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Sandy

Thanks for your message.  I'm wondering if you could address the most powerful/effective things those of us with limited funds can/should do to increase our response rate.  After getting a great database, that is. Whenever people talk about doing sampling of letters to "just" 3-4,000 people I feel left out.  Our entire mailing is only that many.  We have a limited budget, so can't try a few thousand here, a few thousand there to see what works best. Help!

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David

Sandy, I assume you are talking about mailings to your house file.  In that case, I would use the principle of Recency, Frequency, and Monetary (RFM).  This is also exactly why good databases are so important for small non-profits. If you have decent software and you've recorded the right information correctly, then using RFM in a house appeal will be the most powerful/effective tool.

Recency - the idea behind recency is that donors who have given recently (define that as you will; however, I suggest in the last 3-6 months.  This also means you should send a fundraising appeal to your house file 2-4 times a year.) These donors are more likely to donate again.  This is a proven concept. It is also a practice used by large commercial mailers.  Have you ever noticed that after you subscribe to a magazine you are all of the sudden swamped with subscription notices for other magazines?  It's because magazine publishers now know that you are the type of person who reads and subscribes to home delivery of magazines.

Frequency - donors who have given two gifts are likely to give a third, etc.  The more individual gifts from a donor the more likely you'll receive another.  I know that it is counter-intuitive.  We want to think that if I constantly ask an active donor for money, they will stop giving. However, out of sight, out of mind, especially if you only contact your donors once or twice a year.  Just look at your own life, do you think about your favorite cause every day (no fair, I know you work for your favorite cause)?  If I gave money this week to save the whales, I won't remember that I did next week, let alone next month.  Yes, it's true some donors only want to give once a year, and a good database software package will track that preference for you.

Monetary - a donor's largest one-time gift indicates their interest in donating again and the size of their next gift.  Most people don't give out of their want.  If they can afford a $100 gift from "pocket" change, chances are they can afford $150 next time.  It is also true that the larger the gift, the more the donor has "bought into" your cause.

Now how to use this to your advantage?  Specifically because your house file is so small, you can and should be sending highly personalized appeals EVERY time.  With today's modern database software and mail merge, you can narrow your appeal to just the likely donors.

The most powerful/effective tool now becomes mailing to likely donors, based on RFM, and asking them for the right amount.  The number one error in fundraising, in my opinion, is not asking for a large enough gift.  If a person gives you a $1000 gift, it may be the largest gift your organization has ever received, you can now ask for $1000, $1500, or $2000 dollars in a direct mail appeal, or in a telemarketing appeal.

As for testing, yes, you have a small house file, and if you segment your file based on RFM, then your mailings will be even smaller.  However, I still suggest you test 500-600 names minimum (ideally you would test until you receive at least 100 responses.  In other words, if you get a 1% response rate on an average acquisition package, then you need to test 10,000 names to get 100 gifts.  This is fine for a large direct mailer, but difficult for a small non-profit.).  After sending a small test mailing and you suspect your test package is more successful than your control package, then on the next appeal try a larger mailing.  You are going to encounter risk.  The new package, in reality, may bomb, but it may also succeed, but you'll never know unless you test.

By the way, how do you know if your test package is succeeding?  You must code your reply card.  You should give a different code to each mailing, so you can record in the database, which appeal the donor, is responding to. For example, a Christmas mailing may have a base code of XMAS.  I would also then code by RFM and then by test package.  Donors who have given recently, two or more gifts, and their largest one-time gift was over $100, I would assign the code XMAS1A; the test package would be coded XMAS1B. Donors who have given recently, but only one gift, and it was less that $100, I would code XMAS2A, and the test package XMAS2B.  Do you see what I mean?

Any questions?

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Tamar

My entire database is 10,500.  I just "tested" about 600 of that with a hand-addressed, first-class stamped appeal.  So far, those random 600 are pulling 2.8% (vs. 1% with bulk) the number of donations and the average donation is $102 vs. $46 for the bulk mailing.  You can test with a small amount if you can pull names randomly and have the people-power to do something like this.

