If you want more money, stop asking for it!
You can’t do that.
****
Last week, Olive Cooke killed herself by jumping off the Clifton Suspension Bridge in Bristol UK. The Coroner has not yet established the cause of death, but her family has suggested that she simply couldn’t afford to give to the hundreds of appeals that she received. The blog which follows was written before the tragic death of Olive Cooke. I have not altered it. But I hope it will be a useful contribution to the debate the fundraising sector needs to have over the coming weeks.
****
There are a number of discussions going on at the moment about whether we should ask more, ask less, or adjust the frequency based on an ‘ask tolerance‘.
I want to go one step further. I want to posit that we should ask in a completely different way from anything done before.
Obviously, we want to convert prospects into donors, which requires a compelling ask for money.
Warm donors are different. They have made a donation/monthly giving pledge. They have crossed the Rubicon. They have made a decision to support our charity. They should be treated as donors. By that I mean that perhaps we need to change our approach to them completely.
A completely different way sounds quite drastic. How?
We should communicate with donors often enough that we are a welcome part of their lives. There is an assumption that people don’t want our communications. Another assumption some make is that you are doing donors a favour by going silent on them. This is to misunderstand them.
Our aspiration should be that donors look forward to their next letter, telephone call or e-mail from us. Every contact should move the relationship on. Every communication should reinforce the donor’s decision to be a donor and increase satisfaction, loyalty and LTV. This requires that fundraisers, in addition to their other skills, need to be consummate communicators, consummate storytellers.
We should be reporting back, by telling stories about what we are doing with their money. Every communication should make the donor feel better about their support than before the communication.
So how do you get the donor to give, or to upgrade their giving?
Simple. At the appropriate point in each communication, you ask donors if they would like to give/upgrade. You give donors a choice. You let the donor decide when to give/upgrade.
Think about it. If you ask them to give, and they say no, they feel bad that they couldn’t accede to your request. If you ask them too often to give/upgrade, they will start to feel bad about the relationship, feel harassed, and possibly transfer their support to a charity that is less demanding.
If you ask them if they would like to give/upgrade, and do it every time you communicate with them, they won’t feel bad about saying: “no, thank you, I don’t want to give/upgrade at this time”. They will feel good that their current contributions are valued, and completely neutral about when they say: “no, thank you“. You let the donor dictate the frequency of communication, and the frequency of their giving/upgrading. You put the donor in charge. No one is unaware of the fact that you need money.
This sounds like complete pie in the sky.
I didn’t make up this idea. In face-to-face fundraising academic research has demonstrated that when a fundraiser asks for a major donation in a person’s home or office, if he or she adds the words “…but you are free…” to whatever is being presented as the “compelling proposition”, the fundraiser will significantly increase response. This technique doubled the success rate of persuasive face-to-face attempts.
Words such as “…but obviously do not feel obliged…” are just as effective, so long as they emphasise the donor’s freedom to say no. According to the researchers, the idea of implying a donor’s freedom to choose was far more important than the actual words used. The subjects felt less threatened about making a choice. The report concluded that “It remains to be seen how effective it is when…the decision is made without the requester present.“
Could this transform fundraising?
I think so. But there is a lot of work to be done first. The theory may not apply when the requester is not present. There is not the social pressure. There is a different dynamic. But it may still work. It needs testing, but if the theory is correct, just doing a straight A/B test should begin to indicate whether this idea has legs. (So I would recommend that fundraisers need to test telephone fundraising as well, because the dynamic there is half way between face-to-face and mail / e-mail)
Fundraisers need to test this, as follows:
- A standard warm mailing asking for money. With all the bells and whistles. (Some charities already use a soft ask. This test is still valid.)
- A stewardship communication, mail, e-mail or telephone, which focuses on what Roger Craver showed in his book ‘Retention Fundraising‘ are the key drivers of donor satisfaction:
- Donor perceives your organisation to be effective in trying to achieve its mission
- Donor knows what to expect from your organisation with each interaction.
- Donor receives timely “thank you’s“
- Donor receives opportunities to make his or her views known
- Donor is given the feeling that he or she is part of an important cause
- Donor feels his or her involvement is appreciated
- Donor receives information showing who is being helped
- And finally, a request whether the donor would like to make an additional gift/upgrade, alongside a statement that clearly indicates that the donor has the freedom to choose.
