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Lists, Acquisition Planning & Strategy
Presented By:Jeanette Cassano
Senior Vice President
July 7, 2015
Page 2July 7, 2015
OVERVIEW
• Direct Marketing Current Trends
• Purpose of Direct Mail
• Types of Lists
• Sources of Lists
• List Ordering Process
• Role of the List Broker and List Manager
• Planning an Acquisition Mailing
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Future of Direct Mail
Digital Taking Shares of New & Old MoneyWhile Direct Outperformed Expectations…
2014 U.S. ‘Direct & Digital’ Spending: $146.1 BB
In the US –Spent on
Direct Mail
Whereas -Spent on Digital
Digital = Display, Email, other Mobile, Social Technology & Services, Lead Gen & Affiliate Services and Search.
Direct = Insert Media, Teleservices and Direct Mail.
Direct Mail kept its share in acquisition:
• It can be can be integrated with digital channels (mobile, behaviortriggers)
• It is targetable, predictable & measurable.
• Direct Mail has scale, endurance, impact & importance, acquisitionand sensory benefit
• Almost every household in the civilized world can be reached bydirect mail.
Source Advertising Spend: Winterberry Group analysis of multiplesources 2015.
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Trends - Direct Marketing – Economy & Nonprofits
• Two main factors influencing charitable giving are the economy & consumer confidence.
• Research shows that during harder times, charitable giving falls as a percentage of the GDP. Theconverse is true; during periods of strong economic growth – revenue growth increases.
• Value of Nonprofits in 2012 (Urban Institute Center on Nonprofits and Philanthropy)
• The tax-exempt sector represented 5.4% of our GDP.
• 501(C)(3) Public Charities accounted for ¾ of its revenue ($1.65 trillion) & expenses ($1.56trillion) more than 3/5 of nonprofit assets ($2.99 trillion).
• The number of nonprofits registered with the IRS increased from 1.32 million to 1.44 million, ajump of 8.6 percent.
• Nonprofits employ approximately 11MM paid workers or about 10% of the workforce (thirdlargest behind retail & manufacturing).
More Groups Chasing a Finite Pool of Money
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Reporting/Trends - Direct Marketing – Overall Charitable Giving
• Two Major Benchmarking & Forecasting Companies are The Giving USA Foundation & Atlas forGiving along with our CoOp partners such as Blackbaud (Target Analytics) & Epsilon.
The Giving USA Foundation Data
• Charitable giving in 2014 (Giving USA) is expected to be in the neighborhood of $350 billion, itwas $335 billion in 2013 which is a 3% increase over 2012. Approximately 72% came fromindividuals.
• Individuals Dominate Giving
• Donations by individuals—by far the most important source of funding for nonprofits—rose significantly in 2013. Researchers say wealthy individuals were the main source ofthe increase.
Source: Giving USA
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Reporting/Trends - Direct Marketing – Overall Charitable Giving
Atlas for Giving Data
• According to Atlas for Giving, $456.7 billion was given to charity in 2014 an increase of 9.3% over2013. They had estimated a 13% increase in giving in 2013 from 2012.
• Robert Mitchell, chief executive of Atlas of Giving, an organization that forecasts giving rates,said stock-market gains boosted gifts to donor-advised funds and colleges more than to bignational charities that depend on the support of large numbers of small donors.
•• Differences between Giving USA & Atlas for Giving:
• Donor Advised Funds are part of Atlas for Giving’s calculations and represent 6.4% ofall giving. (Donor-advised fund is a charitable giving vehicle administered by a public charitycreated to manage charitable donations on behalf of organizations, families, or individuals.)
• Giving USA relies on IRS 990 information & does not use survey data whereas Atlasfor Giving does use surveys. Churches are not required to file tax data so surveysare what are used to gauge church giving. 1/3 of charitable giving is from churchdonations.
• Atlas for Giving claims they are more timely & relevant since they don’t rely solely ontax data that is a 1½ to 2 years old but econometric models.