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Michael

If we are going to talk about mailings, I think it would serve us all well if we defined what kind of mailings we are talking about.  Is your question about a donor acquisition mailing?  Or are you talking about an "in-house" mailing -- the understanding I have is that this is to a list of people that have already donated to your organization at least once.

These two different types of mailings have very different parameters, purposes, and results.

However, I would like to re-iterate the question listed below.  I have seen many different things suggested as being methods for increasing response rates, whatever kind of mailing you are doing.  Some authors I have read discuss the use of "teasers" on the outside of the envelope, or even photos on the outside of the envelope.  At least one other source has said that you get a better response when you use different size envelopes.  In other words, to make the piece look less like bulk mail use something different than the standard size business envelope.

Which of these methods is best?  Or is one better than the other?

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David

Michael,

I wanted to make sure I answered all of your questions.

Despite what consultants and direct mail experts tell you: There is no one method better than the other; it's what works best for your organization. That is why direct mail programs in nonprofits are so rare.  It takes years to understand what works and what does not.  It even takes 2-3 years just to turn a profit on a single acquisition mailing.  There is even some evidence that people are being turned-off by teasers and pictures on the envelop!  The surest way to get a new donor to open your solicitation is if they recognize your return address.  Who knew!

In other words, test!  Look at what other organizations in your field are doing.  If they keep mailing the same package, they are either fools or it's a successful package.  Be constantly aware of opportunities: Active donors, inactive donors, and new donors are more likely to give generously to an urgent appeal for something specific, as opposed to money for the general fund.  Even this advice can be a two edged sword; if your organization needs money to pay the electric bill, a donor may think you are poorly managed (even though you have a waiting list and 99.9% of your budget goes to services).  However, an appeal to repair your halfway house destroyed by a tornado can be very successful.  On the other hand, a well written and compelling fundraising appeal talking about the need to pay the electric bill so that you can actually see the poor widow you are trying to help, may just work.  You'll never know unless you test.

One last word of caution, there are some things that will harm your organization more that it will help.  An appeal that is tasteless or is out of character with your organization could hurt your organization's fine reputation.

Any questions?

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Tom

No kidding, about the impact of a bad mailing, David.  I spent two years at one nonprofit cleaning up the aftermath of a single public relations screw up that happened just before I came on board.  I should have smelled a rat when I found a copy of the offending newspaper article in the former PR guy's desk when I moved in.  Donations dropped like a stone and I spent my entire tenure, practically, rebuilding our reputation. A lot of that was done with a carefully crafted newsletter and direct mailing campaign.

You wouldn't believe what a swim against the "we've always done it this way" tide it was to change their marketing approach even a little.  But it did help.  Public perception improved and we were given a "by" by the media on a couple of news stories that could have wrecked us – mainly because we had worked so hard with them to sell ourselves in a positive light. The non-profit organization is still recycling some of my stories and photos and I've been gone for three years now. 

Not the best way to go, but at least, if they're back in a rut, they aren't doing anything spectacularly wrong.  With direct mail, it's like with doctors.  You at least want to "...do no harm!"  Sending something in poor taste or something that makes you look shifty or dishonest will kill you for a very long time.

Be careful and get lots of people to look at anything that goes out to your mailing list or the media. In many counselors there is safety.

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Michael

I must agree with your post.  The quality of your letter, the graphics, everything else is wasted if your database is poor.  The organization that I direct has been lent the donor databases of other organizations on occasion.  My impression of all of these databases has always been that they were in very poor condition.  One specific list that I remember had one person entered (slight spelling variations, but at the same address) no less than 6 times!

This kind of thing can have a very negative impact on your mailing. First, even if this person donates, they are not likely to donate 6 times so your response rate is artificially lowered.  Second, this potential donor may not like receiving 6 copies of the same mailing, may think that your organization is very wasteful and not donate at all.

So, make sure your database is in good condition before you mail to it.

