is direct mail donor recruitment an art or a science?
TRANSCRIPT
of both. The art side of direct mailfundraising, ie the creative, commands theattention and is what the public sees. Thecreative is what is flashed on the screen asthey announce the winner of the bestfundraising direct mail pack. The creativeis tangible and aesthetically satisfying. Allthe above statements illustrate recogni-tion for the creative side of direct mailfundraising, but what about the analyticalside? It clearly does not enjoy such ahigh profile, but data analysis is criti-cal. This paper highlights the analysisstages of direct mail recruitment and whatshould be learned at each stage; includ-ing conversion and measurement of bothprospects and donors. The goal of thispaper is to demonstrate that a combina-tion of the best creative, the right target-ing and good timing yields the optimumresponse.
To achieve this combination the crea-tive needs to be balanced against analyti-cal resources. The right combination ofresources will depend on each individualsituation and the place to begin is with ananalysis of prior campaigns. It is goodpractice always to review the response ofthe last campaign before planning thenext. To review the campaign in total theanalysis must look at how active donorsperformed in comparison to prospectivedonors; which new creative test, or of-fer, achieved the highest response; which
Brian Williamson is Strategic Planning Di-rector of HLB, the United Kingdom’s largestlist broker, manager and data consultancyexperts. Brian acts as a consultant to coreclients, reviewing direct marketing plans andadvising on effective uses of data. He workswith clients on issues ranging from list plan-ning and test matrices to lifetime value andstrategic analysis.
Brian has been with HLB in the UnitedKingdom for over a year; he joined them fromthe United States where he was circula-tion manager with The Mark Group, one ofthe USA’s largest collections of upmarketwomen’s wear catalogues.
ABSTRACT
This paper promotes the importance of properpost-response analysis and highlights the criticalelements to be analysed. The analysis elementsdiscussed include: response measures, donationvalues, donation options, costs and return oninvestment. The goal of this paper is tointroduce the reader to what can be learned fromeach type of analysis and how that informationcan be used. This will empower the analyst tomake appropriate recommendations for futuremailings.
INTRODUCTIONIs recruiting new donors via direct mail anart or is it a science? In reality it is a little
Is direct mail donor recruitment an art ora science?
Brian WilliamsonHLB Ltd, 1 Riverside, Manbre Road, London W6 9GB, UK;Tel: �44 (0)181 735 8318; Fax: �44 (0)171 243 2363;e-mail: [email protected]
Received: 24th April, 1999
International Journal of Nonprofit and Voluntary Sector Marketing Volume 4 Number 3
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International Journal of Nonprofitand Voluntary Sector Marketing,Vol. 4 No. 3, 1999, pp. 213–216.�Henry Stewart Publications,1465–4520
methods increased average donations; andwhich lists recruited the most donors. Inother words, begin planning every cam-paign by analysing the data in full.
When focusing on the data analysisthat will drive campaigns, the first stageneeded is a general overview.
GENERAL OVERVIEWThe purpose of a general overview isto provide a top-line analysis of howthe campaign performed. The analysis issimple, but it sets up the format for theremainder of all analytical projects. It iscritical, therefore, to decide exactly whatwill be measured and how. The standardfields measured include:
— percentage of names lost in the de-duplication and/or suppression screen-ing
— gross or information request percentageof responses
— net or actual donation percentage ofresponses
— average donation values (including cashand committed giving)
— average cash donation values— average standing order or committed
gift donation values— average costs per donation (costs per
pound donated)— average costs per new donor— Return On Investment (ROI).
All of the above information should besourced, analysed and reported in amanagement summary.
Analysis of the percentage of nameslost through deduplication and/or sup-pression screening will begin the manage-ment summary. If the percentage of nameslost is extremely high this indicates con-siderable parity between the names on thehouse database and those on the one beingrented. While it shows that the targeting
is good, it also means the universe on newnames left to mail is limited. Furtherresearch will need to be done to findmore suitable new names.
Responses provide vital informationand show how well the offer matched themailed audience. If it emerges thatresponse rates are dramatically differentfrom those that were forecast a reason forthis must be found. A dramatic decline inresponse rates will send any organisationinto a panic, and often prompts acomplete evaluation of the campaignplanning process. A complete evaluationusually begins with an examination of thedifferences between this and previouscampaigns. Downturns in results may becaused by changes to campaign strategy,such as the creative, the offer changes, orthe targeting. However, this should bemeasured against the tried and tested pack,ie ‘the control’. Dramatic increases inresponse rates also require immediateattention, albeit that this is looked on in amuch more positive light. In order torepeat a success the reason for the upturnmust first be discovered. For example, ifresults have increased due to a new offerand the results can be replicated, thisprovides an opportunity to increase themailing universe and to mail names thatcould not previously have been justified.It is as important to react efficiently topositive results as it is to react to negativeresults.
