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How to Manage A Successful New Donor Acquisition
Mailing Campaign Developed by Strategy Plus/Gifford Claiborne It is recommended that you never mail anything before testing every aspect of your mailing first. What do I mean by testing every aspect? Test, your message, but… most importantly, test your mailing list. This means you’re trying to find out if your message inspires your audience, and you must know what type of response rate is profitable before mailing to your total list. In a nutshell, you want to know:
Allow me to explain myself in more detail. Many Rescue Missions over the past 20 years, thanks to people like “Gifford Claiborne” have acquired tens of thousand of new donors by using tested direct mail packages. In other words, they were testing the performance of the message, meaning, i.e. copy, art work, meaning the effectiveness of pictures and accompanying design, but most importantly, they were testing the audience response to there message within the various mailing package. The response from your acquisition mailing, when a gift is mailed in, then become new donors. These new donors have been the life-blood of many Rescue ministries across this nation, and by using continued monthly donor appeals, have provided millions of dollars in support, this has allowed many Rescue Missions to grow and expand services. This can be accomplished by sending a monthly appeal letters, and a second separate mailing using a Newsletter to include a mini appeal, yes, this means you would mail two separate appeals each month. You would drop early enough to ensue your mail piece is in-house before the 1st and 15th, News Letters are generally designed to inform, however, when accompanied with an appeal letter, this strengthens the overall package to include an ask, not only do you inform the donor, but the appeal letter should touch the heart of the donors emotions, motivating them to respond with a gift. However, all this starts by using a tested direct mail donor acquisition strategy designed to target various geographic areas… using rented mailing lists. For most Rescue Mission ministries this works best at Thanksgiving, however, Christmas season works well too. Generally, Christmas mailing’s, tend to produce a larger single gift, however, fewer responses. Keep in mind, never mail anything until you or someone else have tested both list and the message first, but make sure you verify the response rates. It is recommended that you test various lists, using no more that three different offers (Meaning three different mail packages). This way you can determine which is your best offer. Also, you must find out which mailing list performs most effectively. Your list usually is more important than your offer, however, you want to know which offer gets the best response. Keep in mind that your testing results are only estimates, and once you “roll out” the mailing list; (meaning: mail to the total mailing lists), then and only then will you find out the final results, and what mailing list performances the best. Also keep in mind that list vary somewhat in different areas because of economic and social conditions. However, your test is all you have to go on prior to rolling out your mailing. Your organization could experience a significantly different response rate; it could be lower or higher, depending on:
You must also take into consideration budget, past experiences, your fortitude as well as your faith. All of this adds up, or takes away from any successful donor acquisition mailing campaign. In some cases depending on the urgency of your of your message, and the targeted audience, the average acquisition gift can vary in size, anywhere from $20.00 to $40.00; per single gift. This can adjust up or down depending on the geographic area you mailing into. Keep in mind, your projected amount will vary, and this depends on three important factors.
TEST # 1. If you have a large geographic area that you are trying to reach, rent as many as 10 response lists, and use as many as 5,000 names each. Keep in mind this depends on your community size. Test accordingly! In a large community, like L.A, or New York, Boston, and major metropolitan area, test as many as 50,000 pieces. For example, if your mailing costs are estimated at $350… Cost Per Thousand (CPM), then $ 350 times 50 thousand-test mailing will cost $17,500.00. Remember, this all depends on your individual market, as well as your market penetration. Keep in mind with lower test quantities the CPM will be higher quantities always CPM. You will have some creative costs for developing these direct mail packages, but the goal is to break-even. This means if your spend $2500 mailing to each test list you must get in return $2500 back from your total tested amount. However this is seldom done, generally only around 3 lists end up being winners out of the 10 lists tested. A list winner is one that does better than break-even, from the original list of 5000. A list that performs at a response rate of 1.5% with an average
gift of $25 per-response, is a winner. A winning list should garner
75 responses at $25 average gift per response, or a total of $1875
of income. However, keep in mind that any given new donor
acquisition mailing could produce only a 1.0% or even a low 0.5%