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Pat

David, assuming you have a good database to mail to for regular annual fund gifts, do you think it's necessary or more helpful to include a brochure with your mailing.  Normally, we include a reply device and return envelope, but I am questioning the value of a brochure in addition to the letter, reply card and return envelope (not prepaid).  These are donors who have contributed at least once in the past three years. What do you recommend for a donor acquisition mailing?  Given it should be done as inexpensively as possible, but do you think an informational brochure about programs is warranted?

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Mary

Of course, I'll be very interested in what David has to say about this, but in my experience, a brochure to a list that has given recently is a waste of time and money -- and often leads to depressed results.  I'd concentrate your time on cleaning the database (as the others have said) and writing a really good letter.  Also, the silly old reply device is important, since many donors will save that to deal with later.

Depending on how well informed potential donors are, I would sometimes use a brochure.  I worked in the performing arts, where our acquisitions were most likely to come from subscribers or other ticket buyers who had not (yet!) given.  In that case, they probably knew most of what a brochure would tell them -- they'd already bought in to some extent, just needed a good reason to give.

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David

Mary & Pat,

I think Mary has hit it right on the head: you need to know your donors, and they need to know you.  The principle here is that a person who understands your organization and what you do is more likely to give, give large gifts, and give more often, but don't insult them. Brochures, I feel, are rudimentary, promotional pieces.  After a person gives, they tend to feel part of an inner circle, and therefore, deserve a personal letter talking about your successes and how their gift made it happen.  I'm also coming from the bias that "annual" appeals do not mean one letter a year. I'm assuming you are sending a thank you letter, a quarterly newsletter, etc.  I also agree that your fundraising copy, if it is compelling, can be more effective than a static brochure.

Mary, again you are right.  The reply piece can be the most important. Put a return envelop in every letter, every thank you letter, every newsletter, because you want to be there when your donor is in the mood to give money away!

Acquisition mailings are another animal.  Depending on your target, a brochure may be fine, but if you are going for high-dollar, CEO types you may want to send something personalized, four-color, and high-gloss.  And on the other hand, if you are an organization working with the poor of Appalachia, such an expensive piece could turn a lot of donors off. However, a nice piece is important for a fine arts or performing arts organization when they solicit corporate sponsors.

Pat, I hope I answered some of your questions.  Direct mail is an art and a science all unto itself.  The only thing proven about direct mail is the need to constantly test.  Even if your package has worked for five, ten, twenty years, test it!  Look at it this way; snail mail is no longer a luxury or something to look forward to (when was the last time someone wrote a song about direct mail?  Elvis's Return to Sender?).

Any questions?

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Michael

I have a question:  What is an acceptable response rate for a donor acquisition mailing?  Would something in the 1.5 - 2% range be acceptable?

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Tamar

I can't wait to see what David says but I think that 1.5-2% is remarkable for donor ACQUISITION.  That's not even bad for regular appeals (depending on other factors of course) is it David?

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Michael

While we are talking about response rates, what is an acceptable response rate for in-house mailings?  By that I mean when mailing to a list of people that have already donated to the organization at least once.  Keep in mind that this is a very tight list where we remove people from "active" status if they haven't donated in 1 1/2 years.  At that point we start sending them different pieces, more personalization, etc. And thereby we gain back about 1/3 of the inactives. We have also been very careful to avoid duplicates, etc.  We have a very clean list, thanks to our database management person.  It is apparent to us from other lists that we have seen that other organizations don't keep their databases very clean, and their lists become much less effective, and waste a lot of money.

But, for a regular in-house list mailing how is a response rate of 15 -20%?  We have an average donation of about $30 per person, how is that??

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David

Michael,

Without a doubt 15-20% at a $30 average gift seems like a great response rate.  I just ask, what is your cost per piece mailed (the total cost of the package, mailing, and list rental divided by the total number of pieces mailed) and your response per piece mailed (the total amount of donations divided by the total number of pieces mailed)?  Obviously, if the cost per piece mailed is higher than the response per piece mailed, then you are losing money, and no response rate is good.

