How to Maximise Income from Mid-Level Direct Mail Donors

Thanks to premium direct mail, today many charities in Australia have large databases of premium acquired cash donors, with 12 month active counts ranging from 10,000 to over 100,000 donors.

The average gift is about $35 to $50. But 10% to 20% of those donors give $100, $500 or even $1,000 at a time. And a large premium cash acquisition program will generate thousands of these donors as well.

So how do you get the most income from this high value segment? The short answer is to mail them nicer packages, and they will give more, and more often. That is easy to test and is well established.

The best way to maximise income from mid-level donors is to improve the quality of the communications you send them. And that usually costs more. So here’s a simple maths equation I use to sort that out.

If you mail a package that cost $2 to a segment of donors who give $20, you will need a 10% response rate to break even. To calculate that, you divide $2 by $20, which equals 10%.

If you spend $3 to mail a package to $50 donors, you need a 6% response rate to break even. Anything over a 6% response rate is profit, or net income.

If you spend $4 on a $100 donor, the breakeven is 4%. If you spend $15 on a $500 donor, the break even response rate is 3%, and if you spend $20 on a $1,000 donor the break even is 2%.

So the higher the average gift, the more you can spend per contact, and the threshold at which you start hitting profit drops at the same time.

That then leaves the question…what do you spend more money on? What gives you the best lift in response, per extra dollar spent?

Start with fundamentals — like paper weight and paper stock

Most direct mail fundraising is printed on an uncoated white stock, with a medium weight or thickness, usually 80 gsm (which stands for grams per square metre). Consider using the 100 gsm, or 120 gsm versions. They are a bit thicker and feel nicer.

Then consider the coating for the paper. Most direct mail fundraising is printed on uncoated paper, but consider using a matte finish. Or you can even choose a glossy finish. Both coatings will make the images printed on the paper look better.

And then think about the paper stock itself. There are thousands of paper stocks to choose from, in every imaginable colour and all sorts of textures. A well selected paper stock is a simple way to make the words on the page appear important, valuable, and worthy of the donor’s attention.

Next — Embellish the Paper

When it comes to embellishing paper stock, remember theses four — embossing, die cuts, gold foil and glitter. Use them all if you can. And when it comes to added cost, remember the break even response rate formula.

If it costs an extra 20 cents per piece to add a die cut, and another 30 cents to emboss the outer envelope, that is adding 50 cents per piece to your cost.

Take 50 cents and divide it by an average gift of $100, and your response rate needs to rise 0.50% to make these embellishments break even. If your response rate rises 1.00%, you will actually double your money. If the response rate rises by more than 1.00%, you make even more money.

If your average gift is $500, adding 50 cents to your cost per package needs a 0.10% lift in response rate. And if your averge gift is $1,000, your break even is a 0.05% increase in response.

That’s all it takes — to raise more money from mid-level donors.

Mail Objects — not just paper

In the example above, Vision Australia sent three “front-end” premiums, and a “back-end” premium designed to upgrade donors from giving $35-$50 up to $75 by offering a tea towel premium. It cost $4 more to add all these premiums to each package and the response rate needed to rise 5.33% to break even.

The actual response rate rose from 8% without premiums to 27% with premiums. Their net income tripled for every premium design they mailed. And, the dramatically higher response rate tripled their second gift rates in that time-frame.

Learn to work with direct mail’s stengths, and don’t be a victim of its weak points.

Direct mail can deliver physical objects into your donor’s hands. You cannot send a t-shirt through a phone (yet).

Focus in on the fact that direct mail can deliver physical objects — and not just a story on a piece of paper — and you will discover a mind-boggling array of options to raise more money from your donors.

Send objects that your donors will value, and use. Give them things they can wear. Send them things they can display. Turn your donors into walking, talking, advocates and evangelists and living, breathing advertisements for your cause and your mission.

It is not just about sending donors “stuff”. The key is to understand the financials, and then select “stuff” they will respond to with increased donations. From there, you can construct an entire physical universe of donor premiums that will cement your long term relationship with your donors much more than what a simple letter alone could ever achieve.

Why Bigger is Better in Fundraising

The more money a charity raises, the more it can do. More money means helping more people, saving more lives, and solving more problems.

Yet many fundraisers wish for nothing more than a small group of extremely loyal donors. The more loyal the better. 100% retention is the ideal, anything less and there’s something wrong. No donor should ever quit, for any reason.

Large and expensive fundraising programs that generate lots of one-off gifts or regular donors who quit early are frowned upon. Often called ‘churn and burn’, the whole business of mass market fundraising is not just imperfect, it’s sometimes conflated into a sin and labelled unethical.

So is it better to have a small group of very loyal donors, or a much bigger group of less loyal ones?

 Let’s start with the perfect ideal:

Charity A’s donors are 100% loyal. The last time the charity asked these donors for money, every single one responded. And each donor gave a whopping $500 average gift.

