Year: 2015

Why “mail everyone” is never the answer

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I’ve had my first request – to talk about the basics of segmentation. Thanks and keep them coming!

The question will eventually come, if it hasn’t already: “how many people are on our list?”.  The answer?

The-Meaning-Of-Life

For those who may not get the reference, it’s from The Hitchhiker’s Guide to the Galaxy.  When assigned to find the Ultimate Answer to Life, the Universe, and Everything, the computer Deep Thought ponders this for 7.5 million years and comes up with the answer 42.  It then says that:

“I checked it very thoroughly … and that quite definitely is the answer. I think the problem, to be quite honest with you, is that you’ve never actually known what the question is.”

The question of how many people are on our list or in our database is similarly ill-formulated.  You may have a list of X people, but are you really going to ask for a donation the person who called your executive director a [redacting] [redacter] at the gala 11 years ago and never corresponded with your organization thereafter? So your list is X-1.  How about dead people?  You need them in your database so you know not to solicit them.  And so on.

Every time you communicate with these folks, you are losing something.  Usually, for methods like mail and telemarketing, there is an additional marginal cost for each person reached.  With email, there isn’t, so email tends to be the least segmented direct marketing method.  This, however, ignores that there is a cost for not segmenting an email file; the less people open your emails (and especially in cases where you are emailing an account that no longer exists or is checked), the more likely systems are to think you are a dirty dirty spammer and cast you down into the ranks of personal attribute enhancers, Nigerian princes, and your great-aunt who thinks that you absolutely need to know about the ecstasy-lased gummy bears “epidemic.”

The bottom line is that even when you aren’t paying the bill, you have every incentive to make sure your list is as trim as possible.  That means not communicating with the deceased, opt-outs, those with incorrect communication data (although you should be doing NCOA (national change of address), eCOA (electronic change of address), and corrective phone appends on those people you would still like to talk to), and those who have opted out of the medium (e.g., email opt-outs) or message (e.g., solicitation opt-outs).

You may think that once you clear those people out of your list, you should have a defined number.  However, different people are at different stages of interaction with your organization.  Here are a few:

  • Some guy (aka suspect)
  • Prospect
  • One-time giver
  • Multi giver
  • Sustainer
  • Mid-major donors
  • Major donor
  • Planned giving donor

These are frequently presented in a pyramid because there are only so many easy-to-use graphics in PowerPoint.  Some may say it’s because suspects and prospects are the base of the program and they grow from there in smaller and smaller numbers, but you and I know the truth.

The truth is that these are like the stages of grief, in that they don’t always apply, don’t often go in order, and abstract over significant parts of the donor journey. For example, take a look at the types of retention you should be measuring and you’ll see that there are categories – first-year, but not first-time, givers and reactivated lapsed – that this pyramid doesn’t take into account.  Similarly, you will see people who are major donors on their first gift, people who you didn’t know about who leave support to you in their will, and the former sustainer who no longer wants to support your organization.

I take inspiration from Stephen Jay Gould, who critiques in many discussions of evolution the ideal of progress or, worse, inevitability:

Progress is not merely a deep cultural bias of Western thought…it is also…the explicit expectation of all deterministic theories of evolutionary mechanism that have ever achieved any popularity, from Darwinian selection to Lamarckism to orthogenesis. I do not, of course, mean progress as an unreversed, unilinear march up the chain of being; Darwin did away with this silly notion forever. But even Darwinism anticipates that an imperfect, irregular, but general ascent should emerge from all the backing and forthing inherent in a theory based on a principle of local adaption to changing circumstances.

Stephen Jay Gould, “The Paradox of the First Tier.”

In reality, the donor journey isn’t a net gradual march from suspect to prospect to one-time donor, to multi-donor, and so on.  But the general theme of this – that you should treat different types of donor different based on what you want them to do for the organization, what they want to do for the organization, and their means and interest – is a good one.  A suspect and a potential major donor are very unlikely to want the same communication in the same way.

So there are some folks you may want to get some communications, but never others.  Other such groups:

  • Board members
  • Organizations
  • Recent donors
  • The people you serve
  • Public officials and opinion leaders
  • People who have requested a certain number of communications each year

That’s the broadest type of segmentation – what type of people do we want to include?  But we’ll want to increase revenues and save costs by sending the most effective communication possible. So in this week of segmentation, we’ll talk about the philosophy of segmentation, then start with a basic segmentation – RFM analysis – and build from there.

Why “mail everyone” is never the answer

Reactivating lapsed donors

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Getting lapsed donors to reactivate is second only to getting the second gift in terms of its importance on keeping your program from bleeding donors.

