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| Path: Main Street : Resources & Library : Research Articles : Feature Article |
Replenishing, increasing lists are major problemsby Steve Thomas
August 14, 1996; Canadian FundRaiserDirect mail fundraising is alive and well. House lists continue to produce, and for many organizations, there's no better, more cost-effective way of annual fundraising. Nevertheless, for almost everyone, prospecting is still more difficult than ever before. The major question of direct mail fundraising today is how to replenish and increase our lists.
Relationship fundraising came out of England. Most of us are practicing it now. We send out welcome packs to new donors, make welcome calls, engage in dialogue with our donors, and send them lots of information and frequent newsletters. Will this all pay off? We hope so, but we don't know for several years.
Most direct mail programs have large pools of lapsed donors. We're fishing in this pool more and more with reclamation mail and phone programs.
Most of us have looked around for alternative sources of donors. Some - like the telephone - work, but the resulting donors are not as cost-effective as mail donors. Monthly givers, acquired through in-person, telephone, or television are even more lucrative than mail givers, but start up costs are very high.
What's working better in traditional direct mail prospecting? We're seeing more and more premiums such as address labels, seeds and notecards. Without a doubt, such mailings increase the response percentage, but they are also more costly and leave questions about the kind of donor we are getting.
Questionnaires seem to be the answer for some organizations. The Council of Canadians, the National Action Committee on the Status of Women (NAC), Alternatives, and the Arthritis Society have used them recently. Since we've seen them multiple times, they must be working. Then there are householders; TVO recently sent out 975,000 and made a profit!
While the total number of pieces being mailed is down, at no time in Canada have so many different approaches been tested, and for that matter, have so many agencies been tested against other agencies. So far, no approach or agency has been a clear winner.
Wiser organizations have realized that you have to invest money to build a direct mail donor file. The Americans have known this for years and so have our commercial brethren.
Pick up a copy of Mal Warwick's latest book, The Hands on Guide to Fundraising Strategy and Evaluation. He offers some good clues for calculating the lifetime value of your donor and you will learn what you can afford to spend acquiring a new one. Generally, a safe rule of thumb says that if you can recoup your acquisition loss by the end of the next year, you will, in the end, make large profits.
Will we ever return to the good old days of direct mail acquisition? We just may. Craver Matthews Smith, a big Washington-based direct mail firm, recently tracked all their acquisition results with the Consumer Confidence Index over the last 20 years. When it was high, acquisition did well; when it was not, acquisition did not.
This conclusion stands to reason. Even though times are tough, you might support your favourite organization, but why would you take a risk on a new one? Fortunately, the Consumer Confidence Index in Canada is slowly beginning to rebound after several years in a slump. Although there might not be another golden age of acquisition, a silver age is quite possible. Stay tuned.
Steve Thomas is a Toronto-based direct response fund raising consultant. He can be faxed at (416) 690-7256.
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