That kind of charity is seriously donor-centric. And talk about best practice, there would be case-studies galore — and quite a few awards — in store for any charity that accomplished what so many fundraisers can only dream of — perfect donor relationships. No attrition, whatsoever.

And let’s contrast that with a charity that has 50% retention. Half their donors never gave again. What’s more, the donors who did give gave much less, only $100 on average.

It sounds like a meat grinder. Every year the charity has to get new donors to replace all the ones they’re losing out of this leaky bucket calling itself a fundraising program.

Subtract the rhetoric and add up the numbers

It would seem like higher retention rates are better. A higher donor lifetime value must be good. And attrition must be bad. If half your donors are leaving, there must be a problem.

But scale matters too. And scale is often overlooked in this type of discussion. You might have really loyal donors who are each worth a lot, but how many of them do you have? And is that really raising you the most money?

In the example above, Charity A has 100% retention and an average gift of $500. But how many of them do they have? Let’s say they have 1,000 donors.

Charity A raises $500,000.

And let’s take Charity B with it’s revolving door of donors. A measly 50% retention rate and a paltry average gift of only $100. Let’s say they have 20,000 of these people they call “donors”, cough, cough…

Chartity B raises $1,000,000.

Now factor in economies of scale

Scale, or how many total donors you have, makes your income higher, but it also reduces your costs, by spreading them out across a much larger number of people. The bigger you get, the less it costs to ask each donor.

Let’s say it costs $100,000 in staff and administration costs to run each of the programs above.

Charity A raises $500,000 a year. So $100,000 takes out 20% of the money raised. Dropping them down to net income of $400,000.

Charity B raises $1,000,000. So $100,000 reduces net income by only 10%, down to $900,000 — more than double the other charity.

Let’s say that admin costs are actually higher for Charity B. Even if admin costs were double ($200,000 a year), the charity would still end up with $800,000 net — still double the other charity.

In fact, even if admin costs were $500,000 a year, Charity B would still raise $500,000 net. And that would still be more money than what Charity A raises.

Test, Measure and Reinvest Profits — Grow Even Faster

Some people look at a 50% retention rate and see red. They hear “lower average gift” and roll their eyes. But think of these as just numbers, that’s all they are. Instead of making value judgements about them, use them as the financial measurements and tools they were meant to be used as.

A charity has a 50% retention rate. So what. That’s not good or bad. It’s just a number. The average gift is $100. Costs are $500,000 and total income is $1,000,000.

That means that every dollar you spend on this program turns into two dollars by the end of the year. It’s like a bank account that pays a 100% interest rate. If you were presented with the opportunity to open a bank account with a 100% interest rate, what would you do?

You would put as much money into that bank account as possible. In fact, you could mortgage your house to the bank for, say 8%, and put that money into the account earning 100%.

The same thing happens with a “high-volume” fundraising program that can reliably and measurably generate an attractive return on investment. As you put more money into the program, it gets bigger, it gets progressively cheaper to run, and is increasingly profitable over time.

Never doubt that a small group of caring people can change the world. But a much bigger group can change a lot more, much faster.

Which Donors Are Really Into You?

Hey, I know your donor.

Yeah, I do. He’s that guy you met on the street, online or over the phone. He gave you his direct debit number, then quit before you could process it, like, even once.

Maybe you sent him a letter telling him how much you valued the relationship. It came back return to sender, no forwarding address.

He even completed an online survey saying he makes over $200,000 a year, owns his own home and is happily married. He’s actually unemployed, 3 months behind on his rent and recently divorced.

God, your donors are so complicated.

The truth is, your donors are a complete paradox. They will confuse you, lie, take all your free stuff and leave. It’s enough to do your head in. There is, however, a way to manage this. Here’s how:

Take a look in the mirror and be honest with yourself. Starting with the fact that:

 100% Donor Retention = One Donor

If you want 100% loyalty, then you need to have 100% loyalty in return. Are you ready for that? Just limit yourself to one donor with whom you have a lifetime relationship, until death do you part?

No? Too much? Then stop expecting 100% loyalty from the hundreds, thousands, and in some case millions of donors with whom you are having a relationship with.

You are only part of their lives. At best you are an ongoing affair that lasts for many years. The passion can be intense at times even.

To others you are just a fleeting moment that happened once and is unlikely to happen again. Yet your memory of it lingers on in your database to this day.

The More The Merrier

A single $1 million donor is the same as ten who donate $100,000 each. And the same again as 100 donors who each give $10,000. And a million donors giving $10 a month is $120 million a year.

We actually want ALL of those donors. Each and every one of them in every shape and size they come. We even have a name to describe this ideal in modern fundraising, it’s called the donor pyramid.

100% donor loyalty is neither possible, nor is it even desirable.