I often give Blackbaud a hard time, but the point in their report that you much treat lapsed donors differently is vitally important. The cost to (re)acquire is usually lower than the cost to acquire a new donors, and they almost always have better retention rates (remember how I said to track lapsed reactivation retention separately? This is why) and higher average gifts than a newly acquired donors. In fact, because of this, you should be willing to spend more to reacquire donors than to acquire them anew.

But at the same time, you can throw money away in lapsed reactivation just as easily as you can in acquisition. It’s little use to try to get someone back who, well,

He's just not that into you
Or she.

In an ideal world, you would be using modeling to find out which of your donors are most likely to reactivate. But in that ideal world, there would be no need for nonprofits, so it’s pretty clear we don’t live there. Yet.

So what can you do quickly, easily, and most importantly cheaply? Here are a few ideas:

Catch donors before they lapse. Look in your file for two things – people who don’t give as much as they used to and people who don’t give as often as they used to. You can view these folks as “relative lapsed.” They are telling you that they don’t value you as much as they used to relative to other charities or other things going on in their lives.

Identify lapsed donors who are giving to other organizations. An ideal way to do this is by joining list cooperatives, as recommended in the acquisition post. This will lead to the modeling discussed earlier. Another way of doing this is in your merge/purge process. As you rent outside lists, you run those against your file to make sure you aren’t paying for people who already have as donors. If you mark these donors who match outside lists, you will have a good indication of who are donating to other organizations (and, hence, are still alive and philanthropic generally). These lapsed donors will generally perform better than the average lapsed donors.

Identify people who just aren’t responding. Unfortunately, you can’t tell who is or isn’t opening an envelope and people may not answer a phone call for a few reasons not having to do with lapsing. However, you can tell who is and isn’t opening your emails. If you can run a report for people who haven’t opened an email in the past, say, six months, first of all, don’t email those people as much. This is a topic for a separate post, but just because you can email everyone at no marginal cost doesn’t mean you should email everyone. Suppressing these supporters for most emails will help your delivery and open rates and also help you specialize your tactics. The more salient lesson for lapsed donors is if someone isn’t opening your emails, yet their email address is still good, chances are they aren’t in love with your organization anymore and less likely to renew.

You also may want to see how many times you have mailed someone and see after how many times people in your file generally have their response rate fall off. If very few in your organization give after being solicited 24 times without a response, you may want to make this a part of your lapsed suppression criteria.

Go to the familiar. If a piece worked for someone before, send it or something like it to them again to try to reacquire them (whether an acquisition or a donor piece). This is why I recommend mailing deeper into lapsed categories for people who have given to that piece in the past. Similarly, finding messaging similar to what someone has responded to in the past makes someone more likely to respond.

Vary your messaging. This seems like it might contradict the previous one (and it does). But after so many times, messaging can also lose its effectiveness, so you might try a new tactic someone hasn’t seen before to attract them back.

Know who is worth getting back. Remember that lifetime value calculation? You will want to make sure that you aren’t investing to get people who will not pay back their investment in the long term. If someone donates $5 per year and it costs $5 to get that donation, then no amount of investment should be expended to get that person back.

So those are some retention basics in terms of technique. But the biggest thing is to treat your donors like humans – addressing your appeals to their desires and treating them politely and like an individual.

Thanks for reading and let me know if there are other topics you’d like covered.

Reactivating lapsed donors

Onboarding for donors and supporters

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According to the Online Fundraising Scorecard, 37% of non-profits did not send an email within 30 days of a person signing up for emails. Only 44% asked for a donation by email within 90 days.

Let me put this in an approximate pie chart:

online supporter pie chart

We’ve seen this week that getting the second gift (or lack thereof) is where there is the greatest retention leak – people who donate once and don’t get enough out of the experience to donate again. Online donors, in particular, are the most fickle and least likely to retain.

This could be because of the medium. But it also could be that over half of all non-profits do engage people right when they express the most interest in the organization – immediately and unequivocally. To demonstrate this, try to remember what email newsletter you signed up for a month ago today.

Chances are, you can’t. Thirty days is a long time to remember you signed up for something, especially if no one reminds you that you did. Replace “the guy” with “the donor” in this quote and you have a pretty good idea of how people think about your organization, at least initially:

Never assume that the guy understands that you and he have a relationship. The guy will not realize this on his own. You have to plant the idea in his brain by constantly making subtle references to it in your everyday conversation, such as:

— “Roger, would you mind passing me a Sweet ‘n’ Low, in as much as we have a relationship?”
— “Wake up, Roger! There’s a prowler in the den and we have a relationship! You and I do, I mean.”
— “Good News, Roger! The gynecologist says we’re going to have our fourth child, which will serve as yet another indication that we have a relationship!”
— “Roger, inasmuch as this plane is crashing and we probably have only about a minute to live, I want you to know that we’ve had a wonderful 53 years of marriage together, which clearly constitutes a relationship.”

