If you were asked what you think will be the most significant challenges facing the direct marketing industry and/or direct mail fundraising now, and over the next five to ten years, what would you say? And what would you recommend as the best ways to meet those challenges?
Recently, we had a spirited discussion at an Avalon staff meeting when I posed these questions to my team. 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: As the pool of donors becomes more competitive and people give to fewer organizations, how can nonprofits expand their universe with fewer donors?
Solution: As an industry, we must focus more heavily on retention, recruiting more high-value donors, and reinstating high-value lapsed donors instead of bringing in marginal members.
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 with whom we 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: Given that 80% of donations are still coming in through direct mail, how can organizations make sure their mail stands out in a crowded mailbox?
Solution: Forget about the flashy package design and go back to tried-and-true results backed by analytics—identify and mail to those people who are statistically most likely to respond, maximize all of your data resources, and mail smarter.
Challenge: Direct mail costs rise every year—and response rates and donor counts don’t always rise in tandem. As online marketing looks cheaper by comparison, direct mail costs fall under heavier scrutiny.
Solution: Use a strategic and analytically driven process for targeting your program. Organizations must maximize complex, sophisticated, and actionable analytics into their daily operations. And we’re not talking about monitoring campaign-level performance. That’s a given. Nonprofits must also have a greater understanding about which donors they should be mailing, and when, and what those donors will produce in the long run, so that they can know with certainty that money is well spent. This requires a strategic-level understanding of the best mix of programs and channels to achieve organizational goals for fundraising.
My team and I did the same exercise for online marketing challenges and solutions – I’ll share those thoughts with you in the next issue of FYI.