The Power of Co-op(eration)
For a long time, even prior to the “great recession,” many nonprofit mailers have been battling diminishing prospect results and shrinking housefiles while costs continue to rise and net income decreases. This has created a serious dilemma for many mailers because shrinking donor files also means that there are fewer good prospect names available on the rental and exchange market.
So what can mailers do to get more good names to grow their files, get better results from the names they’re renting and exchanging, improve donor renewal results, extend long-term value, and increase total net income? There are no simple solutions to these challenges, but a great place to start if you haven’t done so already is to join one or more cooperative databases to find new prospect names and take advantage of the extensive modeling capabilities co-ops provide for housefile modeling and upgrading current donors. Modeling prospect and housefile names has the potential to make an immediate positive impact on your bottom line — whether your organization is looking to reverse negative trends or continue positive ones.
This article is intended to provide a basic understanding of cooperative databases and statistical modeling, and how you can use them to increase net income. It will help you avoid what I consider to be one of the most deadly sins in direct marketing, which is making major cuts to your prospecting campaigns. Cutting, suspending or eliminating prospecting, as most of you already know, only makes the challenges facing nonprofit direct marketers more difficult.
Cooperative databases and statistical modeling are not new. In fact, statistical modeling (predictive analytics) has existed for more than 30 years, and cooperative databases (co-ops) have been around for more than 20 years. Both are used extensively by commercial mailers and other marketers to identify those most likely to buy their products and services. Some of these businesses have been so successful using modeled co-op names that 100 percent of the prospect names they use come from co-ops. Historically, nonprofit organizations have been participating in cooperative databases but to a lesser extent than commercial marketers.