Dave Barry, Dave Barry Complete Guide to Guys

You want to strike while the iron is hot – this person cares about your cause now. So you want to set up a welcome series for your donors online. There are some great guides on how to do this and I promise to write one in a future blog post. For now, here are some key tips:

  • Start with a thank you. This person is interested in your organization. They have given you their time and attention. They sound like a pretty cool person who is giving you a fairly valuable thing. This should be rewarded with good manners.
  • After that, if you have a key offer, lead with it. For some, you may be emailing them a temporary membership card. For others, it’s an opportunity to get involved with advocacy. Surveys are also good. Whatever people like to do with your organization online, use it to build their engagement and learn about them.
  • Yes, within the first 30 days. If they donated already, ask them to become a monthly sustainer. In fact, you may want to test whether a sustaining ask works better generally.
  • Test getting them into your mail, telemarketing, and other direct marketing channels. Just because someone started with your organization online doesn’t mean they don’t also have a mailbox and a phone.

This gap of time can be even acuter in the mail. At least with an online donation, you get (or really really should get) an immediate email receipt. With an initial offline gift, there’s the time that it takes the mail to get to the cager (or another person who will open it), the time to deposit the check, print the thank you, batch it, and send it, and the time it takes to get word back to that donor. That alone is pretty bad.

But what happens next is worse: nothing. Let’s say someone makes a donation on January 1st. They may not get into the data pull for a mail piece until March or April, depending on the lead times you have in printing. Picture making your donation, getting a thank you three weeks later, and then radio silence for months afterward. Doesn’t sound like a recipe for retaining that donor or striking while the iron is hot, no?

So instead, create a couple of mail packages that fill that gap that are sent automatically post the initial gift. The same principles apply here as online – things that help you and that your donors like are the perfect here: petitions, member cards, new supporter surveys, etc. You can expect these pieces not only to help your retention rate but also to provide some additional net revenue as well.

Onboarding for donors and supporters

Why do people stop giving?

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This has, unlike so much in the fundraising realm, been objectively researched and I commend the paper to you.

This paper tested six attributes of connection between people and causes they support.  Guess which ones actually mattered to donor loyalty (I am paraphrasing their points somewhat):

  • The nonprofit shares my beliefs
  • I have a personal link to the cause
  • The nonprofit’s performance is strong
  • I trust the organization
  • I have a deeper knowledge of the organization
  • The quality of the donor services they provide me is high

A hint: four of these matter; two don’t. I’ll pause here why you contemplate.

(pause)

I’m Henry the 8th I am.  Henry the 8th I am I am.  I got married to the widow next door.  She’s been married seven times before and all of them were named Henry – HENRY.  Henry the 8th I am.

Second verse!  Same as the first!  Little bit faster and a little bit worse!

henry the eighth2
Does anyone else find it weird that in this “romantic” movie, he got his first date with his wife by aurally torturing her. Stalker much? (Also, this is Ghost for you young’uns.)

Oh, you’re back.

The four that were important were:

  • The nonprofit shares my beliefs – One of the key drivers of giving and support is the desire to be a part of something bigger than yourself. Knowing the organization is like you and has a similar core system to you is vital.  This is something you can use in your writings – “You know how vital art instruction in elementary school is to raising creative, happy, and well-rounded children and that’s why we…”
  • I have a personal link to the cause – Not surprising. Those impacted by a disease, an injustice, a crime, a whatever, are going to likely be among the strongest to support a cause about these things.  The next step, however, is not done often enough – you often can see a significant retention lift if you can reference this: “You know better than most the heavy toll of…”  Beyond this, if appropriate for your cause, work with those who have a personal link to the cause to celebrate this.  Techniques like anniversary cards (congratulations on three years cancer-free today!) can work well, but more than that, peer-to-peer fundraising can allow a person to celebrate those anniversaries on their own behalf.  You cannot craft a message better than: “I believe in X because of Y. Because you are a person like me, please support X also.”
  • I trust the organization. Trust is, I would argue, a necessary but not sufficient condition of support. No one who does not trust you will support you.  You can borrow trust with social proof techniques like the BBB seal on your donation form, but generally, running a tight ship nonprofit is sufficient.
  • The quality of the donor services they provide me is high. Another necessary but not sufficient condition.  In my experience, a good donor relations person can help turn around a less positive donor experience more easily than trust can be repaired, but it’s important to treat the people who help you serve people well. This starts with customization and if you missed the initial post on this, here it is.  Letting the donor know you know them is critical to quality donor services.