Using the response per piece mailed figure will allow you to track the success of a package or mailing over time.  If the response per piece mailed is higher than average, then you potentially have a phenomenally successful package, but you have to test the package again.  For example, an appeal featuring your non-profit's work with firefighters six months ago, may not do as well six months from now.  Why?  The emotional response to 9/11.

Michael, I'm very impressed with your database.  It sounds like you are doing a lot of things right.  Congratulations!

Tamar, you're right.  I'd say 1.5% on an acquisition mailing is excellent. Personally, I'd be happy with something nearer to 1% with a high average gift.  But again this all depends on your organizations history, its cause, and the time of year.  I would say a 2% response rate for the American Red Cross after the tornadoes in Wisconsin would be a horrible rate, but for a Catholic seminary....  I would also want to look at the cost per piece mailed verses the response per piece mailed.  If I'm close to breaking even I'd be satisfied with the success of the mailing.

And then again in the long-term what is the value of this donor?  If I get a 2% response rate, but they only give one $5 gift, then I'd feel dissatisfied.  On the other hand, if I get a .8% rate and a low average gift, but I know I can move them into a higher gift bracket, then it's worth it.

Any questions?

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Michael

David,

I guess I may not have made myself clear.  This information (15 - 20% response rate & $30 average gift) is for our in-house list.  Therefore, there is no list rental.  This list is the collection of everyone that has responded to our acquisition mailings over the last 6 years or so.  We started with no list whatsoever in 1996 (late) and now have about 1300 donors that we mail to regularly.

The average cost per piece is approximately 36 cents.  Each letter updates our supporters on our most recent work, and includes things like media coverage that we have received (this shows we are really doing something).  We are an advocacy organization, so we think that demonstrating activity is important.  There are some organizations in the same field that many people question their activity level, in other words many potential donors wonder if some of these other organizations really DO anything.  We try to show that we are VERY active.

We mail to our list approximately 6 times per year.  And while the response rate does vary somewhat, it is relatively consistent.

I'm just trying to find out if we are doing things right.  It seems like our acquisition mailings are doing ok (1.5 - 2% response rate – they usually come close to breaking even, or we at least don't lose too much), and our in-house list is performing in such a way that it provides most of our budget (yes, we are a SMALL organization).

Right now we are primarily just trying to increase the size of our list so that we will have more resources to work with.  We are about to do our largest mailing ever, approximately 45,000 pieces.  We have tested about 9000 names on this list and they tend to respond at a level of 1.6% with an average donation of $18.48 (this is an acquisition list).  If it continues to perform consistently it should generate about 720 new donors.  We should be able to increase our in-house donor list by a little over half.  We will likely loose about $3000 on the mailing.  But it should generate hundreds of new donors at a net cost per donor (amount lost on the mailing divided by the number of new donors) of about $4 per new donor.

How does all this sound?

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David

Michael,

I think your organization and mailing program is far ahead of the game. For any sized non-profit, you are doing everything right.  I do recommend you use some database marketing techniques, specifically, Recency, Frequency, and Monetary (RFM), to maximize your donations and minimize your cost.

For example, there is little reason to send mail frequently to donors who haven't given in two or three years.  Perhaps send them one of the acquisition letters in your next mailing.  Treat lapsed donors as potential new acquisitions on a rental list, except you already own the list.

Another suggestion is to encourage your donors to give more in your letter and on a giving-tree on the reply device.  For example, if you know that your donor's largest one-time gift was $100, then ask for $150 in the letter, and $100, $150, $200, and $other on the reply device.  I particularly like the x1, x1.5, x2 scale.

Again, congratulations on doing things right.  I've seen so many non-profits fail, or at least fail to live-up to their potential, because they refused to take the steps necessary to fundraise successfully. Anytime an acquisition mailing can come close to breaking even is excellent.  Your fundraising copy sounds interesting and informative, which is important in cultivating donors.  And I think it is wise to understand that it is more important to add new donors to your database then it is to break even on an acquisition piece.

I hope I did not come across as flippant yesterday, by the end of the day I was getting a little cagey.

