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Direct Marketing 201
◊◊ Trends, Metrics, Strategy & Implementation ◊◊
Presented By:Brian DeLaite
Executive Vice PresidentBelardi/Ostroy
May 14, 2014
◊◊ Analysis, Overview & Strategic Plan Development ◊◊- Macro to Micro -
What’s happening in the economy? Industry?
Where’s your organization’s performance in relation to others?
What are your particular organization’s goals and objectives?
What’s your current performance?
How do we meet your budgeted goals? Present & Future.
Maximize performance in your key metrics.
The Giving USA Foundation’s research shows that during harder times, charitable giving falls as a percentage of the GDP. The converse is true; during periods of strong economic growth – revenue growth increases.
Three steps to YOUR economic recovery: 1) Focus on acquisition 2) Build donor retention 3) Amp up creative (Future Fundraising Now)
“Some of the biggest advances in direct mail marketing have come on the list side…allows marketers the ability to target better than ever before with offerings such as modeling, analytics and appending. “(Inside Direct Mail)
Trends – Direct Marketing
Trends – Direct Marketing
Charitable Giving Report 2013 - Blackbaud
• $12.5 billion in total fundraising – 2013
• 4.9% Increase over 2012; largest since recession
• Online giving increased +13.5%; $1.7 billion
• Over one-third of giving happens Oct-Dec
• Long term overall donor declines have been mainly caused by declines in new donor acquisition
• Increased revenue has offset donor declines
• Direct mail = Foundation of New Donor Acquisition
• Scale, endurance, impact & importance, & sensory benefits• 70% prefer to read print & paper communications versus a
computer screen
Trends – Direct Marketing
The Index of National Fundraising Performance (Q3 ‘13) – Overall
o Revenue per donor shifts tend to be largely influenced by the mix of donors across different loyalty segments:
• Long-term donors typically contribute larger amounts than new donors.
• Organization strategy may also be impacting overall revenue per donor as organizations work to maximize net revenue.
Atlas for Giving estimates that charitable giving rose 13% in 2013. Whereas, Blackbaud reports donations rose at 4.9% which marks the largest increase it had found since the recession.
Trends – Direct Marketing
Trends – New Donors
Trends – New Donor Revenue
Understand & reach the benchmark metric(s) established in your budget…# of new members, CP$R, Net/Donor, etc.
Key Metrics Across Programs
• 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 Revenue The lower the better.
• Net/Donor:= Net Income/# of Donors= Important prospecting metric because it takes into account donors, revenue & cost.
• LTV = Long Term Value (Life Time)Key retention metric for long
term planning.
*Traditional Mission Based * Premiums (Front and Back End)
Types of Acquisition Programs
- Traditional/Mission based -
Lower response rates
Higher average gifts
Renewal rate higher
LTV stronger – generally more LOYAL LONG-TERM DONORS
- Premiums: Front & Back End -
Significantly higher response rates
Smaller average gifts
Harder to renew - Must be renewed w premium (bigger & better than last one)
LTV generally lower
How to Increase LTV – increase initial acquisition gift; identify what donors are best
to target for retention efforts - creative, wealth zip codes, targeted lists known to generate
higher average gifts
What does it mean when you have a traditional or a premium based program in this economic and direct mail environment?
Optimizing Components for Mail Plans
Packages
Seasonality – Campaign Timing
Lists
Categories
Analysis of Package
Mail Volume & Net/Donor by Package
953,636198,015 195,188 241,134
793,418 735,580
8,608,770
($26.95)
($65.32)
($41.85)
($130.15)
($15.93)($24.33)
($70.11)
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#11 Survey Education General Health Care SupporterCard
Survey n/a
Package
Vo
lum
e
($140.00)
($120.00)
($100.00)
($80.00)
($60.00)
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($20.00)
$0.00
Net/
Do
no
r
Identify Control Package(s) – rotate if possible
Test, Test, Test – package fatigue may be just a mailing away
Identify best months to mail package – optimize volume accordingly
Determine package LTV & incorporate into plans
Identify optimal List/Package combination
Chart shows packages
mailed over several years w new co-control
on horizon.
Analysis of Seasonality
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25.00%
Seasonal Mail TrendsFundraising Category & Mailer
Identify strongest months in which to fundraise – may need to test timing in months with no prior mail history. i.e. September, October, November for above.
Mail package with best ROI in those months
Is LTV better during certain times of year than others? i.e. someone who comes in over the slower summer months where there are more outside distractions
If more mailings are spread across year – it is more risk adverse than fewer campaigns with higher volume
* House file – Lapsed and Prospect – Segmentation / Performance:
*Recency * Gift/Donation Amount
* Single vs. Multiple Actions/Gifts * Modeling
Acquisition – List Types / Segmentation
Recency Dollar Gender Region Source
Commercial
Member/Donor Buyers Subscribers On-Line Direct
Acquisition – Outside List Types /Segmentation
Fundraising
CoOp Databases
Response
• Subscribers
• Buyers
Compiled• Internet sites / registration• Government Data• Phone Directories• Credits Records• Warranty Cards, etc.
Abacus /Epsilon Apogee Blackbaud / TAG DonorBase I-Behavior Wiland
Targeted names from mailer’s file Additional Mailable universe Increased response rates Higher average gifts in many cases
Structure of Acquisition Plan & Strategy
Know your primary, secondary & tertiary markets
Maximize the use of your core continuation & house files Better target your marginal lists Incorporate LTV into your planning – subsequent giving analysis critical Maximize exchange opportunities & get aggressive net arrangements /volume
discounts 10% to 20% of plan should be devoted to testing
List/Package optimization – Traditional/Mission based or Premium based Member/Donor lists are generally most responsive Test lists of Nonprofits whose mission is similar Hotline selects – great tool to get unique names & increase response rates. Cooperative Databases are must tests.
Merge optimization
• Continuations• Retests• Tests
Must Lay a Solid
Foundation for your plan
Use historical results and current trends to develop projections for each list…Rigorous, Quantifiable Metrics.
List selection is data driven. Not only qualify but must also quantify the viability of our
acquisition plan and strategy. Defend projections with objective data.
Objective - High value long term donor 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
Organization’s budget & goals determine the quantity to be mailed
Prospecting is an investment.
Structure of Acquisition Plan & Strategy
Analysis of Categories
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Buyer Compiled Disease House Files Multibuyers Other Donor Subscriber
Gif
ts
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ail
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Quantity Mailed vs. Donors
Quantity Mailed # of Donors
When the right audience is targeted, a critical component of Environmental Best Practice standards is met.
Returned, unwanted and undelivered mail produces vast amounts of waste paper.
Plan and implement the “Golden Rule” every step of the way: Reduce, Reuse, Recycle.
Planning & Strategy
◊◊Direct Targeted Mail Marketing Strategies◊◊The ability to deliver your message to a precise audience - produces cost
effectiveness & environmental stewardship.
Match Back Analysis is important!On generational giving patterns - today’s donors, no matter what their age, use all channels of marketing. “Fundraising is profoundly multichannel” and “Message/channel integration is a more urgent priority than ever.” (Convio report)