The converse of these is what causes people to lapse: if they no longer trust you, they think you share their values, their link to the cause is diminished or severed, or have a bad donor experience, they are more likely to not give in the future.

What of the two that don’t matter?  Performance of the nonprofit is what the Charity Navigators of the world attempt to quantify, first by pretending that percent of overhead means anything to impact, second by feigning that checkboxes around transparency mean someone is active in their community, and now with Charity Navigator 3.0, which has non-subject-matter experts reviewing the statements of subject matter experts to gauge impact and achieving the same level of impact as me commenting on neurosurgical techniques. It turns that those who can’t don’t teach; they rate.

It’s this type of performance that doesn’t seem to matter as much to loyalty.  People give to something because it feels good to give – to plant the tree whose shade you may never enjoy.  Getting into performance and numbers and such can sap the joy from the process.  Or at least that’s my theory on what that didn’t rate.

As for depth of education, it’s great to educate the people who actively want to learn more about your cause.  Donor telephone town halls, reports back, impact statements and the like are all good ways to do this.  But so much of education from nonprofits comes from the false belief that “if only people really understood the problem, then more of them would give.”  In fact, it’s probably that curse of knowledge I mentioned a couple of weeks ago that makes you speak in buzzwords and feel like you can educate the passion into someone.  A story, told well, means far more.

So now you know a little about why people lapse.  And it should be no surprise that retention is worst after the first gift.  There isn’t a built up trust.  There may or may not be a connection to the nonprofit (and if there is, the nonprofit may not know about it yet).  Communications haven’t been established and you haven’t told the donor the great things they did with that first gift yet.

Increasing that percentage of second gifts is the biggest area for almost any retention effort.  So I’ll cover that tomorrow.

Why do people stop giving?

How to measure retention

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Often, you will see people ask “what’s your retention rate” and get answers like 50% or 60% or whatever.  But there are different types of retention that add up to that overall retention rate.

Yesterday, I said that your direct marketing program was like a bucket with a hole in it.  We’re going to change this a bit today to say that your program is like a pipeline with a bunch of holes in it.  This is the lifecycle of your donor.  To define some terms:

  • Prospective donors are people who haven’t given yet, but might.
  • New donors are donors who are giving their first gift to your organization. I said we’d be defining terms.  I didn’t say they’d be hideously complex.
  • Converted donors/second gift donors/first-year donors are all terms for people who have gotten over the hump and given to your organization within the next year
  • Multi-year donors are people who have given reliably over multiple years
  • Lapsed donors are donors who haven’t given in a while. In a lifecycle analysis, this is frequently put at a time horizon (e.g., given the past year or past two years), but in reality it’s often militated by a broader analysis.  For example, if someone donates $5, you will stop trying to retain them much sooner than someone who donates $100).
  • Deep lapsed donors are lapsed donors, only really lapsed. Again, when this is is defined by your organization.
  • Lapsed reactivated/reinstated are people who were lapsed and have since given a gift. This is an important category often overlooked, in that these reactivated donors can’t be treated like people who just gave their second gift, but neither are the part of that key multi-year donor group.

Blackbaud indicates that the average retention rate is about 50% — that is, of your file, half will give you a gift in the next 12 months.

But as you can see, that’s oversimplified.  First-time donors are less likely to retain with a retention rate about 27%; multi-year retention is 58%, according to Blackbaud’s white paper on the topic.

But they only look at these two categories for retention.  It’s best to look at your retention rate in four buckets:

  • New
  • First-year
  • Lapsed reinstated
  • Multiyear

This is why retention rate as an overall metric camouflages what is happening in your file.  You may have a higher overall retention rate than you did a couple of years ago, but lower retention rates in all of these categories, similarly because you have more multiyear and fewer new donors than you did in years past.

If you prefer, lapsed could be included in here; I don’t because I think of lapsed retention as reactivation – there has to be an effort to reacquire donors, rather than talking to those whose attention you have already.

The other reason it’s important to look at each of these groups separately is that they require different strategies for retention.  With new donors, you have been a first date.  You have learned a tiny bit about them and they about you.  Also, to stretch the dating analogy, your relationship at first is new and exciting.  You can explore things early on like sustainer asks and that person might be in the afterglow of giving and your outstanding onboarding process (more on this later this week) and willing to entertain that notion.  Testing different messages and learning instruments like surveys are par for the course.