Elderly Woman
This may sound dry; it isn’t meant to. The seven key drivers should be presented through emotional and passionate storytelling around all the vital needs that must be met by improving donor retention as well as response rates and donor satisfaction/loyalty. The need for donors to feel good about themselves; the warm glow that comes from supporting a cause or helping another person. Giving donors a good ‘donor experience’. Communications need to be compelling, moving, involving, inspiring. And they need, over time, to tick all the boxes of the key drivers above.
How do you judge success?
If this test doesn’t reduce response, then you are on to a winner. Telephone 100 donors in each cell and ask them how they felt after reading the letter. Again, if the approach doesn’t reduce satisfaction, you are on to a winner.
Why? Because you have permission to change your approach to fundraising from donors. Many donors feel they are on a conveyor belt. Asks for gifts/asks to upgrade /asks to leave a legacy, all with the occasional stewardship communication. What I am suggesting is truly a donor journey. A complete donor experience.
If this works, it could change the paradigm for fundraising.
(My thanks to Charlie Hulme for the title to this article.)
31 Comments
Roger Craver · May 18, 2015 at 18:00
As is so often the case Giles insights are bold and correct. There’s no question that change is long overdue. And, as he suggests, Involving the donor in that change is essential. In fact, anything short will result in more of the same old, same old.
Many will think that involving the donor, asking for her/his preferences will prove ruinous. Nonsense. Last month I ran a four-part series in The Agitator titled “Ask Less, Raise More” (http://www.theagitator.net/communications/raise-more-ask-less-part-4/) outlining why it’s so important to focus on “donor preference” and “donor intent”.
Few charities currently do this, but where it’s been done deliberately–and it’s been done in both the UK and the US– or simply stumbled upon the results are significantly more positive than the current burn-and-churn “best practices.”
Let’s keep this debate going and growing.
Thanks, Giles.
Giles Pegram CBE · May 19, 2015 at 19:33
Hi Roger,
Thanks for your very helpful response to my post. You will note that I used your seven key drivers, with attribution of course, and created a kink to your book. I hope you don’t mind.
You should have put a postcard in your book stating the seven drivers. To be put above the desk of each fundraiser, supporter service officers, and telephone fundraisers.
Best, as ever,
Giles
Derek Glass · May 21, 2015 at 09:53
Indoctrination has always played a central role in the implementation of Relationship Fundraising. Placing placards above the desk of staff is a perfect example of how it works.
This practice of indoctrination can be read about in the very first chapter of Relationship Fundraising. It talks in detail how an organisation must make all staff members believe in it, or fire them and replace them with people who do.
Relationship fundraising only “works” when nobody questions it. It requires the suspension of critical thinking, and demands complete loyalty and submission to it’s tenets.
It’s all right there in the first chapter of the book, and there’s a very good reason it is at the beginning.
Tim Kitchin · May 29, 2015 at 14:14
I really enjoyed this post, Giles. There is very strong overlap between Roger Creever’s Retention Fundraising principles, and the thinking of Bill Price and David Jaffe in their latest book “Your Customer Rules”.
Their seven principles of effective customer service are:
1. You know me; and remember me
2. You give me choices
3. You make things easy for me
4. You value me and listen to me
5. You trust me
6. You surprise me
7. You make me better/help me do more
Like all good strategy, it should be blindingly obvious!
Bill was VP, Customer Relations of Amazon from its earliest days, and a massive advocate, along with the UK’s Peter Massey, of ‘Best Service is No Service’ thinking – i.e. empower the customer; streamline their experience and then get the hell out of their way…
The important point here is that there is no contradiction between this sort of lean service thinking and very high frequency sales-oriented contact (as embodied by Amazon). But it only works if that interaction is delivered as an a customer-relevant, intelligent ‘offer’, rather than a bludgeoning ‘ask’. Or worse still a ‘demand’.
Break this basic rule of humanity and you WILL burn customers; you WILL destroy brand equity and you WILL erode the effectiveness of the channel.
To offer myself as a sample of 1, the Labour Party’s bludgeoning individual fundraising – both email and telemarketing – during the recent UK election pissed me off to the point where I cancelled by regular giving to them. Worse than that I have joined the greens and will be pro-actively ANTI-Labour in my activism henceforth. The volume was not the trigger to my rejection, it was their assumptiveness. This is ultimately a moral issue, that transcends arguments of ‘effectiveness’, and is about breaching the bounds human dignity, and ultimately triggering unpredictable and dangerous responses. Witness the tragic outcome that seems to have occurred with Olive Cooke.