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Trends - Direct Marketing
• Issues that impact current benchmark/projection reports:
• High profile episodic events drive giving• Stock Market• Unemployment & compensation (Recently employed or just re-employed don’t give – takes two years
to reach previous levels of giving of person who was previously unemployed.)• Interest Rates• Global Economy, Competition Internationally (i.e. Asia), Geo-political Issues• Oil/Gas prices• Technology has increased – i.e. crowd-funding, etc.
• Three steps to YOUR economic recovery: 1) Focus on acquisition 2) Build donor retention 3) Ampup creative (Future Fundraising Now)
• “Some of the biggest advances in direct mail marketing have come on the list side…allowsmarketers the ability to target better than ever before with offerings such as modeling, analyticsand appending. “(Inside Direct Mail)
Predictions for 2015…
…trickle-down effect to people who give small donations?2014 – donations from wealthy increased…Direct Mail a Pipeline
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Purpose
The Purpose of Direct Mail is Twofold…
• Direct Mail Revenue is responsible forbuilding many of our country’s mostimportant Non-profit organizations
• For most small organizations, the mostcommon source of funds is asking largeamounts of people for small donationsthrough Direct Mail
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Educates prospects on mission of nonprofit
Creates awareness of issue
Increases “brand” recognition
New members/donors can become monthlygivers and/or major donors
Supports other channels of fundraising
New Volunteers/Activists Donate Goods Attend an Event Participate in a walk or run Volunteer to organize an Event Promote a charity on line Email or send a letter to an elected Join a social network
Purpose
Creates More and More…
MoreAdvocacy
MoreFundraising
MoreFundraising
MoreAdvocacy
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5 Factors to Achieve Success
• Lists
• Offer
• Copy
• Format / Packages
• Premiums / Benefits
If the mail piece does not reach the right people, Direct Marketing cannot do its job & willnot be successful in meeting its objectives.
Maximizing Direct Mail Success depends 1st on lists – 2nd on offers – 3rd on copy/graphics.
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Types of Lists
ExamplesPhone Directories, Credits Records,
Deed RegistriesGovernment Data, Warranty
Cards, etc.
Commercial
Response Compiled
Consumer
Commercial Fundraising
Consumer lists change at a rate of about 2% per month as people are born, relocate, die or marry.NCOA adjusts for these factors.
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Recency Dollar Gender Region Source Modeling
Member/Donor files Subscriber files Buyers Co-Op Databases Compiled Survey Email Direct
“…better target prospect – lift response”
Factors to Consider:1. When was file last updated2. Selects Available3. Pricing4. Usage
Types of Lists Marketing and Targeting
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Broker/List Manager
NextMark/SRDS*/MIN
Internet
Direct Connection
Exchange
Rental
One-Time Use
* SRDS = Standard Rate & Data Service. Database of media rates & relatedinformation – includes approx. 100,000 U.S. & Int’l media properties.
Approx. 25,000 Response Lists & 50,000 Compiled Files
Sources of Lists; Types of List Transactions
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Mailer
ListOwner
Clearance and Order Process
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Mail responsive names that have both the to give to your cause.
Why use a Broker/Manager – Macro Perspective?
Abreast of current &historical trends in the
overall direct mail market.
Expertise within yoursector such as charitable,environmental political,
cultural/arts, etc.
Identifies the lists thatare successful for aparticular cause ormembership offer.
Knows the characteristicsand success of lists outside
of the core market.
Has the information onhow a list was built & how
often it is updated.
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Why use a Broker/Manager – Micro Perspective?
Works with the client todevelop an acquisition plan
including testrecommendations.
Identifies profitable segmentson marginal/unlikely lists.
Maximizes exchange opportunities &negotiates the best prices for you with
the list owner.
Clears and orders continuation, retest, and test listswithin a designated timeline.
Coordinates with list manager for the timely deliveryof names to the service bureau.
Invoices the campaign.Keeps track of the exchange
balance betweenorganizations.