Conversely, for your multiyear donors, you should know what they like and don’t like.  Do they give only in the fall and when their gift is matched?  Do they love advocacy appeals?  Is your calendar hanging in their house and are all of their mailing labels yours (i.e., premium donors)?  Not only can you know these, you are expected to know and play back to them – see Ellinger’s Peak of Ideal Customization for details.

One additional retention metric to be aware of is an output from retention rate: lifetime value.  Here’s the formula for lifetime value:

clv-equation
Because everyone loves calculus

Wait!  Please don’t leave!

This is the overly complicated version.  You can ignore discount rate because the cost of money is so low. What you really want are “what is the net value of a person’s donations to an organization going to be?”  The key inputs to this are:

  • What are they giving?
  • What does it cost to get them to give that, initially and ongoing?
  • What is the likelihood that they will give gift 2 from now (and three and four and five) – that is, what is their retention rate? That’s the calculus portion of this – you sum each donation that someone will give, discounting it by the likelihood that they will give it

Retention rates, like compound interest, are magical, rippling through your program for good or ill for years to come.  Tomorrow, we’ll look at the inverse of the retention rate – why people stop giving.

How to measure retention

The basics of retention

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I had the pleasure of speaking on an excellent panel last week with NonProfit Pro on the topic of donor retention, so instead of our regularly scheduled week, let’s look at retaining our donors.

As direct marketers, we often have every bit of data about an appeal or campaign at our fingertips.  We can track average gift and response rate, test versus control packages, open rates, click-throughs, conversions, and so on.

The thing that is often forgotten is that each number represents people.  Everyone who gets a piece of mail, email, phone call, or text (or fax blast, carrier pigeon, telegram, etc.) votes on it by their action or lack thereof.

Lost in the numbers of an appeal or campaign performance are the metrics that matter in the long-term: are our strategies helping you love those who support you more and/or helping your supporters love you more?

Yes, it sounds a bit hippie-ish, as if I’m going to get the drum circle out any moment.  And part of it is – these are the people who make our work possible.

But even if we must look at this from under our green eye shades through our decidedly non-rose-colored glasses, it makes both sense and cents to make donor retention a top priority.

Our direct marketing programs are like a bucket with a hole in the bottom of it.  If you want the water level to rise, you can only do one of two things – poor more water into the bucket, or decrease the size of the hole.  Given this analogy, you might wonder why you would bother to pour water into a bucket with a big hole in it.

Hand pouring water from a glass into a leaking pail
The image of a leaky pail of water that is legally required
to accompany all retention commentary.

And you would be right – retaining the donors we have is of greater importance than acquiring new ones.  While you certainly can’t stop acquiring to focus on retention (less you get down to one very very very loyal donor), keeping with donors with your organization is vital for several reasons:

  • It’s cheaper. There are very figures for this.  Some say it’s twice as expensive to acquire a donor as to retain one.  Others say it’s 12 times as expensive.  Someone out there right now is working on a study that definitely concludes that it is a hillion jillion times more expensive.  Bottom line, it’s cheaper to retain a donor than to acquire one, by a factor of X, where X is big enough to be important.
  • It’s easier. Picture addressing your acquisition package, email, or phone call to someone that you know already knows what your organization is, what you do, and kinda likes it.  Cuts a few sentences, maybe paragraphs, out of it, no?
  • Retained donors are of greater value than new donors. We’ll talk retention rates tomorrow, in that people who have only given one gift are far less likely to stay with your organization.  They also tend to give more gifts and more per gift.
  • Retained donors are of greater value, part 2. Major donors rarely come from the ranks of people who made one gift to your organization; that’s something that comes from a longer-term association with you.  Additionally, more than half of bequest givers have given to an organization 15 times or more.

So this week, we’ll talk about donor retention: how to measure it, why people stop giving, how to get that elusive second gift, and how to reactivate a lapsed donor.  Like many of these topics, each one of these could be its own book (and some are), so if there are areas of particular interest to you, let me know by email or in the comments and I will work to dedicate a week to the topic.

The basics of retention

Ask strings (a.k.a. why you have $18 donations)

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There is no platonic ideal for an ask string.  It varies organization to organization, piece to piece.  Testing is really is the only way to determine what asks work best for your organization.

Nor is it a place where asks translate well by medium.  Generally speaking, an average online gift can be 2-3 times higher than an average mail gift (why, you ask, would you then bother with mail?  Because retention rates on online giving are much, much lower than mail or telemarketing).

