Thursday, July 14, 2011

What to Focus on

Here's a gem from Drayton Bird's "Commonsense Direct Marketing". He did a test with panels covering a myriad of combinations of list, price, mail date, ways of responding and creative approaches. His goal was to quantify the relative importance of each. The graph below shows his findings: the response difference between the worst and the best performance of each factor.

Reading the Chart. The difference between the best list and the worst list was 6 times. For example, if the worst list got a 0.20% response rate, the best list got a 1.20% response.

This graph rings true for me from my 25 years of direct marketing testing. Audience is the most important factor in strategy, followed by offer. This is often expressed as the "40-40-20 Rule" Audience drives 40% of the response, as does offer. Creative is 20%. This is different from Drayton's findings, but I take both as illustrative rather than definitive.

I'll take it a step further. In planning you should start with a selection and understanding of audience, then move to offer and finish with creative. They all need to work together.

Wednesday, April 20, 2011

The Medium Is the Offer

You may have heard the medium is the message. This pithy phrase comes from a book, Understanding Media: The Extensions of Man, by Marshall McLuhan (1964). The basic idea is that the characteristics of a medium can dominate and even override the content carried by the medium.

In fundraising we depend on media to communicate with individuals. We need to pay close attention to the media we use because they influence what our audience receives from the communication.

Think about it. A typical appeal letter carries a vivid cry for help. And gets a 5% response rate. Why doesn’t it get at least 50%? Are people really that calloused? That’s part of the point. The medium, a mass produced piece of direct mail, plays a significant role in what the individual receives. It dilutes it.

Contrast that with an in-person visit from the organization’s president. It's harder to say no.

The medium is the offer.

The offers we present our donors are defined by the medium we select. A double buckslip direct mail package is fine for a $25 annual fund drive, but it's not suited for presenting a complex community development project for $10,000. The richer and more personal the medium, the better suited it is for involved and high-priced offers.

Monday, January 31, 2011

Haiti & Emergency Donors

Check out Bryan Miller's entry on Haiti. As usual, Bryan has keen insights on creating coherent online donor experiences. I particularly like his ideas of giving donors communication options and asking their interests. These have worked well in my experience.

While on the subject of emergency donors, here's an interesting finding that reminds us that not all emergency donors are created equal. This splits SE Asia tsunami donors according to their 1st gift amount. Look at the difference in LTV!

You may find that a good percentage of your emergency donors are in the $100+ category. You can afford to develop special approaches for these high-end donors.

Friday, December 31, 2010

Barn Find of 2010

Car collectors fantasize about visiting a farmer with a used car to sell. There in the farmer's barn is a vintage Duesenberg, and the farmer is just happy to get rid of it. Multiple cars might be involved.

For me the Barn Find of 2010 happened while analyzing Network for Good's data. I was looking into the timing of giving. I knew online giving would be concentrated in the month of December, but didn't know how much. I also didn't know how concentrated giving was on December 31.

Further, the December 31st spike translates into online revenue that 24 times more than the average day of the year.

(Learn other important findings by downloading the Network for Good study. It's free!)

So what makes this finding more valuable than the vintage Duesenberg? If you're like many organizations, your website is a conflicted place. The organization tries to balance a list of goals for its website. This list includes things like PR, branding, education, advocacy, and so on. Fundraising often gets short shrift.

The December 31st spike means that even if the homepage can't be a fundraising engine year round, it should be on December 31st. Once you reap the rewards from focusing the homepage on giving for this day, you can then set your sights to the last week of December, or even the entire month.

Monday, November 15, 2010

Will Younger Donors Give to Freemium Packages?

A few weeks ago I recommended analyzing acquisition campaigns by age. Is your current control losing it among the young -- your future donors?

Here's an example of that analysis in action. It's a direct mail campaign. The organization's control package was a freemium notepad package. The test package removed the freemium. The thinking was that the freemium was an old folks gimmick and that it was a turn-off for more "mission minded" younger prospects.

Hypothesis: the freemium package would win over the mission package among older prospects and the opposite would be true among younger prospects.

The packages were tested with randomly selected panels from the client's continuation lists. We appended age information after the fact.

The age split that yielded the largest mail quantities for test reliability was at the 70 year mark. The 70+ year olds were mailed 21,000 of each package and the under 70 year olds got 15,000. This first point is that their DM continuation lists were weighted heavily toward the older end.

The graph below shows the response rates of the two packages by age:

As we expected, the Notepad package had a nice lift in response among the 70+ prospects (mostly Silent Generation). Contrary to our hypothesis, the Notepad also won among younger prospects (mostly Boomers).

The mind-blower is that the freemium had a higher lift with the under 70 crowd -- a 55% lift versus the 30% lift for their older counterparts.

The good news is that the control optimized performance from both age groups. But this finding also gives rise to developing freemiums that are specifically tailored to younger prospects.

I'll keep you posted.

Friday, October 29, 2010

How to Maximize Year-End Online Giving

Over the past few months I've had the pleasure of analyzing Network for Good's massive and rich dataset of online giving. The dataset features giving history that goes back over seven years and represents almost 2 million online donors and their nearly $400 million in giving.

This analysis identifies the peak period for online giving in December. This finding -- along with our recommendations for what to do about it -- will be presented by my TrueSense colleague Jeff Brooks and Katya Andresen of Network for Good in a FREE webinar.

The webinar will be hosted by Network for Good at 1PM (Eastern) on Tuesday, November 2. Register here.

Wednesday, October 6, 2010

How Long to Break-Even?

New donor acquisition can be a drag on your cash flow. It seems that most acquisition loses money out of the gate, and this impacts cash flow.

However, the payoff is in the subsequent giving of the acquired donors. Or so we've been told. What does this look like? The following graph shows Long-Term Net Revenue per New Donor for one organization:

This graph shows the average net revenue given by each new donor from one acquisition campaign. We see that the campaign lost money initially. There was a loss of about $7.50 for each donor acquired. If 10,000 new donors were acquired that would be a loss of $75,000. That's a hit to the current year's cash flow.

Fortunately, these donors continued to give (and the organization continued to offer new chances to give). By the sixth month, the subsequent giving of these donors was sufficient to recover the acquisition loss (break-even). This is excellent news.

I've run this graph on many organizations and many acquisition programs (TV, radio, DM, etc.). Some break-even within twelve months and some take as long as four years. How can a program sustain itself if it takes four years to recover an acquisition investment?

My recommendation is to run this analysis on each of your acquisition programs. Know when your campaigns break even. Sure Long-Term Value is important, but you need to count the cost. And you need to understand the impact acquisition has on your current year cash.