Any questions?

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Michael

We are doing the recency/frequency thing.  And we do consider someone "inactive" at about 18 months - 2 years.  Then we do additional things to try and re-vitalize them, and we can usually do so with about 1/3.

Regarding upgrading/high donors, how do you approach this?  Would you do something like this with a separate/additional mailing or would you substitute this kind of thing for a regular mailing?

Also, do you suggest doing something like a special separate mailing, once or twice a year, to your high donors/most frequent donors?  Maybe an additional piece to them around the holidays?

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Jenny

How long should an inactive former donor be kept in a database? How frequently should fundraising appeals be sent to active donors over the course of a year?

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David

Jenny,

Well, it depends.  (Don't you hate that response?)  Seriously, you should keep the information on inactive former donors in your database indefinitely.  However, you should rarely send a direct mail solicitation to them.

There are several benefits to keeping someone's record indefinitely:

1. If you have a direct mail acquisition program, you can use the old record to purge the name from any rented lists, saving you money;
2. You can send the inactive donors a solicitation once a year treating the records as if they were "new" rented names, the inactive donor list will be as successful as any rented list, no more than 1%, and you didn't pay for them;
3. You can develop a "re-activation" appeal trying to get an inactive donor to become active again;
4. You can contact the inactive donor to find out if your non-profit has done something wrong (this can lead to wonderful changes that will improve your fundraising and customer service); and
5. You can use the information for analysis.  For example, if you find that most inactive donors give only when you give them a “freemium” or premium, then maybe they aren't the loyal, long-term donors you want or need.

The debate on frequency will rage until the end of time.  However, one thing is clear, out of sight, out of mind.  Why else does McDonald's advertise?  My suggestion to you is that you contact your active donors at least once a month.  Wait!  I'm not suggesting you solicit them every time, but that you stay in front of them at least once a month.  Work-up a schedule that includes newsletters, fundraising appeals, special events, phone calls, one-on-one visits, etc.

Does this sound like too much work for a small non-profit?  It may be, and then I suggest this being the goal as you grow and a challenge to be creative.  Learn to find creative ways to let your donors know about your successes, what you are doing, and that you truly appreciate their support.

Any other questions?

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Diane

You are so right. Although nonprofits may compile a segmented list manually, it is much better to set the foundation correctly by installing a relational database. This will help every aspect of the development program. Even nonprofits that do not have a large budget should consider upgrading their database program with one of the low cost programs that are available.

My experience has been that personalization will always provide a better response rate, sometimes up to 25% depending upon the list. You might expect 12-25% from existing donors. Most nonprofits I work with generate a new acquisition response rate of 1/2 to 1.5%. However, keep in mind that if you use a random sample of less than 5,000 that the results will be slightly skewed. If you expect to receive the same rate when extrapolating to the larger mailing then you might be disappointed as small samples sometimes "overperform" due to the laws of statistics.

Despite this phenomenon, I think it behooves nonprofits to test, test, test, so that they can develop new and better ways of doing things without investing large sums of money. We all need to help each other get better at what we do, no?

For more ideas about direct mail, you may want to visit our site at http://www.drcharity.com/directfund.html

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Jenny

What strategies do you use to move a donor into a higher gift bracket?

Also, what is considered the industry standard for when a former donor is considered inactive? I have heard 18 months. Thanks for your replies!

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David

Jenny,

To move a donor to a higher gift, use their one-time-largest gift as a base and then ask for 1.5x or 2x that amount in the fundraising letter.  Also use a 1x, 1.5x, 2x giving-tree on the reply device.  In other words, suggest that they give you more money.

Another strategy is to "suggestive" sell.  In a solicitation letter, thank them for their gift of $100, and tell them for $150 you'll be able to feed 15 more children, etc.

Yes, 18 months is definitely a good standard for inactivity.  However, I would not let them get that inactive, by 6-12 months I would have already sent them a letter thanking them for their previous gift and reminding them that we really need them to donate again.  By 12-18 months, I would try to find out why they are no longer giving, perhaps with a phone call or a survey.