There are two types of ask strings – one fixed, when you don’t know who is going to give what, and one variable, when you have a history with a donor.

Tests that work for both

  • Generally, you want at least three options.  Probably no more than seven.  In there is a lot of room for testing.
  • You will more often see ask strings ascend, but testing descending can frequently add value.  Sometimes having them somewhat out of order works best – I’ve seen controls that ask for $15, $10, $25, or $50.
  • No dollar sign. There is some psychological evidence that seeing signs of money actually make people thriftier (hence why they are omitted on pricey restaurant menus). Try without
  • What do you call your other category? Some say an indicator like “Your most generous gift:” or “Your best gift:” strikes a better chord than “Other:” (How could it not?)
  • Circle the goal. Often, you will circle an amount that isn’t your highest, but isn’t the lowest, with a note along the lines of “Your $X gift today would really help those incontinent badgers you love so much!”  The idea is to try to upgrade the donor or get a higher gift amount in acquisition.  Social proof – adding a line like “most people in [your city] give this amount – can also help.  This helps a donor classify your organization and avoids awkwardness like the question of how much you should tip your Uber driver.  (Seriously, how much should you tip your Uber driver?  Please leave comments in the notes, as it’s one thing I can’t effectively test.)

Fixed ask string tests

  • Mission tie-ins and odd amounts. Why ask for $15 when $17 is what you really need to help buy art supplies for an inner city youth?  This compelling why also creates a strong tie between the letter and the response device.
  • Social/cultural tie-ins. If you are focusing on a particular audience or demographic, some numbers have important tie-ins.  Some Jewish people believe in giving in multiples of $18 (Chai in Hebrew means living; the letters of chai add up to 18, so “giving chai” is considered to be especially fortunate).  In Chinese, eight is especially lucky and 88 more so, as the number eight is pronounced similarly to prosper or wealth.  Eight is used like nine is in the US in prices (e.g., $1.88 versus $1.99 – they really just both mean $2).  Conversely, four is unlucky in both Chinese and Japanese, because it is homophonous to the word for death in both languages.
  • Where to start? A good rule of thumb is to start your ask string around where your current gifts are, but you may find that you test up from there.  Another tip is to look at the list you are renting – if you are getting donors $20+, you wouldn’t want to start your ask string any lower than $20.  If it’s $5+, you may (or may not) go that low.
  • Do you have to use these? If you can make your acquisition purchases in segments (e.g., give me all of your $10+ donors and all of your $50+ donors), you have dual benefits – you can use the $50+ donors as multis and you can start one ask string at $10 and the other at $50.

Variable ask strings

  • Highest previous contribution (HPC) v. the previous contribution. Let’s say you gave $50 to a nonprofit, then $25.  Should they next ask you for $50, $75, or $100?  Or $25, $37, and $50?
  • Multiplier: HPC, 1.5 HPC, and 2 HPC is probably most common, but I’ve seen HPC, 2 HPC, 4 HPC, and 8 HPC be effective (on a matching gift campaign in particular, where the idea of doubling is already planted)
  • To round or not to round? If someone make an odd gift of $27, should you next ask them for $27, $40.50, and $54?  Generally not; cents don’t make sense.  $27, $41, $54?  $30, $45, $60?  Rounding out ask strings can help you get out of weird numbers that consistent upgrading can create (e.g., if you donate $30, then upgrade by 50% each time, that’s $45, $67.50, $101.25, then $151.875.  And if you haven’t got a ha’penny, then God bless you).  On the other hand, if someone is giving $18 or $88 for a reason, it also rounds that out.

As with many things, testing this online is far easier and cheaper.  But testing online is a different blog post for a different time.

Has anyone else found success with an innovative ask string?  Please post in the comments or email me at nick@directtodonor.com.

Ask strings (a.k.a. why you have $18 donations)

Customizing your direct marketing (aka Dear Mr. Jenny Roberts:)

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In addition to looking for that sweet spot somewhere between “that nonprofit doesn’t know me and takes me for granted” and “that nonprofit has clearly been looking through my underwear drawer again,” the most grievous sin you can make in customizing and personalizing is being wrong.  Thus, a disclaimer that these techniques should really only be used when you are confident in the data used to customize.

When looking at your donor’s sweet spot, there is another optimization to be navigated – the cost of additional personalization versus the return.  Like all else that is good and pure of this world, the way to determine this is through testing.  But there is one way to maximize the bang for your customization buck, which is to customize only one side of, or page of, a letter.  If the printer can do most of your mail piece without variable printing your costs come down substantially.

