Ready for 2014? Mike Haskell at SourceLink.com surveyed 10 professionals for their takes on where marketing will go in 2014 – he’ll devote a blog post to each in the coming weeks. For a preview, visit SourceLink, but in the meantime, below are some highlights we think are relevant to the nonprofit fundraising market:
Anyone who’s worked for a nonprofit knows how valuable Board members are – they play a key role in any organization’s mission fulfillment. And anyone who’s served on a nonprofit Board knows that there are unique dynamics between the Board and the organization’s staff. Staff members are always trying to balance giving the Board members enough information so that they can make educated decisions, but not wanting to bog them down with the nitty-gritty of day-to-day fundraising.
Direct marketing is complicated, and challenges can arise when we try to simplify it, or use our own opinions to drive strategy. The following are some helpful direct response fundraising pointers for Board members to keep in mind when making decisions:
1. Our donors are not unique to our organization. They likely give to a number of nonprofits and trying to be overly controlling of what fundraising communications they receive (and how much) can cause more harm than good.
2. It is very difficult to recruit young donors and change your organization’s demographics. Unfortunately, direct marketing donors tend to be a self-selecting group. They are often older, and not very diverse. But research shows that those younger populations will eventually evolve into donors!
3. We know it’s cheap and easy and quick and everyone’s online – but here’s the deal: online fundraising is not taking over direct mail any time soon. It is still a small part of overall giving, and while online is growing, we cannot give up on direct mail. A solid mix of fundraising channels (mail/phone/online) is most effective to achieve a long-term, steady revenue stream.
4. We can’t make changes or decisions affecting the marketing program based on what we like. There is a science behind direct marketing and it is based on years of data. This data has been tested and quantified and is never based on one data point, or a handful of them. So we need to apply the science and give it time to work.
5. It is important to understand the consequences of our fundraising goal decisions, before we make them. For example, if we want to increase membership by 200%, this will likely come at the expense of the type of member acquired and our net revenue. If we want high net revenue, it will likely come at the expense of our member counts. Each goal should be fully understood before the directive is made.
6. Direct mail is a solid and predictable investment, yet it is not limitless. We cannot pour massive sums into a program and continue to see increased return year over year. It doesn’t expand infinitely, because universes are limited. There is a balance for each organization and careful planning and analysis is needed to determine what the “right” amount is.
Having worked with nonprofits for more than 20 years, including serving on several nonprofit boards, I’d like to make the case for ongoing investments in donor acquisition. All too often, it seems that nonprofits don’t close the deal with their board members, who are unconvinced about the critical need for ongoing investment in donor prospecting. And with the typical net revenue loss on a mature acquisition program, it looks like a no-brainer budget item to cut.
Board members: consider this your wake-up call.
You have a fiscal responsibility to go where the money is – that’s the only way your organization will have the funding it needs to fulfill its mission. And here’s where the money is: in multi-channel, integrated fundraising campaigns that begin with donor acquisition, move to engagement and cultivation, renewals/reinstatement, donor upgrading, and gift acknowledgements.
Simple concepts. But they require detailed, constant attention and funding to work.
Let’s face it. Your donors are old. And for the most part, they respond predominantly through direct mail. Yet when they give through multiple channels they have higher long-term value to your organization. When embraced, traditional direct marketing channels can be reliable and predictable, providing steady revenue for an organization.
Let’s get to some basic facts because there is no silver bullet — no way to magically bring in new donors — without an ongoing, consistent monetary investment.
Do you think “inexpensive” online appeals are the panacea we’re looking for? Let’s do the math.
The biggest impact on performance is average response rate. The average direct mail acquisition response rate is about 1%, and the average online response rate is roughly 0.03% — not 0.3%, but 0.03%!
So for every 10,000 pieces of mail you send, how many donors and how much revenue will you add to your file? For every 10,000 emails you send, how many donors and how much revenue will you add? And that’s assuming we have equal-sized prospect pools, which we don’t. Email prospect files are a fraction of the size of direct mail prospect files.
Blackbaud’s Next Generation Study is out – with lots of interesting information on how American generations are giving, and how much. The Study highlights Gen Y (people born between 1981-1995), Gen X (born between 1965-1980), Baby Boomers (born between 1946-1964), and Matures (born before 1946) as discrete giving groups with different habits and preferences.
In his Agitator blog about the Study, Roger Craver gives us the non-newsflash: “Your Donors are Old! Celebrate!” – pointing out that Matures and Boomers make up 69% of all giving, so adjust your strategies accordingly. But don’t wring your hands – younger donors are lining up behind the oldsters. And older donors are increasingly responsive to multi-channel appeals.
