I was lunching yesterday with a fundraising executive at a large charity that works with intellectualy disabled children, and she was lamenting the “tactical” nature of premium direct mail.

To her — and I think she speaks for many people — it feels like a never-ending series of seemingly frivolous decisions about greeting card designs, photography vs. illustration, glitter vs. die-cutting, and what should the matching envelope look like?

Lost in all the discussions about monograms, shopping bags and t-shirt sizes is a meaningful “engagement” with donors, she said. What does early intervention education services for intellectually disabled children have to do with tote bag fabrics?

They have a lot to do with each other. And not just on a shallow superficial level, but on a deeply strategic level as well.

Like many charities working in the disability sector, her charity is facing big funding cuts with the rollout of the National Disability Insurance Scheme (NDIS) over the next several years. Millions of dollars in government funding that used to flow to disability service providers is going directly into the hands of disabled individuals, to spend on services as they see best for themselves.

That means disability charities need to find new sources of income — such as individual giving and regular giving programs. They will also need to actively market their services to the general public.

Mass marketing vs. niche marketing

Stategically, every disability charity in Australia has to shift away from a narrow focus on services to a small population of people, with large amounts of government funding supplemented by a small group of committed and loyal donors.

In the future, these charities will need a much larger number of donors to generate a bigger percentage of their income, and they will need to build market leading brands that will attract the most number of potential customers.

The charity that attracts the most customers will be able to grow and expand and will eventually displace or absorb smaller charities with less popular services and less donors.

And all this premium “stuff” plays a key strategic role. A premium direct mail donor acquisition program is the fastest way to acquire large numbers of new supporters.

Once on board, you have to make the most of them.

It’s easier to sell people what they want, than what you need.

Several large disability charities have started out with a small group of donors, 1,000 maybe 2,000, who each loyally give about $100 at either Tax time or Christmas, raising a supplemental $200,000 a year for the charity.

Then, they launch a premium direct mail donor acquisition program, and get 20,000 or even 40,000 donors, at a much smaller average gift of about $40. If you can get each one of them to give that amount again, just once, you can raise an additional $800,000 to $1.6 million every time.

And then the charity puts these donors on a “journey” involving “donor care” and direct mail house appeals. In other words, a series of self-reflective newsletters and fundraising letters, one after the other. You’ll be lucky if a quarter of those donors give again.

Next, charities put these donors through telemarketing “conversion” programs to cross-sell them to regular giving. And the conversion rate is terrible.

Your donors don’t want to be weaned off premiums.

You can acquire thousands of new donors with a premium. And it should be no surprise that using a premium is the best way to get them to give again.

Take a group of premium acquired direct mail cash donors, and mail them a thank you letter with a t-shirt inside with your logo and their name. Tell them it is a thank gift for their first gift, and ask them to give again.

You will get a 20% to 30% response rate, all of whom become 2-time frequency donors before you’ve even sent them their first house appeal.

Repeat this process and add premiums to your house appeals, and the response rates will rise. Every time you increase the response rate to a house appeal you are also increasing your 2nd gift rates and your retention rates rise in tandem.

Introducing Premium Regular Giving

And if you want to convert these donors to regular giving, take a careful look at what kind of regular giving product you have and how you are selling it.

Offer these donors a monthly incentive to become a regular donor, and many morewill do it.

Guide Dogs offers a regular giving product at $199 a month. That’s right, $199 direct debited each month. It’s called the Guide Dogs Wine Club. And it comes with a case a wine delivered to your door each month. Guide Dogs makes $50 net each month, and the attrition rate is half the attrition rate of face-to-face acquired monthly donors.

If you are finding it hard to convert premium direct mail donors to regular giving, it probably has a lot to do with what you are offering them, and how you are offering it. What kinds of incentives could you offer?

Premiums create Influencers and Advocates

You can do a lot with 40,000 supporters beyond just getting them to give more money. You can use premiums to turn them into an advertising channel.

All that “stuff” can convey key messages. Turn these premium donors into walking, talking influencers in their community and advocates for your brand and your services.

They will attract customers, and they will bear witness and tell your story in a way that money alone simply cannot buy.

Love your premiums and your donors will love them too.

Strategically speaking, the most important thing you can do is select premiums that reflect quality and value. Show how much you care by presenting the premium in as appealing a way possible. Love what you are sending your donor, and they will see that and respond in kind.

Too many fundraisers loathe the premiums they are mailing. They select the cheapest thing possible, the easier thing to produce, and then they insist the premium must be all about the charity and have nothing to do with the donor or their tastes or preferences.

The worst thing you can do is regard the whole premium decision-making process as tactical and completely beneath you.

These donors are motivated by material objects. And they can smell a premium with low self esteem from a mile away and will drop you like a rock.

Take pride in what you are mailing, and donors will take pride in supporting you in return. A thoughtful and carefully considered decision about tote bag fabrics can make a million dollar difference down the track.