To reverse back from the moral debate though, into one of practical fundraising practice, and to quote Boris Johnson here, when it comes to having your cake or eating it debate, I’m in favour of BOTH.
Charities should ideally take a blend of the left-brain logic and right-brain intuition; the tactical and strategic; transactions and relationships; quantity and quality; rigorously planning and relentless testing; campaign success and lifetime value.
Only the sort of philosophically complete; intellectually sound; and humanly decent approach that you advocate can deliver this. Thanks again for such a thoughtful post.
Giles Pegram CBE · May 30, 2015 at 17:58
Hi Tim,
I want to thank you and respond to your content.
Of course, I agree with everything you say.
I like your seven principles of effective (donor) service. As you say, they are very similar to Roger Craver’s, and indeed Professor Adrian Sargeant’s. What is common to all of them is that they all work to improve the ‘donor experience’. And ALL are within the fundraiser’s control. I don’t mind which you choose, but one of them should be above everyone in fundraising’s desk. (Including supporter services, and telephone fundraising)
You write: “The important point here is that there is no contradiction between this sort of lean service thinking and very high frequency sales-oriented contact (as embodied by Amazon). But it only works if that interaction is delivered as an a customer-relevant, intelligent ‘offer’, rather than a bludgeoning ‘ask’. Or worse still a ‘demand’.”
People talk about three or twelve communications a year, but they mean ‘appeals’, not communications.
You write: ” Charities should ideally take a blend of the left-brain logic and right-brain intuition; the tactical and strategic; transactions and relationships; quantity and quality; rigorously planning and relentless testing; campaign success and lifetime value.”
Absolutely.
Thank you for your very intelligent response.
Best,
Giles
Liz Haigh-Reeve · May 18, 2015 at 21:13
There’s plenty of sensible thinking here. The challenge is to forge a genuine partnership with what Stephen Pidgeon classifies as minor donors in his book. ‘How to love your donors to death’ donors who support a number of causes like Olive Cooke are getting deluged with phone calls often from oh so slick telephone agencies who having connected successfully are determined to get that upgrade. It’s a fine line and one that as fundraisers we need to get better at navigating.
Giles Pegram CBE · May 19, 2015 at 19:37
Hi Liz,
We would raise more money if telephone fundraisers were determined to enhance the donor experience, not “determined to get that upgrade”
Best,
Giles.
Derek Glass · May 19, 2015 at 06:50
Another classic example of the decades old relationship fundraising mythology that claims fundraising has nothing to do with money, that the less often you ask for money the more you raise and that donors are motivated to give for purely selfless reasons. Nothing more.
This nonesense was tested and debunked years ago. But anyone is welcome to learn that the hard and expensive way if they wish.
Charlie · May 19, 2015 at 08:36
Hi Derek – there is actually empirical data to prove asking less made 20%+ aswell as lowering cost.
There is nothing fluffy about it – it’s a rigorous, math based approach.
Giles Pegram CBE · May 19, 2015 at 19:42
Hi Derek,
It would be helpful if you were to write a blog outlining your vision for fundraising, including the results of the “tests that debunked…relationship fundraising”..
If you have already done that, please let me have a link?
Giles
Derek Glass · May 20, 2015 at 08:16
Giles, if you have data showing that asking less often raises more money, then why haven’t you published it? 101 Fundraising gives you plenty of room here to do so. And what did you do with that space? You didn’t publish one single piece of data, and instead tried to grandstand about a woman who committed suicide.
Relationship fundraising has never produced conclusive test results that it works. It is not my responsibility to prove you’re wrong, it is your responsibility to prove you’re right.
Without empirical data proving you’re right, it is quite reasonable and rational of anyone to conclude that this is all just a bunch of idealistic, utopian, waffle. If it is truly something more than that, then stop peddling anecdotes, cliches and buzzwords and start producing some actual test results.
Giles Pegram CBE · May 20, 2015 at 19:26
Hi Derek,
Thank you for your interest in my blogs.
The central thesis of this blog is that donors should be given a choice. You must have missed a hyperlink in the text that takes you to a summary of the academic research that suggests this.. The full research will cost you £30, and is well worth it.
If you want more evidence, I suggest you read Professor Adrian Sergeant and Elaine Jay’s book ‘Building donor loyalty’, which proves without a shadow of a doubt that satisfaction=>loyalty=>lifetime value. You will also find Roger Craver’s book, ‘Retention fundraising, which was published last year, interesting.
Your diatribes about relationship fundraising fail to do what I asked. That you produce a blog which states your philosophy of fundraising, and backs that up by referring to any recent research or tests.
Otherwise, I will regard your posts as antediluvian, and not worthy of a response.
Best,
Giles
Derek Glass · May 20, 2015 at 09:55
Giles, if you have data showing that asking less often raises more money, then why haven’t you published it?
101 Fundraising gives you plenty of room here to do so. And what did you do with that space? You didn’t publish one single piece of data, and instead tried to grandstand about a woman who committed suicide.
Relationship fundraising has never produced conclusive results that it works. And It is not my responsibility to prove a decades old hypothesis wrong, it is your responsibility to prove the hypothesis right. You’ve had plenty of time, so where is the data?
Without this empirical data proving you’re hypothesis right, it is quite reasonable and rational of anyone to conclude that this is all a bunch of idealistic, utopian, waffle. And inaccurate, sensational tabloid headlines certainly doesn’t add any intellectual credibility to your argument.
Derek Glass · May 21, 2015 at 03:51
Giles, your so-called thesis that donors should be given a choice in how they are contacted is neither original, nor does it actually work. Since the late 1990’s this idea has been put forward by Seth Godin in this book Permission Based Marketing and by many others.
No business or charity has ever made this theory work in practice. From time to time, people like you re-introduce it as some kind of new idea, and a new generation of marketers then get to find out the hard way that contact strategies controlled by the donor/ customer never yield the highest lifetime value, and often reduce it. Customer’s do not choose the most profitable contact strategy, ever. It is a fundamentally flawed theory that doesn’t work in real life, an idealistic, utopian day dream.
And the same can be said of Adrian Sargent’s so called “research”. Lifetime value is a financial, quantified calculation. It is a number. Things like “satisfaction” and “loyalty” are subjective, qualitative measurements. You cannot take a “satifisfaction score” and use it to calculate lifetime value. It’s not part of the formula. And silly slogans like “satisfaction = loyalty = lifetime value” are mathematically ridiculous.
Finally, you’ve asked for some kind of alternative philosophy…here it is, it’s called data. Actual, real, measurable data. Not philosophies, dogmas or dreamy visions for how the world should be. Data is quickly replacing nonesense like Relationship Fundraising, Donor-centred-ness, and my all time favortite from Adrian Sargent — Loverising your donors.
Data tells the real story.
Giles Pegram CBE · May 21, 2015 at 14:15
Hi Derek,
It appears you are unwilling to put down your ideas in a positive blog, with references to research and evidence.
Our differences are clearly irreconcilable, and I therefore terminate this dialogue.
I wish you well.
Goodbye,
Giles
MH · May 21, 2015 at 14:44
I may be a little peculiar, but I always enjoy the discussion between Derek and Giles around asking less vs asking more.
As a data geek, I’d love to see the figures to back up either assertion. Charlie touched on something I think is important – costs. I know that Derek is a fan, for example of premiums in direct mail, citing a significantly higher response rate when these are included, but I don’t know how the higher response rates compare with the higher costs. Ditto the higher costs of mailing more often as compared with the higher response rates claimed.
And in these days of ever increasing mailing costs, at what point do you reach zero marginal benefit?
I’m also very curious about mailing list numbers. As someone with a small warm mailing list – and indeed a local cause, so a relatively small potential cold list, then a slightly higher response rate will be outweighed by the higher average cost per mailing much more quickly.
Does this mean that this discussion is simply entirely irrelevant to me? So what are the real costs and returns, and where are the break even points? (and are all costs included? If I’m doing 12 mailings a year rather than 3, I’m going to need more staff or an external provider, and am I really going to make that back? If you have the data, then I imagine you’ll know this, and I can’t be alone in hoping you’ll share.
Like most, I’d rather earn the same return for less cost. The same is true for time, as there are a host of other areas for me to focus on, and time, like money, is limited.
Richard Turner @ifundraiser · May 22, 2015 at 00:08
I happened to be looking at data today. It’s from the last few years at SolarAid.
We are a relatively small, but growing, UK based international charity. In 2012 we set off on an ambitious goal to eradicate the kerosene lamp from Africa by 2020. It galvanised our supporters. And in 2013/14 we doubled our fundraised income (I’m not even including our social enterprise income). In 2014/15 we sustained the level – so it wasn’t a blip. Still we aspire to go much higher – we must – as that’s what our social goal demands.
Much of this has been applying the principles of Relationship Fundraising. Equipping donors with our story. Getting them to engage their networks on our behalf. It led to one of our largest trust donations from a former volunteer. Repeated donations from major donors. New major donors.
We ‘ask’ usually no more than twice a year. And even then it’s more of a campaign to get some energy behind our story. We’ve learnt to leverage support from corporate partners to amplify our message to an audience far bigger than our donor base. And our donor base has grown. Many of our new donors seem to come from our existing donors (we just don’t have the funds to try techniques that take years to recoup).
We like go to town on thanking. Skype thank yous. Even solar thank yous. Last year we did a thank you campaign called Thanks a Million. Yes, there was no ask! I recall how a supporter put me on a speaker phone to repeat the thank you to her whole family. Last week a supporter wrote referencing the inspiring thank you he received over a year ago.
We’ve learnt that fundraising is holistic and interconnected – that you can’t just look at results (such as an appeal mailing) in isolation (although we often do). Especially now when everyone is a channel and in this connected world you don’t know who people know. When you approach fundraising in this way you can punch above your weight. And when you step back and see the overall impact, as I did today coming up for air, you can see it really works. If anything the time for relationship fundraising has come. More than ever we need our supporters to advocate on our behalf (as businesses now seek customers to) not extract money from them.
I wish I had more time to look at data. Note to self. When I do I will happily share it.
But I know one thing. This relationship fundraising stuff works.
Derek Glass · May 22, 2015 at 09:44
Hi Richard,
You have explained very well the common “methodology” that Relationship Fundraisers use to justify their strategy.
You started a campaign, and used only Relationship Fundraising principles to the exclusion of any other alternative strategy. And when your income went up, you then give all the credit to Relationship Fundraising.
What you did not do is a controlled test of different asking strategies, and you didn’t measure whether other strategies worked better.
You could have tested an ask versus no ask for example. Instead of thanking donors, you could have asked them for more money. You could have acquired donors using various methods and compared which worked best.
From what I can see above. You simply placed blind faith in Relationship Fundraising, and hoped the rains would come. When the rains did come, you then gave credit to Relationship Fundraising. How do you know you could not have raised more any other way?
This approach to “proving” Relationship Fundraising is very common. Follow it and nothing else and if your income goes up, it gets credit. It’s the only strategy that “worked” because its the only strategy you actually tried.
This is why I’m so skeptical when Relationship Fundraisers claim their strategy is “rigorous” and mathematically sound. They exclude all other stategies, and then claim that Relationship Fundraising works, because it’s the only one they tried.
Well done!
Giles Pegram CBE · May 22, 2015 at 19:12
Hi Richard,
Thanks for writing.
I urge you to read carefully the blog above, and my two blogs on the state of relationship fundraising. http://101fr.org/1HKtBUJ
My only comment on your situation is that you may communicate too infrequently for donors to be engaged with your mission, and your work.
I suggest you do a test. Give one cohort your normal communications. Send your second cohort more frequent communications, talking about the seven points in my blog above, building their relationship with the cause. and with each communication, ask the donor if they “would you like to give at this time” I believe the second approach will give you higher income, and more loyal donors less likely to lapse.
Let me know if you do this.
I hope all is well with you.
Best,
Giles
Giles Pegram CBE · May 22, 2015 at 00:17
Hi MH,
Don’t take my exchanges with Derek Glass as more than a bit of fun. I urge you to read the blog above, and the previous two blogs you can find at http://101fr.org/1HKtBUJ.
At the heart of this is a belief that if you measure response to an appeal by response rates and average gift value, you are missing out a key element of the equation. How does a donor FEEL about the appeal, or does it create bad feelings that lead to attrition.
Retention is key. Reduce attrition by 10%, and see LTV rise by 200%
For a data geek, I would strongly recommend Professor Adrian Sargeant and Elaine Jay’s book, ‘Building Donor Loyalty, (which is on Amazon at about £20.) This will give you all you need to embrace satisfaction as the key driver of LTV. Seriously buy it, read it, and see the scales drop from your eyes
Let me know if I can help..
Giles
Derek Glass · May 22, 2015 at 10:31
Righto Giles, this is just a bit of fun. Hahaha, rolling on the floor laughing matey.
How a donor “feels” about a campaign is measured by people like Giles and Adrian Sargent by sending donors questionaires which pose hypothetical questions and asks these donors to make speculative statements about what their future behaviour might be.
But what a donor says and how they actually behave in the future are two entirely different things. These survey responses do not predict future donor behavior accurately.
However, if you measure response rate, average gift and cost per contact, from those numbers you can very accurately predict the future behavior of donors.
Also, I have seen the claim by Adrian Sargent before that if you reduce attrition by 10% your LTV will rise by 200%. When attrition falls, LTV does rise, but it is different for every charity. Also, anything that causes a donor to give again — like, for example asking them again, and again, and again — makes attrition go down. Attrition is measured by how many times someone gives, and how recently they gave. The more you asked them, the more likely they are to have given multiple times.
Which means, when you increase your ask frequency, the most common result is that your second and third gifts rates rise, and your attrition rate goes down. And that makes your LTV rise.
And likewise, when you ask less frequently, or not at all, the most common outcome is that your second and third gift rates fall, your attrition rises and your LTV goes down.
This is all really easy to test and measure for yourself. But the first step is stop thinking that Relationship Fundraising is something sacred that can’t be violated. To truly find the best strategy, it requires thinking about all of them as an agnostic, and to be brave enough to test the opposite of any strategy.
Derek Glass · May 22, 2015 at 02:52
Hi MH,
I’m a big fan of premium mailings because the testing clearly shows that they work better than non-premium mailings. Based on the numbers, the actual data. The mathematical formulas to calculate that yourself are quite simple and I’ll give you the formulas in the second part of this reply. However…
I am not going to post any clients results on a blog. Lots of folks have tried to goad me into doing so. However, this is first and foremost a business activity we are all engaged in. Sofii, The Agitator, and 101 Fundraising are not peer-reviewed academic journals, we are not professors at a uni, this is not school.
People like Roger Craver, Ken Burnett, Stephen Pidgeon and others in the so-called Relationship Fundraising camp have built their careers strongly criticising, ridiculing, disparaging and defaming premium direct mail designs. Roger Craver calls it “crack” and claims it’s addictive. Ken Burnett claims the donors never give a second and third time and it’s a short-term only strategy.
Neither of these claims are true. In particular, Ken Burnett’s repeated claim that premium-acquired donors never give again is simply an outright lie, and ignores 3 decades of testing by thousands of charities worldwide which collectively show exactly the opposite is true.
I encourage all fundraisers to analyse their data for themselves, and to not buy into philosophical schools of thought. Fundraising data is agnostic and donors do not behave in ways we expect them to or want them to all the time. We have to detach from our expectations and illusions we have about donors, if we want to truly understand their actual behavior.
Derek Glass · May 22, 2015 at 03:40
Hi MH,
You asked two specific mathematical questions. 1) How high must the response rate rise for a higher-cost design to beat a lower-cost design. And 2) What is the optimal frequency of mailing without reaching the point of diminishing returns. The maths for both questions are very easy, here they are:
Calculatiing break even response rate — the formula is cost per piece divided by the average gift = the incremental response rate increase needed to break even on the higher cost.
If you have a non-premium mailpiece that costs $1 per piece to mail, and it normally pulls a $50 average gift. $1 / $50 = 0.02, or 2.00%. That’s the break even response rate for that package.
Now let’s add premiums to that design, and let’s say the cost increases to $2 per piece. $2 / $50 = 4.00%.
If the premium package pulls higher than 4.00%, it works better. Many premium designs pull much higher than 4.00%. When you create a package that pulls 8.00% for example, it clearly works better, it clearly raises more money even with the extra cost factored in. And that’s why so many charities mail these designs.
Your other question was what is the optimal mailing frequency for house appeals — The first thing to do is calculate the net income you make from any given mailing, using this formula:
( Average Gift x Response Rate ) minus Cost per piece = Net Income per piece mailed.
If your average gift is $50 and your typical house appeal response rate is 10%, and your cost per piece mailed is $1, then:
( $50 x 10% ) – $1 = $4.00 net income per piece mailed.
That hows much you raise when you mail one person, one time.
Then, start mailing the name(s) more often, let’s say 4 times a year instead of once a year. And let’s assume the response rate falls from 10% to 8% because of the higher frequency and that the costs go up from $1 per piece to $1.50.
( $50 x 8%) – $1.50 = $2.50 net income per mailing.