The chart below includes an analysis of giving channels by age. As expected, overall giving increases with age and while online giving increases only slightly as you get older, you can see that direct mail increases significantly (52% of matures giving through mail).
As I wrote last September, if your year-end fundraising planning isn’t on the front burner yet, move it there now! Don’t forget that donors are paying attention and looking for last-minute giving opportunities at the end of the year.
Please check out last year’s ideas to implement best practices for your year-end campaign, and then read on for a few more ideas for this year. Some of these are probably strategies you’re already using, but here’s what’s working for us:
Test timing. Have you been using the same schedule for the past few years without evaluating what timing works best? Revisit your schedule to see if earlier/later mail and send dates might improve results.
December 31. Are you maximizing the last day of the year? This is — by far — the most productive date, so be sure to send an online appeal on December 31, and at a time that gives it the best chance to be seen. And consider sending twice – many organizations have had success with this approach, with the goal of staying at the top of the donor’s in-box.
Giving Tuesday. Give it a try: create a test campaign strategy around this date – December 3 this year — to kick off your year-end online giving.
Earlier this summer, I wrote about the Avalon team’s discussion on significant challenges facing the direct marketing and fundraising industries now and over the next five to ten years, and how to address those challenges.
As with the direct marketing challenges, we had a spirited discussion at an Avalon staff meeting when I posed these same questions to my team regarding the online marketing and fundraising industries, and how we can tackle those challenges. We agree that now and in the future, no matter the direct marketing challenge, integrated marketing strategy supported by robust analytics will be part of the solution. But more specifically, here’s what we came up with:
Challenge: How can non-profits make sure their marketing emails stand out in increasingly cluttered inboxes?
Solution: Since all you have to stand out in email is your sender name and subject line—and possibly your preview pane message—the answer is multi-channel outreach. Layer on the messaging across communications channels. Emails may not be the best way to drive online giving, so put specific URLs in mailed appeals, follow up mail pieces with an email reminder, and use Google Ad Words to make sure your organization pops up first in a search.
Challenge: How can organizations realize the full potential of CRM and Big Data to develop stronger relationships with their donors and members?
Solution: We must fully leverage the myriad of data and technology available to us, to target stronger donors and forge more meaningful and lasting relationships, and ultimately create higher donor value and donor satisfaction. Modeling, targeting donors on past behavior, and developing segmentable personas or behavioral clusters, would enable deeper understanding of our donors and their motivations, while still allowing for the benefits and efficiencies of mass segmentation. Such rich, multi-dimensional targeting will leverage transactional donor data, behavior, demographics, psychographics, commercial data, member research, and more, providing a step up on traditional RFM. Online and offline targeting, plus more customized tone, messaging, creative, and offers will result in increased conversion rates and donor satisfaction.
Challenge: How can non-profits ensure email deliverability?
Solution: As competition in the inbox increases, it will become even more imperative that organizations employ smart segmentation, testing, and re-engagement strategies with their lists—and keep list hygiene a priority.
Today at CNN.com and tonight on CNN's AC360°, fundraising is taking some heat. The national media outlet is reporting on recent investigations from the Tampa Bay Times and Center for Investigative Reporting, which reveal outrageous ethical breaches in our industry. Closer to home, The Agitator’s Roger Craver issues a tough call to action for fundraisers—and Avalon is glad to see it. He writes:
We must ask questions and offer advice.
Why? Why? Why?
In these days of tight budgets and belt tightening, all nonprofits are looking for ways to squeeze every last dollar out of their house files. We’ve found that one of the most effective best practices is to dig deeply into your data to uncover trends and early warning signs that things might be off track.
Avalon VP of Analytics Rick Malchow created an ingenious tool, called Avalon VitalStatsTM (Key Performance Indicator Dashboard), to uncover donor-level trends. A valuable management tool, the Dashboard provides at-a-glance summaries of your program’s current performance metrics compared to prior years, enabling convenient program status monitoring and communications. The summaries include donor counts, giving statistics (overall and by donor type), donor retention rates, and program financial performance.
I had the opportunity to attend this year’s NTEN (Nonprofit Technology Network) Conference recently, along with my colleagues Barb Perell and Jamie Natelson. As usual, the Conference was a stimulating mix of best practices discussions, new ideas, and strategies for how nonprofits can take advantage of technology. Some highlights: