Direct Mail: How Much is Too Much?
I’m often asked, “How many fundraising appeals should we send to our donors each year?” The question usually comes after some senior executive or board member has complained to a fundraising manager about overly aggressive appeal frequency. Or after a few donors have written to complain about “too much mail.”
More than a year ago, my colleagues designed a donor-tracking study to gain better insight into this question. Four equally sized groups of donors to a particular nonprofit organization were isolated into four test panels. All the donors were current; each had given at least one gift of any amount in the previous 12 months.
About 30 percent of the donors across all the panels had cumulative giving of between $15 and $24.99. About 40 percent had given from $25 to $49.99. And the final 30 percent had cumulative giving between $50 and $99.99.
The nonprofit organization conducting the study is a large group that raises money across the United States using a variety of methods and channels. It’s also a growing and sophisticated organization.
The tracking study was set up to answer two basic questions: Would reduced appeal frequency result in better donor performance? Would reduced frequency lower costs yet produce the same or better net revenue?
The Appeal Frequency Test Panels chart shows the donor population of each panel, how many appeals they received during the 12-month test period, and how many newsletters were mailed in addition to the appeal packages. Panel One was the control group; each donor received a total of 25 fundraising impacts over the 12 months, including 18 appeals and seven newsletters.
The only variable across all the test panels was the number of mailed appeals, except for Panel Four, which also received a “no ask” affirmation, namely a special “expression of gratitude” letter with no fundraising language. Each panel received gift-acknowledgment receipts and any outbound telemarketing calls they were qualified to receive. In other words, except for the number of appeals and the “no ask” affirmation package sent to Panel Four, all of these donors were treated exactly alike.
Frequent mailings spark donor loyalty
The results of this year-long tracking study might surprise you. Test Panel One with 25 fundraising impacts produced the most gross revenue, the most net revenue, the highest gift frequency and, most important, the highest donor-loyalty rate.
Donor loyalty is the percent of current donors who continue to give in the next year. So, if you had 100 active donors last year and 45 of them gave this year, your donor-loyalty rate would be 45 percent. Typical loyalty rates for current donors average between 45 percent and as high as 65 percent.
The donor-loyalty rate is crucial to long-term fundraising effectiveness and revenue growth because it’s the strongest indicator of the long-term giving potential of your donor file. Low loyalty rates lead to lower and lower revenue. High loyalty rates spark significant revenue growth.
As shown on the Appeal Frequency Test Results chart, Panel Three with 19 fundraising impacts produced the least amount of revenue, the lowest gift frequency and the lowest donor-loyalty rate. Panel Four had the lowest net revenue because of the costs of the “no ask” affirmation mailing.
In this particular tracking study, the donor panel that received the highest frequency of appeals produced the best results for the nonprofit organization. Panel One produced 10 percent more revenue than the lowest panel. Its gift frequency was 7 percent higher than the lowest. And its donor-loyalty rate was 6 percent higher.
Here are some practical tips you can take from this study to improve your own fundraising efforts.
1. Mail your donors frequently to keep them informed about how you’re using their gifts and to alert them to your continuing needs. Remember, contrary to our own beliefs and perceptions, our donors don’t think of our organizations every day or even every week. Donors are just as busy as you are, and they experience just as many distractions. Being in front of your donors and grabbing their attention for a few moments is very important to sustaining a productive relationship. If you aren’t communicating with your donors, somebody else is, and they will gladly accept your donor’s gift.
2. Mail your donors as frequently as necessary to meet your financial needs. When you present a giving opportunity to your donors by mailing an appeal, you’re actually empowering them to take part in a wonderful exchange of values. You might receive a gift, and your donor will know that she has helped provide part of the solution to a need.
What’s important here is the fact that you’re honoring your donors by giving them choice and control over their relationship with your organization. It’s not the frequency of appeals that’s most important, it’s the legitimacy and integrity of your fundraising needs.
3. Donors need a variety of communications. You will have greater success if you vary the tone and content of your communications. Appeal letters serve one purpose and one purpose only — raising money. Other communications — such as newsletters and gift receipts — can be highly effective education vehicles to explain your mission and values, and to affirm and thank donors for their support.
4. Don’t let complainers influence your strategic decisions. Of course, donors who complain deserve to be treated with respect and to have their concerns addressed. But never allow the complainers to drive your fundraising decisions. Never!
The best defense against those who complain about appeal frequency rests on how much net revenue is being produced by like segments of your donor file and your donor-loyalty rate. These two measures must be viewed together. Don’t fall into the trap of defending your mail program solely on the amount of net revenue being raised. You must also review donor loyalty or continuation rates for a complete picture.
5. Use facts to fight against personal preference and bias. Facts are friendly, and we should embrace them. Know your facts, and arm yourself with a short list of key indicators of performance so you always have a ready defense for that senior executive or board member who wants to impose his personal preference for how your fundraising program should be run. My list includes the number of appeals sent to most donors, year-to-year net revenue figures and the year-to-year donor loyalty rate
6. Most recent to give, most likely to give again. This fundraising truism is worth repeating. The donor who gave most recently is the donor who will give again the soonest. Don’t exclude recent givers from your direct-mail appeals. If you do, you’ll only be reducing the amount of money you’ll raise.
Remember, your donors love your organization. In fact, they love your organization so much they’ll give you their hard-earned money. Honor your donors by communicating with them frequently. Share specific information with them about how you’re using their gifts to accomplish the mission they want to see accomplished.
7. Fundraising is an emotional endeavor. Donors give because their hearts are moved and because they trust you to fulfill their heart’s desire. Just look at the response this year to the tsunami and hurricane disasters — donors responded overwhelmingly to the tragedy unfolding on their televisions. Your fundraising program should be designed to tap this human reservoir by frequently communicating your needs, your mission and values, and the positive things you want to get done.
Look at every appeal, every newsletter and every gift receipt as a heart-touching event that links your donor with the cause he urgently wants to support.
8. Fundraising is a high calling. Those of us who design and manage fundraising programs are engaged in a wonderful profession that helps meet urgent needs. It’s a great privilege to give donors the opportunity to extend the grace of giving.
If you view your job from this perspective, you will be less concerned with the frequency of appeal mailings and more concerned with how best to empower your donors by enabling their giving.
Timothy Burgess is co-founder of the Domain Group, an international direct-marketing firm serving nonprofit organizations in North America and Europe. He’s been raising money for others for 27 years. He is vice chair of the DMA Nonprofit Federation Advisory Council and chairs the federation’s ethics committee. He can be reached by at email@example.com or 206.834.1480.