Part 2 — Why Direct Mail Fundraising has changed — and why it’s not changing back

Reciprocal list exchange and data cooperatives — to some people in the Australian fundraising sector, the idea of sharing a charity’s donor list with other charities is still regarded as a sin against “donor-centric” fundraising.

Very soon, those people won’t be sending out any direct mail fundraising, because very soon it will be financially impossible to do direct mail fundraising without list swaps and data cooperatives. Here’s why…

Other charities know more about your donors than you do — when you look at your own database of donors, all you know is that Donor X gave a donation on such and such a date. That, and their name and address is all you know.

When you join a data cooperative and you mix your donor database in with over 100 other charities, you can see that Donor X also gives to other charities, you can see how much they give to others, how many times, and whether they give to charities similar to yours or to a wide range of causes.

You can see which of your donors are giving you cash, but giving to other charities by regular monthly giving. You can see how much they are giving monthly, when did they start, and how they signed up (by phone, face-to-face, online or direct mail).

When you stay outside of a data cooperative, you see none of that. But all the other charities in that data cooperative can see all that information about not just their donors, but your donors too. That’s because…

Most of your donors are already in a data cooperative — when over 100 different charities combine their databases together into a data cooperative, it aggregates and captures what’s called “The Common Donor Universe”. Most of your donors are giving to other charities, and they end up in the data cooperative, whether or not you added them in yourself.

Virtually every charity database in Australia, when matched up against a data cooperative, will have a match rate of 40% to 80%. That means most of the time, most of your donors are in that data cooperative already. Other charities are able to contact a majority of your donors whether you share their information or not.

Your most valuable donors are already in the data cooperative — Which half of your donor database is in the data cooperative? The better half  — the donors who give the most and who give the most often. The most profitable half of your donors, who generate the vast majority of all your income, are already in the data cooperative.

Donors that give to only one charity on average donate $449 to that charity. Donors that give to two or more charities — the ones you find in data cooperatives — give on average $552 to each charity.

Donors that give to only one charity make an average donation of $65 each time they donate. Donors that give to two or more charities donate on average $95 each time they donate.

And donors that give to only one charity donate 9.63 times over their donor lifecycle. Whereas donors who give to more than one charity donate on average 10.59 times to each charity.

To see the data in full, please read my earlier article Disloyal Donors Are Better Than Loyal Donorshttp://www.linkedin.com/pulse/disloyal-donors-better-than-loyal-derek-glass?trk=pulse_spock-articles

Data cooperatives can guide your entire donor journey and lifecycle — Some people in the Australian fundraising sector are busy preaching righteously against the evil technological innovation of data cooperatives. But the smart people in the sector are discovering that data cooperatives are central to not just donor acquisition, but they also increasingly play a central role in donor stewardship and creating an effective donor journey.

Data cooperatives can help you upgrade donors who are giving more to other charities than they are to you. The only way you can find and target those donors is by using a data cooperative.

And for donors who are lapsed, you can use data cooperatives to determine which of your lapsed donors are still giving money to other charities, and which donors have stopped giving to you and to every other charity. Again, you can only do that with a data cooperative.

Because of postage increases, rising competition and other normal everyday macro-economic factors outside our control, eventually, the only charities that will be able to cost-effectively use direct mail as a fundraising channel will be those charities that join data cooperatives.

For the purists and the self-righteous, who refuse to change their privacy policies and refuse to share data with other charities, their donors will not reward them one extra dollar for doing so.

Nobody gets a lift in donations by promising to never share data.
The only thing charities get for not sharing data is a direct mail fundraising program that eventually shrinks and dies.

Why Direct Mail Fundraising has changed – and why it’s not changing back – Part 1

Premium direct mail design — the seismic changes in direct mail fundraising design in Australia over the past 8 years leaves some in our sector wishing for a return to the “good old days” when all you needed was a good story and a good house file to make money in direct mail.

 

No pens, no greeting cards, just a really “powerful” story.

For starters, those days weren’t so good. Back then, you were lucky to get a 1% response to cold mail acquisition and it took 3 years of re-asking those donors, over and over again, until you made any net income from that “relationship”.

In Australia today, premium cold mail packages “only” pull 2%, or double that, on their worst days. Well-designed and well-tested premium packages pull over 10%, and bring in ten times more donors than the “good old days”.

When you continue mailing premiums throughout your entire journey with that donor, you raise even more money, each and every time you contact them, generating total net income that is 4-8 times higher.

Why did this happen?

You can blame the internet and smartphones. It is no longer cost-effective to deliver written communication — alone — by direct mail.

If you have a good story to tell, and that’s it, you are far better off communicating that message online or onto a mobile phone. You can add video and sound to it as well. Direct mail is simply a big waste of money if all you have is a “powerful” story to tell.

Eventually, because of postage increases, rising competition and other normal everyday macro-economic factors outside our control, the only kind of direct mail that will be cost-effective to mail will be premium direct mail.

That’s because you can’t deliver physical objects over the internet or onto smartphones (yet). Premiums are physical objects that fundamentally change the donor’s experience with you and measurably increase donations.

Although they are often dismissed by colleagues in the sector as “trinkets” or “bribes”, they are actually the key drivers that increase donations today and into the future.

Donor’s keep, value, and use the premiums you send them. These objects end up as part of our donor’s lives, and we end up becoming part of their identity and what they represent as a person.

Premiums increase donor’s identity with you, premiums yield higher retention rates when implemented throughout the donor’s journey and they increase total net income.

And that is why premium direct mail is not going away, nor should it. The good old days are gone. Thank goodness.