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When it’s not a numbers game

By October 14, 2020 No Comments

Whilst 2020 has seen so many charities develop and increase their use of online channels, there is still a very real need for Direct Mail as the bedrock of so many appeals.

Direct mail is absolutely not dead and won’t be any time soon. But that doesn’t mean you should be throwing money away sending appeal letters to your entire database. Too many great charities still include people in their mailings who will simply never respond to a direct mail ask.

At fed, our core work for all our clients is their regular cash appeals. We have shared recently some of the creative approaches we’ve used—in this article for example—but I want to tell you that we’re also focused on improving our clients’ net income.

These are the funds that will go directly to helping make the world a better place: more research into fighting cancer, more dogs and cats finding loving homes, more children and families safe from violence. So, we care a lot about maximising every dollar spent on fundraising.

And the number one most important factor in a successful appeal, is audience.

When selecting ‘who’ to mail, we use the RFV model – recency, frequency and value (when did they last give – how many times have they given – and how much did they give). We also look at their giving behaviours. Have they ever given when solicited through the mail before? That’s paramount. The more times a donor has done so, and the more recent their last gift, the greater the likelihood they’ll respond that way again.

It’s natural to want to grow our direct mail files. And it’s natural to think that by mailing more people we will get more money. We have plenty more records in the database with mailing addresses. These names are free!

Unfortunately, that’s just not how this works. Just because it’s free, doesn’t mean it won’t cost you anything.

Take the following examples:

Charity A wanted to include donors who had given over the phone to their direct mail Tax Appeal.

# Mailed# DonsRR%Avg GiftGross $Cost $Net $ROI
3,6162066%$40$8,332$11,056-2,7250.8

The reality: The fact that they’d given a gift over the phone does not necessarily make them strongly performing direct mail donors. As you can see in this example, mailing them actually cost the organisation money.

Charity B wanted to include Deeply Lapsed, lower value direct mail donors because they thought the case study was particularly strong and might encourage reactivation of their giving.

# Mailed# DonsRR%Avg GiftGross $Cost $Net $ROI
852516%$47$2,375$3,022-6470.8

The reality: The longer it’s been since someone’s last gift, the less likely they are to respond, regardless of what the ask is for. Again, this group lost the organisation money.

Charity C went from mailing 70,000 names on their database in previous years, to using the RFV data selection model.

# Mailed# DonsRR%Avg GiftGross $Cost $Net $ROI
70,0005,6698%$71$402,813$208,007$194,8061.9
27,5505,15919%$84$433,398$99,977$333,4214.3

The reality: By selecting only those most likely to respond to a DM ask, they were able to raise more gross income, while spending far less—giving them an additional $138k to spend on vital services.

Growing warm mail files while keeping the performance high is a slow exercise with no magical quick fix. And mailing every name is not the way forward for a direct mail appeal.

That being said, there will potentially be segments in your database—like those in the examples—that could be considered as an investment in tepid acquisition and bring in a decent acquisition return of 0.6-0.8 ROI. If there are, then make sure they are identified as such, and that expectations for these ‘tepids’ as part of the wider mailing are set accordingly.

 

Direct mail is still alive and well, if you use it efficiently and effectively.

Let me know if you would like to chat data at any time, it’s a passion of mine!

Margaux Smith

About Margaux Smith