Of course, these additional costs are nearly non-existent online or on the phones, where your customization is limited only by your imagination, the time you want to invest in creating different versions, and whether your telemarketers will rise up and overthrow you if you have a different script for every call.  I say this last only partly jokingly, in that some experienced callers will use the script with which they are comfortable rather than the script they are asked to use.  Thus, online can have the purest, cheapest testing, so please, please, please test your online asks.

Here are some simple customizations that I have seen increase response rate to the point that they more than paid for themselves:

  • Name: Duh. Infants as young as five months old selectively listen for their own name and this is fully developed by 13 months.  From then until up to 120 years later, we listen, watch for, and seek out our own name.  That name is very, very infrequently Current Resident or Friend.
  • Donation history: If someone has been a long-term donor, it’s great to recognize this. You want to do this casually, as in “You’ve stood for an end to feline boredom for over a decade.  Will you join us again when we need you most”, not as in “Since you joined EFB 13 years and three months ago,” as that gets creepy. If you have something like a member card or supporter club, acknowledging that someone has been “member since 2001” will usually lift response.There is a special version of this that is also very effective – playing back to people that they contributed to the same campaign last year, e.g., “you had your gift matched last year; now is another opportunity to double your impact on adult-onset flatulence.”  Here, you are reminding the person that they are the type of good person that donates to things like the thing they are reading or hearing.
  • Mission area: If you know how someone came into the organization or what they care about, it’s vitally important to play that back to them. Animal organizations, in particular, customize their messages to cat people and to dog people, knowing that each has their own reasons for supporting the cause.
  • Location: I saw a .5% percentage point increase in response rate when someone knew that the story we were using happened right in their state. Of course, this can require 50 different versions, so perhaps you’ll want to start with more easily variabilized copy.  Even easier is to reference the city and/or state in the copy without specifying the story.
  • Contribution level: This is partly for the donor or potential donor. You don’t want to insult someone who would normally donate $20 by asking them for $1000, nor a $1000 for $20.  I once received an acquisition piece from my local Boy Scout organization that asked for $250 as the lowest donation level.  On an acquisition piece.  With no return envelope.  Needless to say, while I was not helpful, friendly, courteous, kind, or obedient, I was thrifty.  This is also for your benefit.  You want to maximize the donation(s) from a donor, gradually increasing their giving over time as their trust in and love for you grows.  That process can be undermine by asking for the wrong gift at the wrong time.

In fact, there is an entire art to ask strings, one that we will cover tomorrow.

Customizing your direct marketing (aka Dear Mr. Jenny Roberts:)

Ellinger’s Peak of Ideal Customization

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There is a concept in aesthetics called the Uncanny Valley. The idea is that generally we like things to be closer and closer to human likeness to maximize emotion and empathy. That is, until the thing reaches a point that is not quite human, but too close to human, for comfort. So, things that look somewhat human, but clearly are not (think C3PO from Star Wars or a teddy bear) look fine to us. But getting close without quite being right is highly offputting or creepy.

uncanny valleyYour dislike of clowns, explained.

For some, this is part of a dislike for ventriloquist dummies or clowns or porcelain baby dolls. It’s also why even in these days of high-tech CGI, you will see animated movies that make cartoon characters to be, well, cartoony and not human looking. Efforts to make hyperrealistic animations have fallen into the Uncanny Valley (e.g., Polar Express, Beowulf).

polar express

This girl has come for your soul.

I posit that there is a similar dynamic in personalization.

On one side of the spectrum, you have the cable company. Long after most people have heard of the concept of caller ID, the first thing they ask you to do in their automated system is to put in your phone number.

What is the first thing the person on the other end of the line asks for after your brief 47-minute wait listening to the instrumental version of “My Heart Will Go On”? Your phone number. That isn’t just not knowing your customer; that is Memento-level forgetting.

On the other side of the graph, you have the Target Knows You Are Pregnant story. To make a long and interesting story short, there was a man who called Target irate that his minor daughter was getting coupons for items that would imply that she is pregnant. Shortly thereafter, he called back to apologize, letting them know that there were things going on in his house that he didn’t know about. Target “knew” his daughter was pregnant before he did.

This story is a bit creepy: that Target’s algorithms would “know” something like this. After other coupons were a little too overpersonalized, Target has started putting in random dummy coupons into its coupons, so they look a little more random. (Even though they know what you really want).

