What Is The Right Way To Build The Donor File?
A standard strategy issue for direct mail programs that are experiencing lethargy in donor acquisition is the use/non-use of Premiums. Perhaps the more pertinent question today may not be whether or not they should be used, but rather where might they be used strategically to help bolster both short term gain and sustainable donor base growth.
Premiums, Standard Appeals, and Involvement Packages usually have pros and cons that apply to both acquisition and donor renewal appeals. And the issue has both short and long term implications.
We define premiums as up-front premiums, little giveaways that assist in or actually drive the “ask” in a direct mail package. Examples include address labels, note cards, calendars, decals or bookmarks.
Front-end premiums frequently generate higher response rates. Sometimes the uptick in response can be significant, in some rare cases even perhaps generating immediate net profits in an acquisition. Back-end premiums sent after the donor has made a gift, do work well for certain applications. For example, they often serve as a reward for joining a monthly giving program, or a new giving level. A donor achieving a certain milestone in lifetime giving can receive a memento of this achievement and be willing to give once again in the same campaign year.
The back-end premium, which has a higher perceived value than a front-end premium, can promote the mission of the organization and help develop an emotional bond between the donor and the organization.
There are risks associated with premium-based direct mail fundraising. Specifically:
1. The donor/prospects may not be sold on the mission when they respond; rather they view their support more in a transactional mode.
2. The premium donor can be less apt to give again within the subsequent six months, and may never give again if the same technique used to acquire the “gift” is not utilized to renew their support.
3. Premiums and other direct mail packages that achieve results via concepts other than communicating the mission frequently achieve “false positive” results. Good initial response rates may cloak unacceptable renewals. Premium donor income streams can be profitable and extremely important. But they will not and should not be expected to perform in a predictable manner similar to donors that have become fully engaged in the mission.
4. The method used in obtaining a gift must be used in the process of renewing support. If this is not done, usually what happens is the number of donors begins to decline, then gift frequency, and finally, income. Premiums are usually “habit-forming.” Once you use them, there is a very high likelihood you’ll need to continue using them in the future to sustain the income stream from responders. This is entirely acceptable – but only if the income stream can be profitably sustained.
5. There are a growing number of direct mail donors who do not approve of non-profits using their funds to dabble in gimmicky fundraising. Be sure to select the proper premium, one that has a perceived value to the recipient, and one that “runs out,” needing replenishing; leading to a renewal package with a new supply. This is why name/address labels have been so successful over the years. After some time, your donor may “need” more, and be inclined to give again when you send a new supply.
6. Be sure that you do not assume everyone on your mailing file will respond equally to a premium. Address labels work well for donors that use the USPS for paying bills, sending greeting cards, etc. However, a growing percentage of the public, especially those that prioritize environmental issues, are choosing to pay their bills and exchange greetings online. They have far less a practical use for address labels.
Involvement devices are sometimes premiums or simply additional elements of the mail piece. Often they are pieces that need to be returned with the reply slip and donation. Examples include advocacy/petition appeals, matching gift “check” appeals, surveys … even stickers that need to be posted on the reply slip, etc.
The goal for involvement devices is to get the donor involved in the message, to inspire the philanthropy and involvement/advocacy of each donor. The thought is that the higher the level of inspiration, the better the response rate, average gift and proclivity to give again in the near future and on an ongoing basis.
Involvement device packages are a preferred with programs that solicit activist donor bases. Engaging the reader with a challenge to engage in the mission on dual fronts – financial support and involvement frequently generate higher response rates. Risks:
1. As with premiums, the presence of an involvement device in a direct mail solicitation can be habit-forming. Be cognizant that donors acquired via this tactic will likely need to be renewed in the same or similar manner.
2. With advocacy appeals, be careful to set a clear priority and goal for the appeal. Is it to generate an ROI? To enlist support? It’s OK to have both action items presented in the appeal. But if one “ask” overwhelms the other, you run the risk of diluting the impact of the appeal, and compromising the goal. It’s easy to allow an engagement vehicle to overwhelm an appeal for support. If the primary focus is ROI, present the involvement device as a clear secondary request.
Straight appeals usually consist of a letter, personalized reply slip, carrier envelope and a reply envelope. The letter and the carrier envelope can be personalized. The reply slip should always be personalized. It could include a fall-out insert that promotes the central theme of the letter. The package focuses completely on the mission of the organization, and “the ask.”
Increased personalization can be expensive. Even proper usage typically generates average unit costs that are higher than other forms of direct mail. However, in many segments of donors – and even in some “internal” prospect cells, it will likely also increase response and average gift.
Appeals usually get right to the point. No gimmicks. Straight appeals work best when donor needs can be identified and addressed.
1. Appeals that address donor need first require the linkage of donor needs and interests to the appeal process. This can be an arduous process, especially if your database is limited. The alternative, a singular appeal message spread across all mailing segments, is usually driven by organizational need vs. donor need, and usually results in lower levels of success.
SO WHAT’S THE ANSWER?
The only correct answer is that all potential income streams – if they can be shown to be profitable and renewable – should be considered and/or enhanced. A comparison of all three approaches follows: