7 Ideas to Rev Up New Donor Acquisition

Chad Lucier
Chad Lucier
Vice President, Account Services

New donor acquisition ain’t what it used to be.

While it’s a road that continues to be traveled by most nonprofits, it’s filled with more bumps and potholes than ever, as evidenced by the Blackbaud donorCentrics Index:


blackbaud-chart

There is some positive news: nearly ½ of all organizations realized a positive change in 2016 and the median decline was only -1.2%.

Regardless of whether you’re in the 51% on the decline or in the lucky 49%, here are a few ideas that might help rev up your new donor acquisition program:

1.    Invest in paid search

The Chronicle of Philanthropy ran an article several years ago that has always stuck with me.

It stated that four out of every five donors research an organization before donating. I imagine this is even truer for new donors than existing donors. This means that optimizing your Google grants and paid search investments will ensure that your prospective donors not only find you, but that they get the message you want.

More importantly, a good paid search strategy is critical to capitalize on the awareness and intent being created by all of your on-line and off-line efforts.

If you want to read more about digital acquisition, check out Jeff Ostiguy’s blog post.

2.    Consider insert media

Insert media utilizes 3rd party companies and publications to distribute your offer directly to individuals. This can take the form of anything from statement stuffers to catalog bind-ins to newspaper inserts.

Insert media has one distinct advantage over direct mail. Because there is no postage or addressing involved, the cost to produce and distribute insert media is significantly less than direct mail. As a result of those low costs, you can reach a much larger audience and deliver a significant number of impressions.

Although response is significantly lower than direct mail, those cost savings can result in a similar upfront CPDR and by all indications life time value is just as strong. For one client we’ve seen a 20% improvement in the CPDR.

If you’ve maxed out your direct mail acquisition efforts, insert media may provide the incremental gains needed to get back on the path to growth.

3.    Use back-end premiums to boost response

Back-end premiums are growing in popularity; most insert media packages utilize them, many DRTV spots offer one for becoming a monthly donor and Peer-to-Peer campaigns are using water bottles, fleece jackets and the like to promote higher gift levels.

More organizations are using them in the mail to effectively increase response rates, and in some cases average gift size.

In three separate client tests, back-end premiums drove significant improvements. Response rates increased by a minimum of 20% and average gift improved by as much as 25%.

If you haven’t tested a back-end premium in the mail, maybe it’s time. I also recommend testing the price point right out of the gate since it can greatly influence both response and average gift.

4.    Consider front-end premiums, too

Hate them all you want. But there’s a reason a majority of organizations use them: they drive response. In many cases those address labels or note cards will increase the number of donors at both ends of the giving spectrum.

Below is one recent example of where a premium was tested against a non-premium and resulted in more new donors at all gift levels.

Compared to the non-premium, the premium generated:

70% increase in $15+ gifts
49% increase in $25+ gifts
10% increase in $50+ gifts

The average gift was $28 for the non-premium and $21 for the premium, which as you can see, can be very misleading. A gift distribution is critical to understanding the value of your premium based acquisition package.

If you aren’t using front-end premiums, they are worth another look.

5.    Use non-premiums for higher value donors

A non-premium based acquisition package won’t increase the number of new donors at the same rate as premium packages. But package costs are low and lifetime value is high so there are plenty of reasons to incorporate non-premiums into your new donor strategy.

To get the most out of your non-premium strategy, make sure you reinvest those cost savings.

While costs vary widely, many non-premium packages cost $100/M less than a premium-based package.

If you are mailing five million non-premium packages, that is $500,000 that you can reinvest in either increased volume or one of the other strategies noted above. By doing so you may actually reap the benefits of both a larger and more valuable donor universe.

Like a balanced portfolio of stocks and bonds, a combination of premium and non-premium acquired donors will typically yield the best balance between growth and value.

6.    Retarget website visitors

Most organizations are retargeting their website visitors with banner ads … but how many are retargeting those visitors with direct mail appeals?

By all accounts, retailers and other commercial organizations are successfully using direct mail to convert web site visitors to customers. This usually takes the form of a postcard featuring a product that you browsed online. While application and execution may be different for non-profits, it is an exciting opportunity nonetheless.

Although this is fairly new to the non-profit space, the potential exists to convert a number of returning visitors or donation page abandoners into donors. This could be especially meaningful for organizations with significant web traffic.

At the very least, this is a new way to target a warm prospect universe.

Which brings us to…

7.    Don’t neglect warm prospects

The path to growth isn’t always through new donors. Sometimes it is more productive to mine the event names or memorial donors that are on your own database than it is to acquire a new donor.

The trick is in identifying the ones most likely to respond. For some ideas on the matter, I encourage you to read Brian Murphy’s recent post about uncovering the buried treasure in your database.

What did I miss? Please share your thoughts and ideas about how to rev up your acquisition program by clicking here.

Tax Reform and You. What Does It All Mean?

Eric Johnson
Eric Johnson
Vice President, Business Development

With President Trump unveiling his tax reform plan in recent days, we’re left wondering what it all might mean for donors and those that do the noble work of fundraising to help others.

In short, we don’t really know quite yet.

We do know that the once-feared reduction in the charitable tax deduction is not part of the President’s proposal. At least for now. And that’s a good thing.

Or is it?

The Trump plan holds the charitable deduction as-is, but looks to double the standard deduction. This change might actually reduce the number of Americans that need to itemize the charitable tax deduction.

If fewer Americans itemize the charitable tax deduction will they actually give less? Tim Delaney, president and CEO of the National Council of Nonprofits seems to think so and was quoted as saying, “Pronouncements of keeping the existing tax deduction for charitable giving create the impression that the status quo would remain, but proposals to double the standard deduction would effectively eliminate the tax incentive for millions of individuals and couples to give to support the work of charitable nonprofits in cities, towns, and rural areas across the country.”

The President’s statement was released on Wednesday, April 26th and has been described as “skeletal” and “a single page filled with bullet points.” In other words, there are plenty of holes and questions outstanding.

As the details of the President’s tax plan become clearer, so will the potential impact on your donors and their financial support. Until then, we recommend these articles for perspective and opinion:

New York Timeshttps://nyti.ms/2plNwHw

The NonProfit Timeshttp://www.thenonprofittimes.com/news-articles/initial-tax-proposal-leaves-charitable-deduction-alone/

Forbeshttps://www.forbes.com/sites/ashleaebeling/2017/04/26/trump-tax-reform-save-for-charities-is-illusory/#7094dfda7888

Beyond the obvious of keeping close tabs on potential changes, nonprofits must strive to be highly-relevant to their constituencies. This will help ensure that contributions won’t decline, even if the tax plan impacts the charitable deduction directly or indirectly.

While THD doesn’t have a crystal ball, we know using data, being nimble and responding swiftly ensures organizations continue to deliver on their missions when donors are faced with issues like tax reform.

To weigh in on this important topic click here.

Is there buried treasure in your database?

Brian Murphy

An interview with Brian Murphy, Senior Vice President, Marketing Analytics & Technology

Q: Brian, acquisition is getting more expensive by the day. And as many as 70% or more of new donors won’t ever give a second gift. But what are the alternatives?

A: Well, a number of nonprofits own an asset that isn’t being utilized to its fullest: their database. There can be hidden treasure in a database – names that have been acquired and paid for but for all intents and purposes are buried.

treasure

Q: What kinds of treasure are we talking about?

A: Untapped revenue sources.

One of the largest sources may be donors who have been lapsed for a decade or more. But they could also include event participants and donors, advocates, and people who were engaged in other types of peer-to-peer programs.

We’ve found that if we approach these audiences a little more creatively, they can be cost-effective alternatives to acquisition in many cases.

Q: You say that you’ve been able to reactivate donors who’ve been lapsed for 10 years or more? How?

A: It’s hard to reactivate long lapsed donors when you’re using RFM, which treats everyone within a segment the same way. But a number of nonprofits have experienced great results through modeling at the individual level.

Q: How about modeling for lower dollar donor records? Those that have given before, but gave a small gift.

A: I’m glad you asked about that and you’re right. While the “M” in RFM – monetary – is really important, a well-built model looks well beyond the amount of a previous gift and identifies donors with both the ability to give again and give at a higher level.

Q: What can modeling do that RFM can’t?

A: To give you an example, THD’s lapsed reactivation model leverages thousands of data points – psychographic, behavioral, transactional, engagement, motivations, preferences and far too many more to name – to pinpoint with surgical precision the lapsed donors most likely to renew their support.

To continue the buried treasure analogy, it’s the difference between sweeping the ocean floor with a net or using the most sophisticated radar technology available. With the technology, you have the equipment you need to find exactly what you’re looking for.

Q: Beyond long lapsed and low dollar donors, where else have you seen success?

A: Over the last few years, we’ve also seen a dramatic fall off in nonprofit peer-to-peer programs like Family and Friends Drives and Neighbor-to-Neighbor Campaigns. This is another area where modeling can make a huge difference. We can model participants as well as donors.

Q: The same basic principle applies to event names as well, correct?

A: That’s right. And for nonprofits who do a great deal of advocacy, those names could be another source of untapped revenue.

Q: Isn’t modeling costly?

A: I think there is a real misconception about the cost of modeling. Many modeling vendors, including THD, will build a model and execute a test to measure model performance at little expense to the client. Test costs are typically much lower than other alternatives – for example developing and testing a new creative package. And the risk is very low because you only need a test panel with enough volume to get a statistically valid read.

But the exciting element of modeling for me is the immense VALUE it is driving for our clients’ programs. The return on investment (ROI) is usually very high.

Q: So you consider modeling a low risk and high value method of mining your database for “buried treasure.”

A: I couldn’t have said it better myself.

To continue this conversation with the team at THD, click here.

How to Talk So Your Board Will Listen

I know just how challenging it can be to deal with a Board of Directors.

As CEO of THD, a fundraising agency that drives strategy and regularly presents program results, I appreciate that attempting to predict what your Board needs to hear from you can be intimidating and frustrating. The stakes are high, and it’s essential that your program is understood in the best possible light.

At the same time, I bring a unique perspective to this important topic, because I’m also the Chairman of the Board of Boyce Thompson Arboretum, Arizona’s oldest botanical garden. These dual roles provide me with some insights that might be of use in helping you navigate your relationship with your own Board of Directors.

Fundraising is different. Tell your Board why.
Boards are passionate and typically composed of very talented members. But their knowledge of fundraising is often elementary.

A survey by The Agitator (reviewed in an August 10th blog post) revealed that, when asked to “rate your CEO’s understanding of and commitment to effective fundraising,” 23% responded that they were “more of a hindrance than a help.”

But are you helping them?

We already know that many of your Board members (including your CEO) aren’t necessarily fundraisers. One is a high tech entrepreneur, another is an accountant, a third is from a big corporate foundation and so on. They’re all over the map and have little experience in your field.

But one thing they do have is opinions.

It’s logical to assume that they’re going to try to fit their professional experience into fundraising. Unfortunately, the dynamics are often totally different. While they may understand their own customer acquisition numbers, they believe that for nonprofits, people should just magically support the mission. They’re emotionally invested and engaged, and it’s hard for them to understand why their commitment doesn’t necessarily translate to a broad pool of donors who are willing to give.

That’s why you need to proactively educate your Board in order to gain legitimacy.

The only way to do that is to sit down with your Board and explain the data that goes into fundraising. Once they see how the numbers work, it’s no longer a question of opinion, it’s a question of facts.

For example, Board members sometimes put too much stock into the opinions of those outside your organization, like watchdog groups. Sound familiar? Educating the Board should often center on an actual ‘fundraising curriculum;’ a series of lessons on what numbers really matter and which mean a whole lot less.

“The insights shared [by THD] help provide our board a more complete understanding of our fundraising work.”
Lori Seader
Director of Development, The Fresh Air Fund

Context is key.
We’re fortunate that fundraising has entered an era when we can easily give our Board the context they need in order to hear you. A number of organizations like Blackbaud provide excellent quarterly benchmarking so that Boards can receive comparative data in terms of how their program is doing. You have to start with the “industry” and then narrow in on the organization on whose Board they serve because that gives them context.

They need to understand that there are really only four ways in which they can raise unrestricted revenue:

  • Acquire more donors
  • Retain more donors
  • Get them to give more often
  • Encourage them to give a larger gift

And because the marketplace has changed dramatically over the past decade, new ways of measuring progress have been developed.

Show them how much the competition has exploded, what it now costs to acquire a new donor, and what the long-term value of a donor can be. Ground them in the metrics of today’s fundraising landscape so that they can understand the challenges and appreciate them.

Provide them with long term impact.
I cannot emphasize this enough: Most Boards think in terms of your fiscal year when it comes to measuring fundraising performance.

They may not be happy with a 2:1 ROI in this fiscal year, but if we could show over a three year time frame or some longer extended period that we’re actually at a 5:1, 6:1, 7:1, they may be more accepting of today’s ROI.