Your net income per mailing falls, but if you do that 4 times a year, you make $10 per donor, instead of $4.00 per donor if you mail them only once a year.
If you already mail 4 times a year, and you want to test 8 times a year, you simply follow the same mathematical formula to figure out if it pays or not. There is a point of diminishing returns, but it is often somewhere around 12-24 contacts per year, depending on the segment of your data base.
This is why I am a big fan of both premium mailings and higher frequency of contact. Because the data clearly shows it works better.
Now, one word of caution to you MH, what I have just described to you is the correct, financially sound method to analyse your results and to plan a successful fundraising strategy. However, the Roger Cravers and Ken Burnetts of the world have over the years come up with lots of insulting labels that they slap onto this kind of strategic quantitative analysis.
They call it “churn and burn”, they’ll accuse you of treating your donors like an ATM, they’ll suggest you’re mental ill.
So be prepared for that as well. But keep this in mind first and foremost — they actually have no power to stop you. And by detaching from their philosophies and ignoring their insulting labels, you will truly begin to understand how donors actually behave.
Jamie Goodland · May 22, 2015 at 11:15
This is really interesting piece. I work for a charity called SOS Children and we stopped doing regular direct mail back in 2005. We find that when surveyed, our supporters frequently point to this as a reason for their continued support, so we think it is a crucial factor in our retention rates. We began sending mailings for (rare) emergency appeals last year, and we find that because of the infrequency of our mailings, supporters respond very well.
We actually published a guest blog by a supporter on our website after the Olive Cooke story broke, which you’re welcome to link if useful: http://www.soschildrensvillages.org.uk/news/blog/finding-balance-the-death-of-olive-cooke-and-how-charities-approach-the-public
Giles Pegram CBE · May 22, 2015 at 19:16
Hi Jamie,
I have read your material, and it is excellent.
Regarding frequency of communications, read my response to Richard Turner, above.
Good luck!
Giles
Giles Pegram CBE · May 23, 2015 at 18:59
Hi Richard, Hi MH, Hi Jamie,
I have been thinking about frequency of communications – not ‘asks’. We agonise over whether to send three communications a year, or twelve.
What about one communication a day?
If you are anything like me, you get, on average, one e-mail from Amazon every day. But there is no hard sell, just offers I might be interested in. I don’t feel this is intrusive; I always give it ten seconds of my time, and sometimes what they offer is something I want. I certainly don’t feel annoyed when I quickly press ‘delete’
Would I advocate charities sending daily communications to donors? Probably not yet, but we ought to be testing the proposal in my blog above. Who knows where it might lead?
Best,
Giles.
Simona Biancu · June 2, 2015 at 18:42
Hi Giles,
I have read and re-read your blogpost. It is a question I know from my international consultancies while the Italian situation is quite different in terms of solicitations directed to donors.
An number of asks like the one you described – and I have read about Olive Cook, I am so sad about that! – could be considered unacceptable in Italy.
Apart from this, what I retain from my experience is that an NGO is able to reach success in terms of funds on condition that the relationship with its donors is something perceived as a sort of friendship. Less rules, sometimes, and more authentic warmth.
An individual giving plan I have been working on in the last months provides for periodical news aimed to tell the donors what happens within the organization. Only news about “practical” events, meetings, voices from the inside of the NGO as a way to communicate and create engagement. No asks, no request except from clicking “like” on the Facebook page and leave a message.
The level of engagement has doubled in 8 months and, what is more important, the increasing of interaction has lead to a consistent growth in the funds raised.
I know it is only an experience, but your blogpost has made me thinking at how asking for support could “annoy”, sometimes, donors and, on the contrary, what could be done to truly involve them in the story of the cause (not the organization).
I think that other experiences could be interesting for all of us to understand better this issue.
Thanks for sharing your views!
Simona
Giles Pegram CBE · June 2, 2015 at 19:01
Thank you for your post. What I am suggesting is that we stop ‘asking’, and transfer the decision to the donor. Is there any reason why your newsletter couldn’t contain a message: ‘ If you would like to give now, then I enclose a reply envelope. Please don’t feel obliged in any way, we are grateful for your support, and like to share our news with you’?.
One small point; I think your newsletter should focus on the beneficiary and the donor, not the organisation. Please see the ‘ seven drivers of donor satisfaction in my blog. You might use this as a checklist when creating your newsletter.
Thanks again for writing.
Best,
Giles
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