All of us responsible for annual giving, or supporting clients who manage these programs, know that direct mail is more often than not the backbone of a charity’s annual fundraising strategy. It’s also the most cost-effective way non-profit organizations can build a stable base of donors from which they can leverage additional support.
But it’s not about immediate revenue and it’s certainly not about the short-term return on investment.
Direct mail is about building solid, long-term relationships with your donors that will hopefully (over time), inspire them to become monthly donors, mid-level/high-end donors, and ultimately, make a gift in their will to your organization.
What we know…
- Direct mail donors are far more likely to have a will than those who don’t donate through the mail.
- Direct mail donors are also significantly more likely to make charitable bequests than those who don’t give through the mail. (If you haven’t yet read the Good Works’ State of the Legacy Nation research paper, you can download a copy here.)
- Direct mail is an efficient way to convert single gift donors to monthly giving.
- Direct mail can often be a great vehicle to inspire regular (modest) givers to significantly increase their giving.
My Board of Directors doesn’t feel our results warrant a continued investment in direct mail.
Does this sound familiar? Maybe you’re having the same conversation in your organization? If you are, then let me help you explain WHY direct mail should absolutely be part of your overall fundraising strategy.
Direct mail is an important channel that allows you to connect with many donors at one time. Yet, if done right, a donor can feel like the letter received was written to them alone. The key is segmentation and personalization. (Check out Holly Wagg’s recent blog featuring 3 data gems to better personalize your donor communications.)
What’s more, direct mail is typically the only truly unrestricted revenue a nonprofit receives. Unrestricted revenue is what funds operating costs – something as simple as keeping the heat and lights on. When charities I work with start talking about collapsing their mail program because they aren’t raising enough money, I like to ask what plans they have to replace the revenue they’ve typically generated through direct mail. Often, there is no plan.
It makes sense to look at opportunities to reduce costs in order to generate the highest net revenues, but cutting a program is rarely the answer. Neither is cutting out new donor acquisition – the impact of doing so may not be seen in year one or even year two, but trust me, it will come.
Donor acquisition campaigns are just too expensive. I have enough donors that give through the mail.
Though it can take years to establish a cost-efficient and successful direct mail program, the reality is that you will lose donors along the way – even loyal, longtime donors – due to natural attrition. Things like death, a move to a long-term care residence, or loss of employment.
In order to maintain a stable base of active donors, you’ll need to invest in new donor acquisition to replace the donors you will lose every year.
One of the key metrics I encourage organizations to think about is their net new donor count. Often, they’re looking at the number of new donors acquired in any one year without cross-referencing this with the number of donors who stopped giving. If you’re losing more donors that you’re acquiring and/or reactivating, your program will eventually start losing revenue. THIS is usually the information that gets senior staff and your Board paying attention! The goal is to address donor attrition before it becomes a trend.
Other key metrics
The reality is that direct mail does require an annual investment to keep your program healthy. By that I mean you must invest money and resources to effectively thank donors, report back to them on how their donations are making a difference, and ensure they stay engaged, inspired and giving.
Other key metrics that help justify the ongoing investment needed to engage and retain your donors through the mail include:
- Donor renewal and reactivation rates (How many donors are you renewing from one year to the next? How many lapsed donors are you able to reengage year over year?)
- Donor Acquisition Cost (How much are you spending to acquire a new donor?)
- New Donor Second Gift Conversion (How many new donors actually make a second gift?)
- New Donor Retention (How many new donors continue to give?)
- Long-Term Donor Value (What is the total revenue received from a direct mail donor over a 5-10 year period?)
If you’ve got an outstanding direct mail program or you need help figuring out if your program needs some fine-tuning, I’d love to hear from you.