Disloyal Donors Are Better Than Loyal Donors

Did you know that Ben and Jerry’s Ice Cream’s most profitable customers buy both Ben and Jerry’s and other brands of ice cream? These “disloyal” customers spend about $400 a year on Ben and Jerry’s alone.

Whereas their “loyal” customers — those that only buy Ben and Jerry’s — spend about $200 a year. Half as much. Each disloyal customer is literally worth two loyal customers.

Do donors behave the same way? — Yes.

The Insight Data Cooperative is Australia’s largest donor-data cooperative combining the transactional data of over 100 charities, with over 2 million records, and over 20 million financial transactions.

We asked our friends at Insight to compare the financial performance of donors who give to only one charity with donors who give to 2, 3, 4, or 5+ charities. Here’s what we found:

Donors who only give to one charity give less to that charity than donors who give to more than one. When a donor gives to 2 or more charities, they give more to each one.

Then we looked at Average Gift:

Again, donor’s that give to more than one charity also give more on average to each one.

With one exception, donor’s who give to more than one charity also give more frequently to each one. And donor’s who give to 5+ charities, although they give slightly less frequently, their higher average gift and higher total donations make them far more valuable than donor’s who only give to one charity.

This is why charities that are privacy compliant and who share their data with other charities — both in the form of data cooperatives and through unilateral list swaps — actually generate much better financial results than charities that do not share their data.

There is absolutely nothing to be gained by not becoming privacy compliant in Australia today. Donors do not reward you for having an iron clad rule against data sharing.

Instead they just give all that money…to somebody else.

Testing Case Study: Greeting Cards vs. Calendar

We once had a client insist on mailing each donor a single shoelace. They called it a “premium”. It was an Alzheimer’s charity and they had some copy about how the condition can make tying your shoelace a challenge.

It bombed, big time.

That’s because not all premiums work the same. Some premiums work much better than others, and it can be difficult to know which premiums work the best without testing them against each other.

Here is an excellent example, from the 2014 Christmas season. (See image above). An overseas aid charity tested two premium-based cold mail acquisition designs.

One design included a full-size four-colour wall Calendar, which was tested against a portfolio containing 3 Greeting Cards, 2 sheets of gift wrap, and gift tags. Here are the results:

The Greeting card package was 11% more expensive, but generated a 30% higher response rate. That reduced the cost to acquire each donor by $12, a 40% reduction. It also generated 350 more new donors.

Now, if you had hired us to do your 2015 Christmas direct mail campaign, we would have shared this intelligence (and more) with you before your holiday appeal lodged this year.

But there is still plenty of time before your 2016 Tax campaign. No other agency produces premium direct mail that works as well as ours does. Other agencies have tried to best our designs, and failed many times. So get in touch with us sooner rather than later.

Case Study: Vision Australia’s response rate tripling house appeal 2015

Here’s a great example of how premium house appeals dramatically increase your second gift rates and donor retention.

Mailed in Feb, 2015, this premium house appeal included an enamelled lapel pin, a 2015 Supporter Card personalised with the donor’s name and embossed with “Thank you” in braille, and a custom designed pen in the shape of walking cane. Plus, if you donated $50 or more, you also got a Iris themed tea towel.

The package was tested against a much lower cost non-premium package. Here’s how they performed:

The premium design cost $100,000 more to mail, but it raised $154,000 more in donations. All that “stuff” made money. The net income almost doubled.

But the most important thing is that the premium package pulled a response rate almost 3 times higher. That means the second gift rate rose 3 times faster. It means retention improved 3 times faster, and it means the Lifetime Value of went up as well

Whenever you increase the response rate to a house appeal, you are increasing your second and third gift rates, your improving your retention and your making your LTV rise.

That’s why premium house appeals work better than non-premium designs.

To run this same test, just get in touch…

Why Premium Direct Mail Fundraising works so well in Australia

According to figures from Australia Post, premium charity rate direct mail is the only category of mail in which total volumes continue to rise. And for us here at Ask², 2015 marks the third year in a row in which our clients have doubled their volume of premium direct mail.

What’s driving this explosive growth is largely financial, as you can see from the chart above. Although premium direct mail often costs more per piece than non-premium direct mail, it generates a much higher response rate, and a much lower cost per donor acquired.

But that’s only half the story. The real financial benefits come when a charity combines premium direct mail acquisition with premium direct mail re-solicitation:

A premium cold mail acquisition package generates 5x more donors to re-solicit. And if you re-solicit them with a premium house appeal, the response rate is usually double that of a non-premium house appeal. Those two numbers multiply against each other and the net income per house appeal increases ten times.

Many charities in Australia have built up large numbers of premium acquired cash donors, but very few are using premiums in their house appeals. That’s a shame, because if you are using non-premium house appeals, you’re really making it much harder on yourself financially than you really need to.

Of course, the production lead-times for premium direct mail are longer, so if you’re thinking of adding premiums to your 2016 Tax Appeal, it’s best to get in touch with us now. If you start thinking about it in March, it’ll be too late.

Taronga Zoo “Ultrasound” Holiday Appeal

It was eight years ago, Christmas 2008, that we developed one of the first “premium” direct mail fundraising packages in Australia — Taronga Zoo’s “Ultrasound” Christmas Appeal 2008.

You may recall, in the middle of 2009, that the Taronga Zoo’s first baby elephant was born, turning into a huge hit with visitors and a world’s first for the Zoo.

But back in 2008, all we had was the ultrasound image, so we turned it into a direct mail premium.

And not only did it perform better than any previous holiday appeal in the Zoo’s history at the time, but it also prompted a few nervous calls from several men on the list swearing they never met “Lucy Melo” and that “the kid isn’t mine”.

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