Let’s take Charity A. They have 1,000 very loyal donors. In fact, half of them gave last year, and on average they gave $500.

Charity A raised $250,000.

As opposed to Charity X. They have 50,000 much less loyal donors. Only 20% gave last year and they only gave $100 each.

Charity X raised $1 million.

Charity X raised four times more money, with a lower retention rate and a lower average donor value.

You are not alone

As you know, every relationship is a two-way street. You want to have lots and lots of relationships with lots and lots of donors.

So don’t be surprised or jealous when you discover that those donors also have lots and lots of relationships with lots of other charities. In fact, that’s a good thing.

All you typically know about each donor is the amount they gave, when they gave it, and how to reach them.

But when you combine your database into a data cooperative with all the other charities out there trying to do the same thing, you can learn a lot more about your donors.

You get to know who else they give to for example, and how often, and how much.

And guess what, the donors that only give to you – and no one else – they give you less.

A donor who only gives to one charity in Australia gives $449 a year to that one charity. Donors who give to two charities give $552 a year – to each charity.

Don’t ask “how loyal”. Ask “how many?”

If you truly want a lifetime of happiness in fundraising, first accept that there is no donor who is going to ride in on horseback and magically solve all your problems.

Stop looking for “Mr. Right”. Stop searching desperately for the perfect donor. He’s not out there.

Instead, embrace the fact that the world is filled with billions of imperfect humans who to varying degrees and at varying times are willing to help you achieve your awesome and amazing goal in life — which is to raise as much money as you can for the cause you care about.

The most successful fundraising letter ever written…

…was from a bird. An American sandhill crane to be precise. First mailed in the 1960’s, Nature Conservancy’s Sandhill Crane letter has acquired (not millions) billions of donors in the 50 years since it was first mailed.

The letter was written by the late American copywriter Bill Jayme, renowned for his ability to instantly connect with the reader. Once you start reading a Bill Jayme letter, you simply cannot stop. Like a book you can’t put down. He really was that good.

Bill Jayme’s letters sparkled with curiosity, mystery and intrigue. He immersed the reader into another world, then created urgency and elevated the act of responding to a noble calling.

I’m lucky to have a digital copy of the original Nature Conservancy Sandhill Crane letter. And here it is. Once you start reading it, you won’t want to stop.

Nature Conservancy Sandhill Crane Letter — by Bill Jayme (1926 – 2001)

Dear Investor,

The bug-eyed bird on our envelope who’s ogling you with such a bad temper has a point. He’s a native American sandhill crane and you may be sitting on top of one of his nesting sites.

As he sees it, every time our human species has drained a marsh, and plowed it or built a city on it, since 1492 or so there went the neighborhood. It’s enough to make you both edgy.

So give us $10 for his nest egg, and we’ll see that a nice, soggy spot just the kind he and his mate need to fashion a nest and put an egg in is reserved for the two of them, undisturbed, for keeps. Only $10. (Watch those crane come in to land, just once, and you’re paid back. Catches at your throat.) Then the cranes can relax and so can you. A bit.

How will we reserve that incubator with your $10?

Not by campaigning or picketing or suing.

We’ll just BUY the nesting around.

That’s the unique, expensive, and effective way The Nature Conservancy goes about its nonprofit business. We’re as dead serious about hanging on to nature’s balance as are the more visible and vocal conservation groups. But our thing is to let money do our talking.

We buy a whopping lot of land: starting with 60 acres of New York’s Mianus River Gorge in 1955 (now 555 acres), we have protected more than 6.9 million acres an area about the size of Connecticut and Rhode Island. These lands dot the nation from coast to coast and from Canada deep into the Caribbean more than 10,000 protection actions securing lands ranging in size from a quarter of an acre to hundreds of square miles.

All of it is prime real estate, if you’re a crane or a bass or a sweet pepperbush or a redwood. Or a toad or a turtle. And a lot of it’s nice for people too. Lovely deserts, mountainsides, prairies, islands. (Islands! We own 90 percent of huge Santa Cruz Island, off the California shore, and tiny Dome Island in Lake George, and most of the Virginia Barrier Islands, and dozens more.)

So besides being after your $10, we invite you to see a sample of our lands. We have 59 chapters in 50 states. Check your phone book. Our field offices will guide you and yours to a nearby preserve where you’re most welcome to walk along one of its paths, sit on one of the log benches, look about, and say to the youngster we hope will be with you, ”This will be here, as is, for your grandchildren.” Nice feeling.

We do ask that you don’t bother the natives. For example, there’s a sign in one preserve that says “Rattlesnakes, Scorpions, Black Bear, Poison Oak/ARE PROTECTED/DO NOT HARM OR DISTURB.” For $10, you’re privileged not to disturb a bear or stroke a poison oak. A bargain.

