Making the Right Call
Experienced marketers understand that reactivating lapsed donors is more cost-effective than acquiring new donors. It comes right out of the traditional marketing playbook. "It's cheaper to reclaim a former customer than it is to get a new one." Just ask Wal-Mart founder Sam Walton.
No matter how you slice it, the immediate cost, response and long-term value of retention make it a very compelling value proposition for any marketer.
But I'm a direct-mail guy. That may be uncool to say these days, what with all the social-media integration talk and pending postal reform. Those developments notwithstanding, direct mail remains the most efficient and effective way to raise money from a large donor file.
But what do you do when a donor just stops responding to the mail? Here's a suggestion: Take a look at telemarketing.
Now, like many, I'm a bit skeptical about this channel. It costs more than mail. It tends to be legally cumbersome and can be upsetting to donors. Plus, fulfillment results can be unclear and difficult to analyze. However, those observations relate to telemarketing as a stand-alone strategy.
So, we carefully tested an integrated mail/phone/mail approach and found that a strategically timed and meticulously controlled model produced a much better response and the highest ROI of any campaign tested.
We evenly split the lapsed donors into three test panels and conducted the test over a four-month (holiday) season. One panel received mail only. The second panel was mailed and called (including the pledge-fulfillment confirmation mailings). The third panel received an integrated campaign. This was controlled to include an initial appeal, followed by two months of calls and pledge follow-up, as well as one final appeal mailing.
The integrated strategy proved to be the most effective across all key metrics (response, average gift, reactivation fulfillment and ROI). The first chart illustrates the campaign structure. The results are clear. When you integrate mail and telemarketing, isolating each method to avoid overlap, the combination produces the highest number of returns and the best ROI.
I started out by saying that virtually everyone understands the superior value of reactivating lapsed donors. Perhaps you need more evidence to be convinced of that premise. Reactivated lapsed donors produced a 4 percent better annualized response rate over new donors while nearly maintaining the average gift. While 4 percent may not seem like much, this translates to an 8 percent improvement in the ROI annually.
In addition to being more cost-effective to reactivate a lapsed donor, the overall value of this individual is comparatively better — even when you factor in a slightly lower average gift.
So go ahead … get started. Integrate telemarketing into your campaign mix — chances are you'll see those formerly inactive donors spring back to life. We found it to be the right call. FS