In addition, if you can provide them with concrete examples of how you turned a $10, $12, $30, $50 gift into a five million dollar planned gift, it can elongate and change the perspective that Board member has on the day-to-day or year-to-year work that’s being done.

Even at a very basic level, they have to understand that finding new donors is an expensive proposition which can only be looked at over the long term. Then, when you turn around and start to look at how your existing donors behave, you’re able to really show that the ROI is actually quite good.

Identify a champion.
It’s always valuable to find someone on the Board who appreciates and values fundraising. It really doesn’t matter where they come from as long as they’re open minded and willing to learn. Then they can serve as your advocate in meetings, helping to lay down the foundation of understanding for the development process and the numerics.

If you can find them quickly, they’re going to be a key asset to you when it comes to helping educate their fellow Board members.

Most Boards have committees where the lion’s share of the work gets done. One of the most important is the Development Committee, which is typically tasked with fundraising oversight.

It’s important that its members get exposed to all facets of your organization’s fundraising programs, and that they be kept informed of progress on a regular basis. They are your conduit to the rest of the Board – along with other key committees such as the Executive and Finance Committees.

Friends, supporters, and advocates on these committees are going to be a key asset to you when it comes to helping educate their fellow Board members.

Be prepared, be bold, be authoritative.
Boards meet infrequently and have demanding agendas. What they value most is someone who will state his or her case simply, get to the point quickly, and be declarative.

Always have your facts straight and always be prepared to answer the question that you know is going to be asked. Don’t overwhelm them with data – be concise.

I can’t tell you how many times I’ve been in Board meetings and the data is too detailed, too granular and simply overwhelming. Sometimes, we think that the more data, the better, but often it’s just the opposite. Lots of data can obscure what you’re trying to say.

And finally, ask for help. You can turn to an agency partner, someone like us, for a helping hand. We are all invested in your success, and will be happy to help arm you with the information you need in order to get your Board’s support.

ian-sig
Ian Thompson
President/CEO, THD

To continue this conversation with the team at THD, click here.

Flat Budgets, High Expectations: The Fundraiser’s Dilemma

We can’t increase your budget [again]

For most of us in fundraising, doing more with less has been the mantra for years.

Even if your budget is flat, your expenses are going up. Paper, postage, people – they all cost more today than they did five years ago. So a “flat” budget actually means a smaller budget.

At the same time, most nonprofits are expecting growth. And you are on the front lines of delivering increased revenue.

Raising more money in a risk averse climate

In his famous (or infamous, depending on your opinion) 2013 TED talk, Dan Pallotta stated that the nonprofit industry’s intensive focus on overhead – fueled by industry watchdogs and public expectations of frugality – squelches innovation and makes risk a four-letter word.

“When you prohibit failure,” he says, “you kill innovation. If you kill innovation in fundraising, you can’t raise more revenue; if you can’t raise more revenue, you can’t grow; and if you can’t grow, you can’t possibly solve large social problems.”

And yet, it’s the circumstances that we face each and every day.

We’d all love to swing for the fences, throw caution to the winds, boldly go where no fundraiser has gone before. But in today’s fundraising environment, we are more often called upon to minimize risk while searching for opportunities to drive greater revenue.

How can we accomplish both? Let us offer up a few solutions.

Offer assignment modeling

As often as not, when it comes to direct mail, many organizations mail everything to everyone and hope for the best. One of our colleagues calls it the “spray and pray” method of fundraising.

But doesn’t it make more sense to mail an offer to a donor based on what he or she really wants, rather than what you want to mail?

Offer assignment modeling allows you to identify exactly which donors will be most responsive to each of the specific packages and offers you already have in your arsenal – premium vs. non-premium, for example – making your mailings more donor-centric and more effective.

Here’s how offer assignment modeling works.

A fictional example

Based on the model’s guidance (and fictional numbers) 2,100,000 pieces of mail were assigned to less expensive Package Q rather than costly Package R.

 

Migration Chart 2

 

The impact? Campaign expenses go down while revenue goes up.

 

A real life example

One of our clients now uses a THD offer assignment model on a regular basis. So far, the use of this modeling tool has reduced campaign expenses by $240,000 which is helping to contribute an additional $529,000 in annualized net revenue to their program.

 

Offer Assignment Modeling Overview for AARP

 

Event conversion modeling

As you know, most event participants are one and done.

They may choose to run a charity marathon once … maybe even twice, even if they’re really passionate … but they’re certainly not going to do it over and over again. The fact is, they’re a whole lot more interested in the marathon than your charity, so they’ll be easily captivated by the next big event or opportunity.

