The Role of Direct Mail in
Philanthropy Marketing
Wayne Gurley
President & Creative Director Allegiant Direct, Inc.
Brentwood, TN
The Allegiant Direct Philosophy:
Developing a Successful Contact Strategy • Direct marketing serves as a “lead generation”
program for major and planned gifts.
• A cultivation process – moving a person from first-time gift to a major or planned gift.
The Allegiant Direct Philosophy:
Developing a Successful Contact Strategy • Not “annual” giving (once a year), but current,
regular, repeat giving
• Getting donors to their “long-term value” as quickly as possible
Direct Marketing
A “Numbers” Game
Major Donors & Planned Giving Donors
(20% give 80%)
Mid-Range Donors
Entry Level Donors (80% give 20%)
Years of Giving Between 1
stGift
and 1
stFive-Figure Gift ($10,000+)
(Source: Target Analysis Group/Blackbaud)
1 - 2 Years 10%
3 - 5 Years 12%
6 - 8 Years 13%
9 - 12 Years 20%
What Was the Size of a
Five-Figure Donor’s First Gift?
$1 - $24 18% (second largest %)
$25 - $49 14%
$50 - $99 15%
What Was the Size of a
Five-Figure Donor’s First Gift?
$100 - $249 23% (largest %)
$250 - $499 8%
$500 - $999 4%
What Was the Size of a
Five-Figure Donor’s First Gift?
$1,000 - $2,499 7% $2,500 - $4,999 3% $5,000 - $9,999 2% $10,000 - $24,999 5% $25,000 + 1% $1,000 + 18% (total of above)
Your goal should be to maximize
Donor Long Term Value (DLTV)
•
Move donors from Point “A” (first-time gift) to
A few DLTV givens:
• Average worth per donor is $1,000 - $2,000. This figure includes all lifetime income from individuals, including planned giving. (Does not include
foundation grants or corporate support.)
• Best age demographic for fundraising is 65+.
• Average “life” of a direct mail donor is 7 years, so you don’t have a lot of time to move them from “A” to
Case Study:
Donor Long Term Value Analysis
Martin Memorial Foundation/Stuart, FL
Years of
Giving Total Lifetime Income From Individuals # of Individuals Responsible for Total $$$ Average Worth Per Donor 30 $141,000,000 27,840 $5,065
Case Study:
Martin Memorial Foundation/Stuart, FL • 13-year history of direct mail
• Historically did 2 appeals, fall & spring • Lacked accurate data and analysis
• No focus on pipeline/attrition rate • Excellent donor relationships
Case Study:
Martin Memorial Foundation/Stuart, FL
•
Starting in FY 2008:
– Increased mail to patients – Began systematic testing
– Added a Fall follow-up appeal to donors; added Doctors’ Day mailing in February
– Launched Foundation “Hot Sheet” – Added LYBUNT mailings
Direct Mail Results
Martin Memorial Foundation/Stuart, FL
$0 $50,000 $100,000 $150,000 $200,000 $250,000
FY2008 FY09 FY2010 FY2011 FY2012 FY2013 YTD
$190,855 $196,675
$216,956 $222,484
$196,080
$156,437
* fiscal year ends 9/30 1,897 donors 1,592 Donors 1,116 donors 1,917 donors 1,254 donors 1,273 donors
Focus on LYBUNTS
• Wanted to address high attrition rate
LYBUNT Results
Fiscal Year # mailed # gifts % response $ raised Avg. gift Cost/donor
2009 (Aug) 691 73 10.6 % $13,115 $180 $4.16 2010 (Aug) 1,250 126 10.0% $12,235 $ 97 $4.76 2011 (Jan) 311 70 22.5% $ 6,455 $ 92 $2.14 2011 (Aug) 1,195 122 10.21% $ 7,708 $ 63 $4.90 2012 (Jan) 694 59 8.50% $ 3,245 $ 55 $5.88 2012 (Aug) 1,057 126 8.40% $ 5,420 $ 42 $4.19 •Cost/donor = cost to recapture each donor
Lapsed Donor vs.
