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Fundraising letter response rates
Boost them (and your revenue) by watching nine vital statistics

By Alan Sharpe
March 6, 2006
Direct mail fundraising is a numbers game. A game that changes all the time. Who could have predicted the advent of online giving? Or the popularity of sweepstakes? Or the rise of a generation of young donors whose primary method of communication is text messaging?
When I say that the direct mail game changes all the time, I am not referring to the fundamentals, of course. Donors will always give to people to help people. The most important word in a fundraising letter will remain "you". And donors will always want to be kept informed about what their gift is accomplishing.
But the world is changing. Technology is changing. How people give is changing. What people support is changing. How people look at nonprofit organizations is changing.
You can spot these trends when you keep an eye on your direct mail results - your numbers - as all smart fundraisers do. Here are some of the more important numbers to watch and manage.
1. Response rate
The percentage of your donors, who received your mailing, who responded with a gift. Pay close attention to the appeals that pull the best response - and figure out why.
2. Average gift
Your gross income divided by the number of gifts. The larger the better, naturally. This figure can be skewed upwards by a few large gifts, so measure it carefully.
3. Average cost per gift
Your total costs (writing, design, production, printing, mailing, postage) divided by the number of gifts received. This number helps you discover what to trim.
4. Return on investment
Your net income divided by your costs, expressed as a percentage. Your chief financial officer will want to see this one!
5. Cost to raise a dollar
Your costs divided by your gross income. The lower, the better. One of the most popular ways of measuring your success, but not to be used in isolation since it tells only part of the story.
6. Conversion rate
The percentage of first-time donors or members who renew their support and become (convert to) annual donors by sending you a second gift. Drops in this figure can sometimes be attributed to poor follow up or mailing too many solicitations (or too few) during the 12 months following the first gift.
7. Renewal rate
The percentage of donors who renew their support each year. The higher, the better.
8. Attrition rate
The rate at which donors do not renew their gifts each year, usually expressed as a percentage of all active donors. High rates can sometimes be attributed to acquisition methods that do not attract loyal donors (sweepstakes and lotteries, for example).
9. CPM (Cost Per Thousand)
One of the most common measurements in direct marketing. Tells you how much you must spend to communicate your fundraising message to one thousand people. The M in CPM stands for Mille, the Roman numeral used to represent 1,000.

Alan Sharpe is a professional fundraising letter writer, instructor, mentor, author and newsletter publisher. Alan helps nonprofit organizations worldwide to raise funds, build relationships and retain loyal donors using cost-effective, compelling, creative fundraising letters. Receive free tips like this each week by signing up for Alan Sharpe's Fundraising Letter.