And the kind and generous people who sponsor them?

They’re even further removed from your mission. Your cause is barely on their radar, because they’re giving to the people who asked them.

With conversion modeling, you use all the available data – plus plenty of added enhancements – on this large (and growing) pool of “warm” prospects to identify people that could become long term financial supporters. That way, you’re effectively mining for direct responsiveness within a sea of people that would otherwise never return to your organization any other way.

At the same time, you have the opportunity to suppress those event names that aren’t likely to embrace your mission and become direct response gift-givers.

Another real life example

Below are the results of testing a predictive model to select the most productive individuals for a direct mail solicitation – people who had NEVER responded to a direct mail solicitation.

Prospects for the selection came from a variety of events including an annual walk and other community based events. Based on these test results, the model is now in full roll-out for 10 direct mailings a year.

 

selection model

Production efficiencies

Yes, postage and paper costs are increasing. But if your organization can gain some production efficiencies – say, by ganging your appeals with others for greater printing power – you may be able to reduce your per piece costs.

But … and it’s a big but … production savings are finite.

For one client, we did such a great job finding significant, year-over-year production savings that we were able to actually self-fund program growth.

But at some point, even with all the purchasing power in the world, production savings are not sustainable.

One of the best ways to generate short term revenue is also the worst

There are some solutions that we like to call lobster traps – once you walk into them, the door snaps shut behind you and you can never escape.

Take adding appeals, for example.

It’s an extremely attractive option for generating short term revenue. And if you’re given a Sophie’s choice – cut acquisition or add in another appeal – it’s often the best solution.

But once it’s done it can be very difficult to undo. And if revenue expectations increase every year, where does it end? When your renewal file is receiving mail every other week? Every week? It’s a slippery slope that may impact retention rates over the long term.

Investing in the digital channel

Today, snail mail represents more than half of all total fundraising – and nearly 93% of individual donations. It is, despite reports to the contrary, very much alive.

But it’s sure tougher than it used to be. We all know that it costs significantly more to raise a dollar than it did ten years ago. That the nonprofit market place has increased exponentially.

NPOs

And that some of our most reliable supporters (the Matures, born before 1945) aren’t being replaced by younger direct mail responsive donors.

And then there’s digital.

While the digital channel hasn’t replaced direct mail, and probably won’t for many years, there is no doubt that it has changed the landscape of fundraising and donor engagement.

We know that donors who respond in more than one channel have a higher lifetime value. That’s reason enough to invest. Even better, it develops relationships with donors who are engaged, passionate, and most importantly, under the age of 75.

Most organizations continue to seek out ways to effectively monetize digital media beyond email. There have been a few hugely successful viral campaigns (think Ice Bucket) and influencers such as Ashton Kutcher and One Direction have raised tens of thousands through Twitter campaigns.

But those are one-off opportunities that are difficult, if not impossible, to replicate with intent.

What we do know is that digital can be executed quickly, budget can be controlled, and that testing and learning can be done in real time. That it is the fastest growing fundraising channel since, well, direct mail. And that it is the channel of choice for the next generation.

Stake your claim to revenue

stake your claim

There may be revenues that you are indirectly responsible for, and it’s imperative that you stake your claim to them.

One nonprofit organization just rolled out with unique URLs on all DM packages in order to track revenue directly attributable to mail pieces – and quantified more than a million additional dollars in online revenue.

And that doesn’t even begin to capture the long term value of these multi-channel donors, which is far higher than those who give in one channel only.

Looking at organic online revenue is more complex, but it can be done through analytics. For one client we were able to show that 5-8% of their organic new donors received an acquisition mail piece before going online to make their gift.  And that stat was consistent over a 3 year study. Without the mail, those donors may not have been prompted to consider giving to this charity.

You may also want to look at how many people moved from “mass market” to major giving. Or how many of your planned givers came from the mail. It’s all about showing how your revenue has increased even if it hasn’t contributed to your program’s bottom line.

Flat budgets, high expectations – playing to win

the end

To recap, here are just a few ways that you can deliver increased revenue year over year… even when your budget remains flat.

1. Use modeling to target the right people

2. Look for production efficiencies

3. Add appeals or asks – with great caution

4. Invest in digital with your direct mail savings

5. Ensure that you’ve quantified incremental revenue

 

To continue this conversation with THD Click Here