In the author’s consultation withfundraisers he has witnessed organisationsmake dramatic changes based on thegeneral analysis of a campaign. In the caseof the Terrence Higgins Trust, a newcreative combined with a new ask greatlyincreased response rates and this providedthem with the opportunity to mail listsnot effective with the creative. They usedthis information to react and increase theirmailing activity, but they realisedadditional information was needed. It is at
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choosing to donate via committed giving.The Trust realised they had to determineif this was a positive change or a negativechange.
MEASURING REVENUE VS COSTThe final measure of levels of revenueagainst cost is the critical part of themanagement summary. Many departmentsin a charity have an interest in, and willpossibly be effected by, the outcome ofthis analysis. For example, the financedepartment will have based its operationalbudget on the expectation of a cer-tain revenue funding overhead: opera-tions, phone support services and goodwillprojects by the charity. The most criti-cal part of the analysis is not the rawamount of revenue generated, but therevenue generated minus the costs spentto recruit that revenue. This determinesthe profitability of the mailing. If it is amailing to active donors the profit shouldbe highly positive; if it is a mailing torecruit new donors the figure could benegative. To make sound financial sensethese figures still need to be measuredagainst forecasts and compared with resultsof previous mailings.
In the final analysis of the new TerrenceHiggins Trust campaign it was determinedthat the increase in response and thepositive impact of a committed giveroutweighed the negatives of lower initialdonation levels. However, it was not untilall the aspects of response, donation leveland donation frequency were analysedthat it could be concluded that the changewas positive. This is why it is important tocomplete all aspects of the analysis.
EXISTING DONOR ANALYSISFollowing analysis giving the generaloverview, the next step is to analyse theresult to the active donors that have been
this point that they looked at response,type of donation, value of donation andprofitability of the new donors.
ANALYSIS OF TWO-STAGE MAILINGSMultiple response rates, gross response andnet response must be analysed if themailing is a two-stage process. A two-stage mailing is a mailing asking for aninitial response that does not request adonation with the intent to send adonation request to these responders. It isimportant to measure the interest repre-sented by the gross response against theaction represented by the net response.The gross response rate is the number ofmailed potential donors requesting addi-tional information. The net response is thenumber of people that requested addi-tional information who actually donated.If it transpires that the mailing isgenerating strong interest (gross response),but weak conversion (net response), thenthere are solutions that can be imple-mented based on changing the offerand/or the creative.
ANALYSIS OF CONVERSIONSNext, it is important to analyse the effec-tiveness of the conversion. If asking for amonetary donation, does the resultingaverage donation meet its forecasted level?Analysing donation levels is similar toanalysing responses.
The donation level must be measuredagainst forecasted levels and previousmailings. If donation levels changedramatically a reason must be found andappropriate action must be taken.
The Terrence Higgins Trust analysisrevealed that response rates had sig-nificantly increased, but donation valuesand patterns had changed. This newcampaign was recruiting more donors, butthey were initially donating less and
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mailed. The analysis is carried out in thesame manner, except that it now appliesonly to active donors. The primarydifference in this analysis is the expecta-tion of results; the overall goal of donormailings is to generate revenue. How-ever, the active portion of the mail-ing must generate a greater proportionof revenue because donor recruitmentgenerally operates at a loss.
The most revealing part of the analysisis when it shows the value of donationscoming from different groups of activedonors. If the mailing to donors hasfollowed a Recency Frequency Monetaryvalue (RFM) model or any other modelthat ranks donors from top to bottom,then the mailing analysis should reveal thesame pattern. For example, if the top 10per cent of donors generally represent 50per cent of the donation, does this rulestill apply? Or is it the 80/20 rule and thetop 20 per cent of the donors represent 80per cent of the donations? This area ofanalysis is vital in order to understandwhich part of the donor base is contribut-ing the most income.
DONOR RECRUITMENT ANALYSISThe key goal of this analysis is to deter-mine the cost of recruiting a new donor.All new donor recruitment aims to recruitdonors at a cost which will yield anacceptable payback. Generally, the re-search has shown that a new donor shouldbe expected to pay back the cost ofrecruitment within nine to 18 months,depending on the nature of the charity.
The overriding message of this paper isto stress the importance of comparingcurrent results with the results of previousmailings and forecasts. It is only possibleto determine how successful somethingwas when there is a frame of reference. Itis this critical frame of reference that isprovided by analysis of previous results. If,for example, all results are reviewed fora single mailing it may be possible todetermine that this mailing generated aresponse rate of 1.5 per cent and anaverage donation level of £10. If theprevious campaign generated a 3 per centresponse with an average donation level of£9 a true understanding of the perfor-mance of the campaign will emerge.
CONCLUSIONFollowing the above analytical processwill show the success of a single campaignand build a picture of a trendline forcampaigns in total. All analysis shouldbegin with revisiting previous campaigns.
Information � Hindsight � Foresight
Foresight will play an invaluable part inhelping future campaigns to hit the rightpeople with the right message at the righttime. Is fundraising an art or a science?Certainly, successful fundraising dependson creative messaging to stimulate dona-tions. To work to maximum effect,however, this creativity needs informedguidance, and that can only come fromapplying scientific analytical processes tothe critical points of each campaign.
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