Evaluates response rates,average gift and other results.
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Organization’s budget & goals determine the quantity to be mailed Prospecting is an .
Factors that determine the timing & number of mailings per year: Expenses/Budget # of new Members/Donors to be added Timing of Cash Flow from New Donors Seasonality
Objective - Most significant quality variable is the average gift amount
Average gift is also a key indicator of a donor’s upgrade potential &measurement of a stronger commitment
Structure of Acquisition Plan and Strategy
“If you don’t know where you’re going, you’ll end up someplace else.”– Yogi Berra
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Continuations, Retests, & Tests
Know your primary, secondary & tertiary markets Maximize the use of your core files Better target your marginal lists 10% to 20% of plan should be devoted to testing
List/Package optimization – Traditional/Mission - Hybrid - Premium based packages
The List Mix: Member/Donor lists are generally most responsive Hotline selects – great tool to get unique names & increase response rates Commercial files - Catalog Lists – low response rate; high average gift Cooperative Databases – modeled donor names Test lists including those of Nonprofits whose mission is similar
Structure of Acquisition Plan and Strategy
Must Lay aSolid
Foundationfor your plan
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Structure of Acquisition Plan and Strategy
Understand & reach the benchmark metric(s) established in your budget…
• Response Rate:= (# of Donors/Qty Mailed) * 100= Success in matching target audience,package & program.
• Average Gift:= Gross Income/# of Donors= Higher gift - better upgrade potential
• Gross Income or Total Revenue:= # of Donors * Average Gift= Shows productivity of mailing
• Income/M:= (Gross Income/Qty Mailed) * 1000= Key in list evaluation
• Cost/M:= (Total Cost/Qty Mailed) * 1000= Indicates cost per thousand
• Net/M:= Revenue - Cost = Net Income.Formula=(Net/Income/Qty Mailed)*1000= Shows net productivity
• Cost Per Dollar Raised (CP$R):= Total Cost/Total RevenueThe lower the better.
• Net/Donor:= Net Income/# of Donors= Important prospecting metric because ittakes into account donors, revenue & cost.
• LTV = Long Term Value (Life Time)Key retention metric for longterm planning.
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Response Rate and Average Gift act like a weighted scale.
Structure of Acquisition Plan and Strategy – Key Metrics
Use historical results and current trends to develop projections for eachlist…Rigorous, Quantifiable Metrics.
List selection is data driven.
Not only qualify but must also quantify the viabilityof our acquisition plan and strategy.
Defend projections with objective data.$$$CAUSE &
EFFECT
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Specifics of Mail Plan Development
Built on response information from previous mailings.
Quantities per list/select are input into the mail plan according to performance andmost recent usage.
Universe counts - Is the universe large enough to omit prior usage?
Strategize placement of list…how many mailings a year? Take all available and waitseveral mailings to mail again or take an nth amount so some quantity of list will bein each mailing.
Improve results by refining select segmentations 12 months instead of 24 months; 6 month instead of 12 Dollar amount of gift ($5+ versus $10+) Male versus Female Geo/SCF/Zip
Usage
Structure of Acquisition Plan and Strategy
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When the right audience is targeted, a critical component ofis met.
Returned, unwanted and undelivered mail produces vast amountsof waste paper.
Plan and implement the every step of the way:Reduce, Reuse, Recycle.
The ability to deliver your message to a precise audience - produces cost effectiveness& environmental stewardship.
Structure of Acquisition Plan and Strategy
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Prospecting is an .
Most clients keep 25-35% of new donors in the 1st year; Multi-yeardonors usually retain between 65-75%.
Over the course of time if prospecting is not done in some manner–natural attrition will continue to exponentially reduce the size of yourdonor base.
Attrition and Acquisition of Donors
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“Even if you are on the right track, you’ll get run over if youjust sit there.” – Will Rogers
Speaker Contact Information:
Jeanette [email protected]
415-886-6106
www.belardiostroyfundraising.com
Final Words