One non-profit mailer I work with considered lapsed donors to be 6 months + because the organization mailed their donors every month, so a donor had 6 chances to give.

Any questions?

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Tamar

We have just done this the past few appeals.  We pick donors at a certain level and "isolate" them on the database.  Then myself, the director and a few board members look through the names and decide who could probably go up (about 2-300 names from a database of 10,500).  Then we decide what amount we should ask them to increase to.  If it is a large amount - a personal visit.  If not a visit, a personalized letter, hand-signed (not scanned), hand-written envelope and first class-stamp.  We have about a 75% upgrade rate (usually it's not a huge $$$ increase - like $100 to $125).

David, this is my first fund-raising job - I come from a non-profit theatre background selling subscriptions and a city magazine background as circulation manager so I don't know what good percentages/strategies are for fund-raising.  I am going with my gut on some things and don't always know if they are right or good to test.

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David

Tamar,

Excellent strategy!  Any excellent upgrade rate, and an extra $25 is an extra $25.  Next time, they'll give $150 and then $175, etc.  Do you see that this is the beginning of a major gifts program?

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Tamar

I forgot to mention that in this last appeal we did the "Sally Struthers thing".  We had an unsolicited letter from a client in his own handwriting. We got permission to use it and copied it exactly as it was without his name.  We enclosed that in the appeal (we had never done that before) and our percentage return has been about 0.5% higher among our smaller donors and non-donors.  I have to believe the jump in donors has been because of that because our appeal letters are basically the same each time.

We always have client stories in our appeal letters but have never done this. Does anyone else have experience with this type of letter working better?  Worse?  Not worth the printing cost?

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Sean

I have a question regarding acquisition mailings.  We currently have a newsletter that goes out to everyone we have an address for (we either got each person's contact info from a special or community education event).  We mail this newsletter to about 2,500 people.  Of those 2,500 in our annual appeal about 300 are regular donors, 500 are sporadic donors, and 1,700 have never mailed in a donation.  Those 1,700 receive at least one plea each year and a newsletter each quarter.  We would like to "acquire" some of these people as either regular or sporadic donors.  Any suggestions?  Also, when do you remove someone from your list, after a year of no response? After 5 years of no response?

Also, how have people gotten donor lists form other organizations?  I hear this can be very effective but I don't know how to go about doing it.

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David

Sean,

Why are you mailing to people who never donate to you?  If they are business or community leaders, I would understand, but mailing 1,700 newsletters to people who do not care enough to donate seems like a waste of precious resources.

To active those 1,700 names, I would try a "subscription" letter.  Say sometime like, "We value you as a supporter of our cause, and due to the tough economic times our community is facing, I want to encourage you to make a donation of at least $15 to help defray the cost of producing and mailing the newsletter you enjoy each quarter."  Please feel free you to use your own kind words, but I think you get the idea.  If the name still doesn't donate, go one step further and say that they will no longer receive a newsletter unless they become an active donor.

Never remove a name from your database; in an earlier e-mail I discussed some of the reasons why.  After 18 months, inactive donors should be put aside to be handled in a different way.

The best way to get lists from other organizations is to ask.  If you are not going to out-right rent a list, then usually you will need to exchange databases.  Typically it is a one-to-one exchange.  If your organization has a database of 2,500 names, then you can only use 2,500 names from the other organization (unless you are real close friends with their development director).  Beware some organizations will only give you their lapsed or low-dollar donors.  This is fine in my mind, but just be aware that you may not be getting their "best" names.  Likewise, don't feel the need to exchange your best names, just be up-front with your policy.

Be selective in which organizations you exchange names with.  For example, if you are PETA you don't want to solicit donations from the NRA database. Typically, but not always, exchange with related or like-minded organizations.  Know what the other organization is doing with your names. Lord knows you don't what them harassing your supporters or saying something bad about you.

Speaking of which, before you exchange or rent your database, make sure you have a privacy policy in place.  Your organization and board must have a clear understanding what the policy is and isn't.