Bargains in diverse real estate are what we look for and find. But not just any real estate. We’ve been working for years to create a huge, always up-to-date inventory of the rarest animals, plants, and natural places in each of the United States. Set up with state governments, these “State Natural Heritage Programs” identify what’s rare and what’s threatened in each state: birds, butterflies, orchids, marshes, river systems, swamps, forests … and crane’s nests.

Then we try to protect those places that desperately need protection and preservation. We think big. For instance, the Richard King Mellon Foundation gave us the largest single grant ever for private conservation: $25,000,000 to launch the National Wetlands Conservation Project, which ultimately enabled us to save more than 20 major aquatic systems embracing well over 400,000 acres. Northern prairie potholes, remote desert oases, teeming marshlands, bird-rich coastlands, pristine lakes, rivers that crisscross the nation …

And we continue to protect wetlands. In Florida, we recently secured more than 22,000 acres the heart of the Pinhook Swamp. Not only is this swamp a vital natural link and wildlife corridor between the fabled Okefenokee Swamp to the north and the Osceloa National Forest to the south, but it also happens to be home to the sandhill crane.

But we don’t just shovel cash at the problems. We buy some lands, trade for others, get leases and easements, ask to be mentioned in wills.

Then we give or, preferably, sell much of what we buy to states, universities, other conservation groups any responsible organization that can care for and protect the land from anyone. Unless the “anyone” builds nests or eats acorns.

That cash flow replenishes our revolving fund. every dime of which is plowed into the unpaved and as yet unplowed. All this activity generates a lot of fascinating true stories, and lovely photos. These we put into a small (40 pages) but elegant, sprightly, and ad-free magazine, our report to our 700,000 members every other month: Nature Conservancy magazine.

Here you may find that the land you and the rest of us have just protected is harboring a Four-lined skink, or a spicebush, or boreal chickadees, or kit foxes. You’ve a lot to learn and see that’s most intriguing, as you’ll discover.

The Nature Conservancy magazine also describes well-led tours of our various perserves, tells you what we’re doing in your state, and shows you how you can help.

And as you use the complimentary sandhill crane bookmark, you’ll be reminded of your personal commitment to the preservation cause.

Now, you may think it’s disproportionate to brag about how we’re raising millions for our projects and then ask you for only $10. Who needs you?

We need you. very much! Those hardhanded foundations, corporations, and individuals who give us money or property must be convinced that our ranks include a lot of intelligent, concerned, articulate citizens: people who know that the natural world and all it harbors needs our help.

Yes. we need you and your ear and your voice and your $10 ($10 times 700,000 members helps protect a lot of acres). Please join us today. It’s easy: Get a pen. Check and initial the “membership application” form that your hand is touching. Within about six weeks of receiving your contribution, you will receive your membership card and the first issue of the magazine. Enclose a check for $10 in the return envelope. (Send more, if you can spare it.) NOTE that it’s tax-deductible. Mail the form. Go.

Thank you, and welcome, fellow investor in nest eggs. For your fanfare, listen for the wondrous stentorian call of that sandhill crane.

PETA’s Premium Donor Experience

For many years, PETA’s donor thank you letters included a bumper bar sticker that simply read: “EATING ANIMALS” in the same font and the same colour as STOP signs. Millions of supporters got the hint and today, you’ll find them all over the world.

It is one of thousands of stickers, labels and posters created by PETA over the past several decades.

PETA produces premiums for every type of supporter, whether or not they give. Every person’s “journey” with PETA is unique and their premiums are a key to bringing that experience to life for each person.

These premiums give supporters the tools to make simple everyday changes in their own lives that help animals.

Starting with a vegan diet, in whole or in part. Just substituting animal products for a vegan meal one day a week is as easy as it can be. To help, PETA has a whole range of recipe cards, cookbooks, shopping guides, and lists of substitutes for meat, eggs, and milk. They’ll even send you a deluxe canvas shopping bag to help you gather and carry everything you need.

Another easy way to help animals is to stop wearing them, as fur, as wool or as leather. And PETA carries a whole line of clothing to give you the perfect compassionate look — from saucy t-shirts to silk-free ties, leather-free espadrilles, and smart as micro-fibre belts. You can even barrack for the animals and your favourite team at the same time in acrylic scarves available in a rainbow of colours.

For every aspect of a donor’s life, PETA has a premium that helps drive their mission, and more deeply engages each donor. For example, once you’ve stopped eating and wearing animals, you can stop killing them around your home.

Physical objects that are well made and that are kept, displayed, and used each day, generate a much deeper and longer-lasting level of donor engagement than traditional “retention” programs like sending newsletters and updates to supporters.

Premiums advertise your cause and they shape the way donors see themselves and how the world sees them. Many PETA supporters are living, breathing, talking advertisements for animal rights. And it’s their head-to-toe accessories, their diet and their clothing that are doing a lot of that work.