What kind of response rates do your direct mail fundraising letters generate?

That’s the most common question I’m asked by potential clients. And it’s a good question, since nonprofit organizations need the highest response rates they can get in today’s competitive environment. Direct mail is an expensive way to raise funds if your response rates are low and your average gift is small.

So what’s an acceptable response rate? That depends on the kind of mailing we’re talking about.

Acquisition mailings (designed to acquire new donors) typically generate low response rates. An acceptable response rate with an acquisition mailing is somewhere between 0.5 percent and 2.5 percent. A response rate of only half of one percent might not sound adequate to you, but it’s acceptable if your costs are low or your average gift is high.

Remember that generating a high response rate in an acquisition mailing is more important than receiving a high average gift, since the whole point of an acquisition mailing is to acquire donors. The higher your response rate, the more donors you acquire. And the more donors you acquire, the more donors you can appeal to in coming months, leading to higher revenue over time.

Renewal mailings (designed to obtain gifts from existing donors) typically generate higher response rates. An acceptable response rate with a renewal mailing is somewhere between 5 percent and 35 percent. Response rates for renewal mailings are higher than rates for acquisition mailings because the recipients already know you, trust you and have given to you before.

Remember that your response rate does not tell you enough. It only tells you the percentage of people who responded to your mailing. Your response rate, even if it’s remarkably high, can’t tell you if you made money, lost money or broke even. It can’t tell you how much you spent to raise a dollar (or pound or yen). It can’t tell you how much you spent per donation. Or your return on investment.

Alan Sharpe is a professional fundraising letter writer, instructor, mentor, author and newsletter publisher. Alan helps nonprofit organizations worldwide to raise funds, build relationships and retain loyal donors using cost-effective, compelling, creative fundraising letters. Receive free tips like this each week by signing up for Alan Sharpe’s Fundraising Letter.