Don't Break Your Concentration(s)
Around the time that the housing crisis was coming to a head, many nonprofits started to cut back on their direct-mail acquisition efforts.
Now, at a time when many organizations are beginning to ramp back up to pre-2008 activity levels, it is more important than ever that those efforts be guided by sound strategy and shaped by sharp thinking.
One way to ensure that your acquisition direct mail gives you the most in terms of both donors and dollars is to geographically validate and adjust your list selection in order to direct your mail only to those areas most likely to produce response. Rather than fishing for new donors and members across a vast market defined, sometimes, rather haphazardly, a well-planned, well-targeted fishing expedition will yield a much greater catch. Here are some tips to give each piece of your mail a good shot at reaching a future donor.
Tip No. 1
Avoid the common pitfall of mailing where you have the greatest number of donors. Many organizations make the common mistake of querying their donors by ZIP code, looking at total quantity of donors in each ZIP and then developing their acquisition mail plans around these areas. That may seem like a straightforward and relatively easy way to isolate your best mailing areas, but it is important to remember that heavily populated urban areas naturally produce a higher raw number of donors simply by virtue of the number of people who live there. What is important to look at is the percentage of the households that your donors represent — or donor concentration.
Let's look at an example of two different ZIP codes with the same number of donors (Figure 1). A donor count suggests that both ZIP codes be mailed, and it appears that they are equal in terms of their value to the mail plan.
However, when you evaluate each ZIP code in terms of how successful you have been at penetrating it, a very different story unfolds. ZIP code 10037 is much more valuable (in terms of how much your organization's mission is known and supported) than ZIP code 10025. In addition, a much larger percentage of your acquisition mail budget would be spent mailing to a heavily populated ZIP like 10025 when the response rate is likely to be lower.
Tip No. 2
It does matter where you have mailed in the past. Again, let's look at our examples. Would it surprise you to know that the .88 percent penetration seen in ZIP code 10025 was achieved without ever having actively solicited a single gift there via mail? If even mediocre penetrations are achieved in areas where mail has never dropped, then it may be worth including those areas in your mail plan. Conversely, if a ZIP code has been mailed routinely since the inception of your mailing program and still has only produced marginal penetration, it is a candidate for removal from the mailing plan. Its absence allows more dollars to be spent on ZIP codes with higher likely response.
Tip No. 3
Demographics do matter. Take a look at the demographics within the ZIP codes that are not currently part of your mail plan. You may be missing some small gold mines. For instance, let's say that your typical donor is a highly affluent older woman. Identifying ZIP codes with high concentrations of your donor's look-alikes can provide you with great areas to test into. For example, given your donor's demographic characteristics, the first set of ZIP codes in Figure 2 are much more attractive — demographically — than the second set.
Tip No. 4
Your donors are not homogenous. Some organizations that suffer from not having a clear picture of their donors insist that their bases are homogenous and that they will not see concentrations that would warrant a change to their mailing strategies. As evident in Figure 3, geographic concentrations (or absences) of donors are almost always evident — whether it's a product of your past fundraising efforts, event locations, your online presence (or lack thereof), your program's service area or competing charities' presence. The darkest green areas represent the highest concentration, followed by lessening penetration levels (indicated by lighter green to yellow shades).
With ever-increasing production and postage costs, nonprofits need to continually fine-tune their prospecting efforts in any way they can. With minimal investment of time and money, you will likely find the best "fishing holes" within your market area.