Can Telefundraising Survive the Cellphone Age?
You’re midway through dinner when the phone rings. It’s a random stranger. He wants you to stop what you’re doing, go find your wallet and offer up your credit card number. I confess. I was that guy.
No, not the one you talked to; the one that organized the call in the first place.
And I loved it. As anyone with experience in telefundraising for nonprofits will tell you, the donor conversations are typically engaging, inspiring and positive. Results are real-time and exciting. And the channel is dynamic, fast-paced and on the front-lines of fundraising. Even aside from the dollars and positive donor cultivation, telefundraising is also an immediate, laser-focused marketing research vehicle. Telefundraisers know the pulse of your donors like no one else.
I left the world of telefundraising about two years ago to get into direct mail production. How were all my fellow comrades faring out in the trenches of telephone fundraising since I had left?
Turns out, a lot has changed.
“The two biggest issues these days are contacts and compliance,” said Dane Grams, membership director for Human Rights Campaign.
The first issue—contacts—is a barrier that’s been steadily growing. Ten or 15 years ago, calling campaigns could penetrate up to 60 percent of a file. That number’s been declining ever since. These days, you’re lucky to get beyond a 35 percent contact rate.
“I think the younger generation moving away from landline phones has only dealt in a digital age where people don’t talk on the phone anymore—receiving an actual call is more of an intrusion than it once was,” said Grams. According to the most recent data gathered by the National Center for Health Statistics, 41 percent of U.S. households only have cellphones. In other words, 39 percent of adults and 47 percent of children live in cellphone-only homes.
“And then there’s compliance,” Grams added. “Regulation issues are making it more and more challenging to even call cellphones. Suddenly, there’s fewer people that answer their phone, and fewer numbers to call in the first place.”
To compensate, Human Rights Campaign has been incrementally downsizing its telephone program to what it considers the bare minimum. The nonprofit’s overall plan may still seem robust to some organizations, but relative to where Human Rights Campaign was a few years ago, it’s succinct. “We use the phone only when it’s the last or best channel to reach someone,” Grams explained.
“Sustainer invites to first-time new joins, maintenance calls for sustainers (updating declined credit card information, etc.), renewals and lapsed reinstatement is where the bulk of calling resources are allocated,” he continued. “At the same time, our mobile-action network is increasing. I think that’s where telemarketing is going. While on a telephone call with donors, we can verify they’d like to opt in to our text-to-give program, or remind them to be on the lookout for an email we’re sending, and then push marketing assets into that side of the digital smartphone. The balance is shifting.”
Although the phone is clearly evolving from a mere talking tool that hangs on your kitchen wall into a complex digital multiplatform that’s with you every waking moment, it’s possible stabilization is on the horizon. Pew Research Center also dug into the data and found the stereotype of the cellphone-only Millennial is not absolute. At the end of 2010, 52.5 percent of 18- to 34-year-olds were cellphone-only. In the most recent Pew study, almost five years later, only 45.5 percent were. The landline doesn’t seem to be vanishing altogether, but the tides are changing for this fundraising channel. And the fundraising industry is constantly adjusting to keep up.
“We use targeted messaging—essentially, callers use a different script if it’s a landline or cellphone donor,” said Jim Harris, president and CEO of Harris Marketing Group. “If it’s a landline, great, they give. But, if not, we use an intro that’s almost apologetic.”
Harris analyzed campaigns at his firm to find that cellphone donors respond at dramatically lower rates (5 percent to 7 percent less) on all nonpolitical campaigns, and fulfill even worse (6 percent to 8 percent less). As it turns out, average gift is identical across the board. He suspects there’s something territorial about cellphones. People are on the run. They don’t have time to delve into a conversation, much less get to their credit cards. In order to increase penetration, Harris has also been testing opt-out lead letters to alert donors about upcoming calls.
Vicky Barrett-Putnam, senior director of donor development and acquisition strategies at Sierra Club, had similar concerns. “We’ve pulled back on some calling programs,” she said. “The telephone is just not used for additional gift campaigns as much as it once was. But, even though it’s increasingly difficult to get ahold of donors on the telephone, the fact is that if you do reach them, it boosts all other channels—a donor that receives a telephone call from us has a 20 percent higher lifetime value whether they gave money on that call or not.”
Tracking a donor’s value after he or she has said no to a telephone gift solicitation is key to understanding telefundraising’s value. But, getting permission to call donors in the first place seems to be increasingly difficult.
The Telephone Consumer Protection Act of 1991 (TCPA) contains nebulous provisions that can’t keep up with the ever-changing technological fluctuations of this channel: namely, automatic telephone dialing systems (ATDS), the cellphone, and what counts as the “expressed written consent” required before placing a telemarketing call. In the largest TCPA class-action settlement to date, with Capital One Financial Corporation and affiliates totaling upwards of $75.5 million, the court in February 2015 rejected the defendant’s notion of consent. Since then, nonprofits have become more stringent in their own interpretations. Some are getting creative with how they ask their donors for permission to call, some have stopped calling cellphones completely, and some are moving all of their cellphone telefundraising off ATDS altogether, opting instead for manual dialing systems.
“In a way, it’s forcing the industry to pay more attention to how telefundraising is implemented, and that’s not necessarily all bad,” said Sara Nakano, vice president at Donor Services Group.
Rather than just churning-and-burning through files, which may produce immediate results but ultimately causes file attrition, Donor Services Group is thinking more about which donors they should invest in—including sophisticated data analytics applications—and then how those donors should be approached. “It’s simply more responsible calling,” said Nakano.
Using manual dialing instead of ATDS slows down the calling process, but that also gives the fundraising caller more time to acclimate and understand the specific donor with whom he or she is connecting. It’s also more time spent engaging the donor, rather than just asking for money and getting onto the next conversation. That can translate to a better and more sophisticated call—but also a more expensive one.
“Labor costs are going up and there are fewer people to call,” explained Mark Mitchell, vice president of SD&A Telefundraising. “So, we have to make up for that with better performance.”
Specialization and Expansion
At SD&A, Mitchell responded by moving further into acquisition campaigns—something no one would have even considered five years ago because of the impossible return on investment. “Web activists, people that are taking action online for causes they believe in, they’re a great audience to call and invite to become monthly donors,” said Mitchell. “In this climate, it’s working, costs are recouped, and it adds people to the dwindling pool of telephone responsive donors.”
Another upshot of the recent TCPA ruling is additional cellphone append requirements. The call center must scrub the data file to make sure landline numbers haven’t been transported to cellphones. Then, it must do an additional scrub to determine if the number is in fact assigned to the right party—that it hasn’t been transported to someone else. This can all get expensive, and it’s had a crushing effect on the fundraising business.
“Look, data is king,” said Tom Siegel, president and CEO of Donor Services Group. “We have to constantly be searching for ways to better mine, append and clean our data files, so that we are calling the best people every time—not those who have been over-called, won’t answer the phone or will never donate.”
For Siegel, these changes in the telefundraising industry are having a positive effect: Organizations are using the phone for more specialized applications. The space for high-end calling (gift planning, mid-range, digital lead generated acquisition, etc.) is growing. Everyone I spoke to agreed, and they have not only kept these programs going, but also expanded them, in some cases.
The telefundraising business is never going away, but it is changing. And right now, it’s clear that its changing more than ever.
Want more from Dane Grams and Human Rights Campaign? Come see him at the NonProfit PRO P2P: Redefining Peer to Peer conference, Oct. 5 in Washington, D.C. Click here for details, including discounted registration info. But hurry! The single-day event is almost full up.