While telemarketing, direct response television, door-to-door solicitation, planned giving, special events, gaming and gifts via the Internet are important revenue sources, direct mail continues to be the mainstay for most charities.
There are many reasons why direct mail continues to dominate:
Proven Media – Direct mail is one of the oldest forms of fundraising and is one medium that has continued to generate revenues year in and year out.
One-to-One Relationships – Direct mail enables the mailer to establish a personalized communication with the recipient. Today’s technology allows us to use specifics about our personal connection and expand on it with relevant details.
Cost Effectiveness -With an established direct mail donor program, the cost to raise one dollar can be as low as 24 to 34.
Program Integration – Direct mail works well with many other fundraising approaches, enabling a charity to develop complimentary fundraising activities.
In recent years, the fundraising climate has changed dramatically. Fundraising professionals now recognize that retaining existing clients, increasing gift levels and growing a donor base requires a more disciplined, refined approach. As a result, effective fundraisers are adopting a more business-like approach that includes more sophisticated direct mail methods – techniques that have been developed and proven in the business-to-business and retail direct marketing arenas.
The Business Approach
It always makes sense to start with the basics, which is to take stock of your current situation. Examine your present mailing schedule, the timing of each appeal, the focus of the campaigns and their results. For the best historical data, you should conduct a three-year review in each of these categories. You may wish to consider whether you have the resources and skills in-house to complete this analysis or if you would be better served by using external help.
Upon completion of the basic analysis, you need to look at more detailed statistical results. You can use basic trend analysis or a more sophisticated RFM (recency, frequency and monetary) review. Either approach will help identify both the current strengths of your programs and those areas where you need to focus attention and resources in the future. This exercise will also help you prioritize the focus of your direct mail program in the future and to decide how best to employ your financial resources.
Learn from your non-responders
To complete your analysis, you need to examine your results through various gift segments. In addition to looking at donors by dollar levels and date of last gift, examine their frequency of giving, their consistency of giving year over year, and the results achieved at different times of the year. Although the inclination is to look at the donors who have responded to your campaigns, those who have not responded are equally or even more important. If you’re willing to listen, you can learn a great deal about your programs from non-responders.
Now that you’ve got the facts, it’s time to develop your Business Plan. First, you’ll need to establish goals. To drive your program forward, you need a good sense of where you want it to go. You need goals for your direct mail program – not just for the upcoming year, but for the next three or more years. What do you want your direct mail to look like a year or two from now? How much revenue do you want your program to generate?
Detailed objectives for each mailing
To develop an annual plan for each period, you need to set out what mailings you will complete, when they will occur and what donor segments will be included. Then, for each individual mailing, set detailed objectives that go beyond response rates and projected revenues to consider objectives for each individual donor segment including, gift levels, first-time donors, multi-gift donors, multi-year donors, etc.
Consider how direct mail will fit in with all your fundraising initiatives. How will you integrate the monthly giving program, major gifts, and planned giving? Do you plan to integrate other media like telemarketing or door-to-door canvassing into your direct mail program?
Finally, you must consider your communications program. What communication pieces do you have available and how will you use them to complement your direct mail program?
Have reasonable expectations
Every organization strives to grow each year, a natural and admirable goal. However, is it reasonable? Many organizations fail to look at all the elements that may have an impact upon their ability to achieve the goals that they establish for themselves.
To establish reasonable goals begin by looking at your historical results. In the past few years, if those results have been flat or trending down, setting a goal of 5% to 10% growth in one year may be unrealistic – unless there are unique circumstances that suggest such growth is achievable. Growth opportunities often relate to the maturity of the organization, how well established its direct marketing programs are and the cause itself. These are all issues that need to be considered before you establish your growth plans.
Given the increasing competition in today’s marketplace, charities need to have a good understanding of prevailing market conditions – circumstances that could impact upon a donors ability to give. Statistics Canada reports that while the number of dollars being donated to charity is growing at about a 6% annual rate, the number of individuals who make the donations is actually decreasing. In essence, the number of charitable organizations looking for support is growing faster than the ability of donors to meet the growing need. In addition, donors are becoming more selective about the charities they support. All these influences should be factored in when developing your plan.
Examine your resources
What resources are available to you — not only financial but technical and human as well. While the organization may have the financial foundation to put a plan into action, you must also have adequate tools in place and staff with the appropriate qualifications to carry out the job. These are very important criteria that many charities, or their boards, fail to consider.
Finally, what are your donors saying about the charity? Have you ever conducted donor research to determine what your supporters feel about the organization and the work that it is doing? How recently did you conduct such research? Research may well determine the feasibility of reaching your goals and it doesn’t have to be costly and elaborate. While comprehensive qualitative and quantitative research will yield the most helpful information, the process can be as simple as a few questions on the response form of an appeal.
The Strategic Plan
Your strategic plan is the method by which you will reach your stated goals. Like a road map, it will help you arrive at your destination in the most straightforward and timely manner. Without it, you may fail. Even worse, you may never know whether you have succeeded or not because you will have no way to measure your progress!
While strategic plans come in all sizes and shapes, they must answer the following questions:
- What are the needs of our organization?
- What are our overall campaign goals?
- What campaigns will we complete and when will we send them out?
- What targets will we establish for such key areas as new donor growth, renewal rates, lapsed and inactive reactivation rates, new donor conversion rates, individual campaign response rates and average gift levels?
- What return on investment do we expect?
- What cost per dollar raised would we like to achieve?
- What donor segments will we target?
- What themes will we use in our appeals?
In addition to these questions, you should include issues that are specific to your organization.
Write It All Down! – Many organizations claim to have a strategic plan but are unable to produce it. It is important to put your plan in writing. Develop it; write it down; work it with enthusiasm and review it regularly. It’s simply good business practice to do so, and your direct mail programme will benefit from this disciplined approach.
Evaluate and Measure – Good business managers evaluate and measure every aspect of their company’s performance. As your programme moves along, you need to take stock of where you are and evaluate your performance relative to your stated goals.
Each aspect of your plan must be reviewed and assessed. In addition to specific campaign details such as response rates and average gift levels, consider broader issues such as the number of donors you are renewing from the previous year, the number of lapsed and inactive donors you have been able to reactivate, and your ability to increase gift levels from individual donors. You should also evaluate carefully your response rates, individual list results and package results of acquisition appeals.
Finally, consider the soft issues associated with your appeals. What feedback, if any, have you received from donors or prospects on past appeals? What topics or subjects seem to work and which ones do not work? Are there any regional differences in your results that would lead you to rethink your campaign approaches? How do your program costs compare with the budgeted figures? Has your cost per dollar raised objective been met?
Adopting a formal approach to your direct mail programme will take the guesswork out of what you are doing. It’s just good business!
Peter Blakely is president of Blakely Epton & Associates, a Toronto-based direct marketing company specializing in the nonprofit sector. It functions as a full service agency providing consultative, creative, data and production services to a wide range of charities that require knowledgeable advice, strategic development and appropriate technical and creative services. For more information, call 905/727-6188, fax 905/727-1589, or e-mail pblakely@blakelyepton.com.
