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| Path: Main Street : Resources & Library : Research Articles : Feature Article |
Your nonprofit donor newsletter has just one reader
By Alan Sharpe
October 14, 2008
In Canada, a growing number of charities use telemarketing as part of their fundraising programs. In the United States, over half now use the phone to raise funds.
The reason they use telephone fundraising is simple: it works.
Yet a majority of Canadian charities are still reluctant to use telefundraising, or even test it. Too often this decision is based on some of the negative myths of telephone fundraising. Here are a few points that will help dispel some of these myths.
MYTH # 1:
My donors will hate being called.This is of course the most common, and probably the most erroneous of fundraising myths. Just because a board member or staff person dislikes being solicited by phone doesn't mean your donors will. Our experience has shown that as few as 1% of donors called, even on the first call-through of a list, object to the call (and upwards of 25% may contribute to that call). The people who do object can be easily flagged in your database, removed from your calling pool and never called again. It is not uncommon to have a zero complaint level on a list previously called.
The fact is, many donors appreciate the interactiveness of the phone call, the chance to ask questions, the personal quality of a phone call, and the ease of giving it provides. Several studies have shown that even those who say no to a telephone call are more likely to say yes to a subsequent direct mail appeal.
MYTH # 2:
The telemarketing company will keep most of the proceeds.Unfortunately, a number of less-than-reputable telemarketing companies have convinced organizations to sign up with them on a commission or performance basis that provides only small benefits to their clients. Reputable telemarketing companies operate on a fee-based system that guarantees the rates you pay. For calling programs targeting your most current donors, you should expect a fundraising revenue-to-cost ratio of $3-$6 raised for every $1 spent, depending on the list and program.
MYTH # 3:
Telemarketing is more expensive than direct mail, so I should just mail instead.It is true that telemarketing is more expensive than direct mail and that direct mail should normally be the main vehicle for donor-based fundraising efforts. But this is not to say that direct mail should be the only vehicle. On the contrary, the extra costs are often justified by the extra results and benefits telemarketing phoning programs can bring.
Telephone fundraising is particularly effective for conversion to a monthly donor plan, monthly donor plan upgrades, emergency campaigns, and lapsed donor reactivation, to name a few examples (see section below for more details on uses of telemarketing).
MYTH # 4:
We can't phone because we don't have our supporters' phone numbers.Many of our clients don't have phone numbers at the start of their telemarketing program. But it's a relatively simple and inexpensive process to have your entire list computer-matched for phone numbers. Costs can be as little as 7? per name found and up to 60% of the numbers can be found on the first attempt.
MYTH # 5:
Everybody has answering machines now, we could never get through.It is true there is growing use of answering machines and call screening devices. However, with consistent effort, a large number of donors can be reached. It is also true that in most organizations, donors are middle-aged or older and are the least likely to use answering machines.
MYTH # 6:
There is a large element of financial risk in telemarketing.This should not be the case. When embarking on a phone campaign always beware of longer-term contracts, or contracts that require a significant amount of financial investment up front. Telemarketing programs are highly measurable and controllable, and should be discontinued the moment the results drop below an acceptable level of response. If your telemarketing company either won't let you cancel a program at your request or requires long-term contracts or significant minimum charges, look elsewhere.
MYTH # 7:
We've tried phoning with volunteers and it didn't work, so telemarketing is not for us.Usually what that means is that telemarketing is not for volunteers. First of all, fundraising phoning is a skill that has to be learned. Few people are good at it, and most volunteers just don't have the time to learn the techniques necessary to solicit funds by phone. An equally important factor in the success of telephone fundraising is the volume of names called. With a volunteer phone team, you simply cannot achieve the volume and, in turn, the results of a professional phone bank.
MYTH # 8:
Our donors will not accept being called by a company on behalf of our organization.While a few donors will be concerned with this, the vast majority will not. Fewer still will even ask you about it.
MYTH # 9:
An outside company won't understand what we do, how we work and how to communicate with our donors.Of course, few callers will be able to know an organization as well as those who work there on a day-to-day basis. But keep in mind that few telemarketing calls ever vary significantly from the script you've approved, and most calls are very straightforward.
There could potentially be some problems, but these can be mitigated in several ways. If you choose a telemarketing company that specializes in nonprofit (as opposed to commercial) telemarketing, the callers should have a good sense of how nonprofits work and concerns donors are likely to have.
Check to see if the company has good employment practices, if so, staff will stay longer and have more experience in handling many types of calls. Ensure that there is an opportunity for your organization to give an in-person briefing and to observe the callers; this also gives you a chance to see if the telemarketing firm provides a reasonable level of training and briefing time.
No caller can be an expert on all issues, but your donors won't expect them to be. Donors with questions or concerns that cannot be easily answered can be referred to someone at your organization for a response; if your group has a tollfree number, this is especially helpful in re-directing donors' more complex questions to your organization.
MYTH # 10:
So many groups are calling now, it can't possibly work.That's what they used to say about direct mail years ago ? that it had peaked and reached the saturation point. But in fact, while direct mail became more competitive, groups could still make significant profits from it. All that really meant is that it was harder to do, but that those who did it well could still make it work. The same is true for telemarketing today. Most donors are still very responsive to a good call about an important cause they support.