response, thereby depressing results. Then if the 7 other “looser lists” performed at a 0.5% average response per list they would garner a total of 175 responses at an average gift of $25, for a total additional income of $4375. Adding these two figures together, $5625 and $4375, the Test #1 total income would be $10,000 total income at an initial cost of $25,000, for a net loss of $15,000 for the test. However, we would have also acquired a total of 400 new donors – 225 from the three winning lists and 175 from the seven looser lists. If cultivated effectively, these 400 new donors will give an average of $700 per month for the next 12 months, or a total additional giving of $8400 for the first year. Adding this $8400 to the initial total test income of $10,000 equals $18,400 income against the Test #1 total cost of $25,000 for a net loss of $6,600, or a net cost of $16.50 for each newly acquired donor – 400 of them. TEST # 2. For your second direct mail new donor acquisition
test, consider repeating the strategy of Test In addition, we would rent an additional 150,000 response names from the three winner lists from the first test--50,000 per winner list, a 10 to 1 rollout ratio. If these three winner lists of 150,000 folks perform as expected, they will garner an average 1.5% response, that is 2250 new donors giving an average of $25 per donor, or $56,250. (However, keep in mind that the response rate could be 1.0% or even 0.5% thereby depressing these response figures.) The cost of mailing the 150,000 names would be $500 CPM or a total of $75,000. Therefore the rollout to the 3 winner lists would result in an initial net loss of $18,750. However, if we effectively cultivate these 2250
new donors, the would give an average of $3,920 per month for the
next 12 months, or $47,040, therefore covering our Test #2 rollout
loss of $18,750, and netting the ministry $28,290, less the net loss
of $6,600 from Test #1, and a net loss from test #2 of $6600 for a
total net income of $15,090. TEST # 3. For Test #3, if we have confirmed the results of the winner lists from Test #1 in the Test #2 rollout of 150,000, we would now rollout to those three original winner lists, if we have the universe available, to 1.5 million, AND we would roll out to an additional 150,000 to the winner lists of Test #2, for a total mailing of 1.65 million winner list names. Again, IF we get our projected 1.5% response, we will garner 24,750 new donors at an average gift of $25, so our income would be $618,750, minus our cost of $500 CPM or $825,000, or a net loss of $206,250. (Keeping in mind that our response rate of 1.5% could well be lower at 1.0% or even 0.5%, and the average gift could be lower as well.) However, our 24,750 new donors, along with the 2650 new donors from Test #1 and Test #2, would now total 27,400, who would give at the estimated average rate of 5% per month response or 1370 monthly responders at an average gift rate of $35, which would total $47,950 per month, times 12 months, or $575,400 income over the next 12 months, minus the net loss from Test #3 of $206,250, or a bottom line net gain of $369,150 for the Three Tests, and an active donor file of just under 25,000 who would continue giving approximately $618,750 annually at an estimated cost of $500 CPM or $12,500 per month or $12,500 X 12 = $150,000 cost per annum, and a net income for the ministry of $468,750 per year. . . And then, each following year, we would continue to cultivate the 25,000+ current active donors we have acquired from the three tests as well as continue each year to mail a new donor acquisition mailing to approximately 2 million new winner names each year, thereby increasing the size of our active donor file by approximately 25,000 each year, and recognizing that each time we add the 25,000 new donors, we would be experiencing a new gain in net income of nearly $500,000 per year as well. Increasing the size of the annual new donor acquisition mailing to 4, 6, or 8 million names, if such response list universes were available to us can accelerate this process. For example, at the 25,000 production quantity, the CPM might be closer to $550 or even $600, whereas in a one million production rollout, $500 might be attained. Keep in mind the 1.5% exampled response rate might well be just 1.0% or even 0.5%, thereby depressing all the above estimates for response and income. And yes, for some lists it might be above the 1.5% estimated target rate. But it pays to keep our sights as conservative as possible so we won’t be disappointed in our initial results, keep in mind that our goal is to acquire new donors, not raise income from the new donor acquisition mailings. After we have acquired the new donors, then our goal would be to raise income for the ministry at an acceptable cost of about 20 to 30%. Please keep in mind that all of the above figures are estimates, based on past experience over a number of years with various Christian organizations.. Your results may vary, also keep in mind that times are changing, and there are so many various media in which to contact prospect these days, i.e. telephone, fax, e-mail, web, and now the i-phone. WOW, the list will increase in the coming years. This is all about your ability to test your market… Prior to rolling out any direct mail program… Good luck, or I should say, may God Bless your endeavors THE END. Written by: Mr. Gifford Claiborne. Fundraising Direct Mail |