Variable Paragraph Copy Test
Audience Pieces
Mailed # gifts % response $ raised Avg. gift CP$R
Lapsed 2-3 Year Donors (IVUS Letter) 1,246 16 1.26% $723 $45.19 $1.08 Lapsed 2-3 Year Donors (LYBUNT Letter) 1,246 17 1.36% $1,130 $66.47 $0.69
The UN-solicitation
• Foundation “Hot Sheet”
• 1 piece of paper, done in-house, “down & dirty”
• Mailed 10+ times/year to $100+ donors, all coded MG prospects, other lists as necessary
• Current, quick, can be
customized for different uses (i.e. “all-doctor” edition, event edition, impact reports)
• Drives donors to website – no BRE included (we tested)
Annual Giving:
A Flawed Concept
• Concept of “annual” giving comes from college & university fundraising.
• Perpetuates the mindset that you will only ask for support once a year
• Assumes you will only get one gift per year from donors
• Does not promote an environment in which “multi-donors” can be cultivated
Problems with
“Annual” Giving
• Creates extremely high attrition rates
• Puts enormous pressure on organization’s donor acquisition efforts to replace donors who lapse and grow the donor base at a reasonable annual rate
Donor Attrition Chart:
20% rate over 5 years
Donors 1 Year 2 Years 3 Years 4 Years 5 Years 1,000 800 640 512 410 328 2,500 2,000 1,600 1,280 1,024 819 5,000 4,000 3,200 2,560 2,048 1,638 10,000 8,000 6,400 5,120 4,096 3,277
Donor Attrition Chart:
40% rate over 5 years
Donors 1 Year 2 Years 3 Years 4 Years 5 Years
1,000 600 360 216 130 78
2,500 1,500 900 540 324 194
5,000 3,000 1,800 1,080 648 389
Donor Attrition Chart:
60% rate over 5 years
Donors 1 Year 2 Years 3 Years 4 Years 5 Years
1,000 400 160 64 26 10
2,500 1,000 400 160 64 26
5,000 2,000 800 320 128 51
Annual Goals
•
Annual Donor Renewal Rate of 60% - 80%
Direct Mail Results
What Can You Expect? (Industry Standards) • New Donor Acquisition response: 1% - 2%
• New donor acquisition average gift: Low: $15 - $25; High: $50 - $60 (depending on the “ask”)
• New Donor Acquisition CP$R: $1.00 (break-even) to $3.00 or possibly more
Direct Mail Results
What Can You Expect? (Industry Standards)
• Active Donor Renewal response: 5% - 15%
• Active Donor Renewal average gift: Can vary from low of
$25 to $100+
• Active Donor Renewal CP$R: $.01 - $.50
• Lapsed Donor Renewal response: 2% - 3%
• Lapsed Renewal average gift: (Same as above.)
Getting the First Gift
• Entry-level “audition” gift
• Was the donor thanked?
• Was gift properly acknowledged?
• Was it acknowledged quickly? (within 24-48 hrs.)
• Was the donor told that his/her gift was put to good use
Getting the Second Gift
• Extremely important!
• 50% of first-time donors never give again
Suggested remedies
for high donor attrition rates
• Thank donors promptly with a letter, and preferably, with a phone call.
• Mail a “Welcome on Board Package.”
• Within a few weeks, make another phone call
thanking them again, and put the idea of making a second gift into their head by mentioning a matching gift and asking them if they mind receiving info.
Suggested remedies
for high donor attrition rates
• Send a postcard inviting donors to participate in a webinar or telephone conference with a senior member of your organization who would agree to discuss issues you are facing or needs (such as new technology or treatment procedures for a hospital). • Should be roughly 30 minutes with time for
“Renewal at Birth”
Membership/Giving Clubs
• Comes from subscription fulfillment industry
• Designed to reduce number of 1-year lapsed donors and generate higher renewal rates and average gifts • Ask comes soon after first gift, when donors are most
Goals of
Membership/Giving Club
• Get donors to give a second gift
• Get donors to give multiple gifts over course of the year
• Get donors to give cumulatively larger gifts than they would without the structure of membership
• Get donors to their “long term value” as quickly as possible
Don’t worry about asking too often.
• Your job is to ask. Your donor’s job is to give.
• Resist the temptation to make this decision for your donors by limiting the number of times you solicit them.
• Your donors will tell you by the number of gifts they give how often they wish to give.
Word have meaning
• Consider changing the name of your program to something that is more conducive to encouraging
multiple annual gifts, such as “Current” or “Sustained Giving.”
• Project a different reality in your own mind and also in the mind of your donor.
Remember…
• If you think you are protecting your donors by not mailing to them so they will be more inclined to give to you, you are sadly mistaken.
• If you aren’t mailing to your donors, some other organization is.
• Your Lapsed Donors are Active Donors for some other charity.