The fact is, telephone solicitation is still relatively uncommon in Canada, and those groups who use it at this early stage have the best chance of success.
BENEFITS OF TELEMARKETING
1. Increased revenues
This is obvious, but sometimes overlooked. Adding telemarketing to your fundraising mix will increase your revenues overall, often enhancing rather than detracting from other fundraising events such as special events, canvassing and direct mail.But it's not just immediate revenue that will improve, telemarketing will also increase future revenue. Converting donors to a monthly plan and upgrading those already on a monthly plan are two programs often done best over the phone, and using them will continue to pay dividends for years to come. Likewise, there is often a larger hidden revenue stream locked in your lapsed donor file. At a certain point, the telephone call is the best way to put these donors back on stream. Since a reactivated donor is a stronger donor than a newly acquired one, lapsed donor reactivation makes a lot of sense.
2. Increased donor awareness
It is simply a lot harder to forget a phone call than a letter. If you call your donors periodically, they are more likely to remember your organization, its work and know you are counting on their support.3. Improved donor relations
Most donors appreciate the opportunity to ask questions or raise concerns over the phone. Many appreciate the direct personal contact of a phone call.4. A cleaner list
A fundraising phone-through of your list is the best way to clean it up. Many corrections to names, addresses and other crucial donor records simply do not come back in returned mail. A phone fundraising program with a script that includes address verification as part of the call can provide hundreds or even thousands of corrections. This in turn can improve your future results and save considerable costs.TELEMARKETING PROGRAMS TO CONSIDER
There are many effective ways to use telemarketing. Below are some programs we find work most often. In general, while we don't believe that telemarketing should drive a fundraising program, we do recommend your donor list be phoned at least once per year. In particular, we recommend phoning when you're launching a special program or emergency campaign; in these cases, a second call-through may be warranted.Monthly donor conversion
If you haven't set up a monthly donor program yet, you should. This is certainly one of the most cost-effective ways of securing a large and stable amount of future revenue. There are several ways to get your regular donors to become monthly donors. In our experience, using the telephone is the most effective means. The extra amount of persuasion and explanation necessary for conversion is best accomplished through this medium of fundraising.Monthly donor upgrade
This is one of the most successful programs you can do. If you already have a monthly donor program, phoning your monthly donors to increase their level of monthly giving reaps larger and more frequent gifts by phone than by mail.Large donor upgrades
If you are establishing a new giving club, or trying to move donors from one level to the next, a mail/phone approach often works best. The letter can either focus entirely on setting up a phone call, or alternately, it can be a fundraising appeal in itself, with a follow-up phone call as a reminder. Either way works, and the telephone follow-up is key to maximizing its success.Special appeals
Most often, special appeals are best done by mail. However, if you have a time-urgent emergency campaign, phoning can increase your results by much more than the increased cost of calling your donors. Such a technique cannot be used frequently, but if your organization is dealing with an important external crisis (or even an internal financial one), an emergency telephone special appeal can bring significant returns.Unrenewed calling
Donors that gave to your organization last year, but failed to respond to several attempts to renew them by mail this year, are prime candidates for a telephone reminder. Tests we have done with some organizations have shown that a telephone call after two attempts by mail was most effective. In other cases, it seems best to insert the call later in the renewal cycle (as long as it is in the same calendar year as the renewal request). Each organization is different, but in most cases, we find telephone renewal reminders produce more net revenue and renew more donors than direct mail.Lapsed donor calling
As mentioned above, there is usually an untapped gold mine in your lapsed donor file. This program works well largely because many donors don't realize they have lapsed and are very happy to renew over the phone. Our preferred method is to segment a lapsed file by year (based on year of last donation) and phone from the most recent to least recent segments until it stops being profitable ? or until the cost of re-acquiring the lapsed donor is similar to the organization's cost of acquiring a new one. We have done programs in which we phoned donors who had not given in 5 years, and still reactivated them at no net cost to the organization. We had a recent client for whom we were able to reactivate donors who had not given for over six years ? at no net cost. Of course, the real value of reactivating donors is the potential future revenue from these donors.Acknowledgment phoning
Some organizations use telemarketing as a regular part of their acknowledgment process. Donors at a specific giving level can simply be called and thanked for their support. The call is short and a message can be left on a machine to that effect. Such a program can pay real dividends in donor relations and future giving. A slightly more aggressive but still successful variation is an acknowledgment phone call 3-6 months after the initial gift (after another acknowledgment is sent by mail) with a soft invitation to join a monthly giving plan or other special donor club.Despite the myths associated with telemarketing programs, targeted phone programs can benefit any organization that raises a good portion of its funds from individual donors. Exactly what type of telemarketing works best varies from organization to organization. As in most fundraising, the key is to run test programs; and by doing so, you will quickly see how telephone fundraising helps increase the revenue and further the aims of your organization.
Alan Sharpe publishes Direct Mail Fundraising Today, the free, weekly email newsletter that helps nonprofit organizations raise funds, build relationships and retain loyal donors. Alan is the author of Breakthrough Fundraising Letters and 25 handbooks on direct mail fundraising. Alan is also a speaker and workshop leader who delivers public seminars and teleseminars on direct mail fundraising. Sign up for Alan's newsletter at www.RaiserSharpe.com.
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