be inexpensive ($0.30 to $0.70 each), produced in large quantities (50,000 to one million letters), and mailed infrequently (perhaps two to six times per year). Response rates range from 0.5% to 2.5%. The success of acquisition mailings is measured by the number of new members or donors and by the acquisition cost for each member or donor. The trick is to avoid spending too little or too much in these acquisition mailings. Special Appeals (sometimes called house appeals or resolicitation mailings) are normally written afresh each time. To achieve the greatest impact, these mailings are more expensive ($0.50 to $5.00 each) and are mailed in smaller quantities (3,000 to 300,000 letters, depending on the size of the membership or donor list). Response rates may range from 3% to 20%, but are typically between 5% and 10%. Many fundraising programs mail a special appeal each month. But it’s unlikely that any one member will receive every appeal. Through segmentation, subgroups are selected for each mailing and for each package within that mailing — to achieve optimal impact and increase the mailing’s cost-effectiveness. We evaluate the success of resolicitation mailings in terms of net revenue: the ratio of revenue to cost, which tends to be between 2:1 and 12:1. The ratio varies greatly with the segmentation chosen; some subgroups (those who give most generously, most frequently, and most recently) tend to be far more responsive than other subgroups. In short, an effective direct mail fundraising program seeks to acquire as many new members as possible at an acceptable member acquisition cost. Then, the entire membership file is analyzed, cultivated, and re-solicited to derive the maximum net revenue. What will make your direct mail work? Your organization is the most important ingredient in any direct mail program. Half the response to direct mail is determined by your organization’s track record and the power of your message … the ties of your work to issues of broad public concern … and the amount of publicity you get. The other half of the response is affected by factors related to your direct mail fundraising program:
  • List selection. This is by far the most important ingredient we can control. Call it 25% of the recipe, or about as much as all the other controllable elements combined. The most brilliant appeal for the most dynamic organization in the world won’t work if it’s mailed to the wrong lists.
  • The “offer.” Next is how the request for funds is structured: what you ask for, and what you tell donors they’ll receive in exchange. Call it 10% of the total picture. Every mailing must be built around a central creative concept — a clear and powerful connection between the “offer” (or request for gift) and the donors.
  • Copywriting. The actual wording of your appeal may account for 5% of the total picture. Most direct mail experts consider the letter itself to be the single most important element in a direct mail package. The outer envelope, response device, and all other package elements should reinforce the central concept of your appeal.
  • Format. The size, shape, and color of the envelope … the character of the inserts … and the extent of personalization may all have significant bearing on the results. The right format choices can be as important as the copy — about 5% of the total. Everything in a direct mail package must fit together to form an effective whole.
  • Design. Once the format is set, the designer’s skill with type, color, and placement can have an equal (5%) influence on the outcome.
Creating a schedule of mailings To cultivate the financial commitment of newly acquired members or donors requires at least six mailings per year to your most active members — and often newsletters and telephone fundraising calls as well. The key is to plan and coordinate the most effective possible sequence and combination of mailings. The really smart part of direct mail is an intelligently designed schedule of mailings, which may include the following components:
  • Membership Acquisition. Prospect letters are mailed every two to four months — in successively larger quantities until the optimal level has been reached.
  • Donor Acknowledgment. New members or donors receive a “welcome package” full of information about the organization — and about the benefits and services available to them.
  • Membership Renewal. Every year (on a monthly, quarterly, or yearly cycle — depending on the size of a membership base), a series of membership renewal notices is sent out. Initially, if numbers are small, the series consists of as few as three written notices. Eventually, it may consist of as many as ten efforts. This same structure of mailings has proved effective for annual fund programs.
  • Special Appeals. Every six or eight weeks, members or donors receive a request for additional support on the basis of some special project or special need. The first of these appeals goes out as soon as the number of members is large enough to warrant it.
  • Membership Newsletter. We recommend that your members or donors receive a newsletter or other informative publication at least four times a year.
 Dan Doyle is the CEO of Mal Warwick | Donordigital.

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