“Even then, retailers learned early that shoppers prefer their shopping suggestions not be too truthful. One of the great unwritten chapters of retail intelligence programming featured a “personal shopper” program that all-too-accurately modeled the shoppers’ desires and outputted purchase ideas based on what shoppers really wanted as opposed to what they wanted known that they wanted. This resulted in one overcompensatingly masculine test user receiving suggestions for … a tribute art book for classic homoerotic artist Tom of Finland, while a female test user in the throes of a nasty divorce received suggestions for a small handgun, a portable bandsaw, and several gallons of an industrial solvent used to reduce organic matter to an easily drainable slurry. After history’s first recorded instance of a focus group riot, the personal shopper program was extensively rewritten.”
― John Scalzi, The Android’s Dream

So here is the Ellinger Personalization Satisfaction Curve (I figure if I keep trying to name things after myself, one will stick):

ellinger curve3
I spent upwards of 42 seconds on this graph

As personalization increases, you like it, unlike a point where you stop liking it.  The three big implication for nonprofits are:

  1. This curve is moving right. It used to be an innovation to have a person’s name included in the salutation. Now, unless you are going for an ultra-low-cost package, it’s table stakes. Donors used to be OK with the Super Mario Bros. excuse for not knowing entire gift history (“Thank you for calling, donor. But your data is in another database.”); now it is inexplicable. We now live in a world that knows our name and who we are (or can look it up quickly enough to simulate this).
  2. But people generally don’t like you to know things that aren’t logical leaps from their existing relationship. For example, if you are using acquisition lists from advocacy organizations, it’s almost certain fine to send them an advocacy piece from your organization to them. However, you don’t want to say “Because you support other advocacy organizations, you may want to help support our cause.” This is a part of the sausage making people don’t need or want to see.
  3. This sweet spot is different for everyone. Some people still get weirded out when people know who is calling from caller ID. Others wear their digital hearts on their sleeves, inviting everyone to know everything. The best you can do is aim for the middle for the general population at first, but then test up and down to see what each your donors prefer.

I’ll talk about a few positive customization techniques tomorrow.

Ellinger’s Peak of Ideal Customization

Your first acquisition mailings

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The first thing to know is that mail programs will generally lose money initially. Even if you have great donors and good packages at first, the cost of growing the program will likely outstrip the benefits of running it at first, especially because there are significant fixed costs in the mailing space (e.g., it costs just as much to copywrite a letter than does to 100 people as it does one that goes to 100,000).

Acquisition is where you can get into serious money. Acquisition is designed to lose money for all but the most (absurdly) conservative organization. It’s an investment in bringing new people into the organization and getting them to support you financially. Yet, it’s necessary to start to build your file and lower your marginal costs.

One way to do acquisition on the cheap is with warm and conversion leads. Warm leads are people who have engaged with your organization non-financially (e.g., remember those folks we got to download our white paper last week and give us their contact info?); conversion leads are people who have donated, but not through the mail (e.g., online donors, walkers, gala attendees, etc.). These are inexpensive ways to get new donors, as you don’t have to pay list rental fees.

The other way to get names is, not surprisingly, to pay list rental fees. Try to find organizations like yours to test their lists – often people who support an environmental/cultural/health/etc. charity support many of them. It’s much easier to convince someone to support something very like what they already support.

It also behooves you to put your list up for rental/exchange as well. This will lower your list costs because you will be trading lists with some nonprofits instead of renting theirs.

Charity Navigator will ding you for having a privacy policy that allows this, even if you allow people to opt out of list rental/exchange at any time. Like so many things in the nonprofit world, Charity Navigator is wrong about this. They would recommend, in fact, that you not mail your donors because of the cost involved and because they don’t believe that part of the mailing is a program expense designed to educate your supporters about your issue and promote awareness. That said, if you took the same mail piece and gave it out at a walk instead of putting a stamp on it, it could be considered almost entirely a program expense.

If this doesn’t seem burdened by an overabundance of logic, you would be correct. Generally, you would do well to take a George Costanza approach to Charity Navigator and simply “do the opposite” of their guidance.

In addition to rental and exchange markets, you can also work with cooperatives to get additional names. These coops include Abacus, Dataline, Datalogix, DonorBase, I-Behavior, Target Analytics and Wiland. I think I’ve tried almost all of these at some time or another. These coops share names among them and will build a model of response to get the best possible donor lists for your organization. Think of it as not renting from 10 different lists, but rather getting the best from 20 different lists. Some work better for some organizations than others and it may take a few to get it right.

The downside here is that your best names will start to get mail from a lot of different organizations. On the flipside, you have access to the best quality names from other organizations. Be sure to hold out part of your file to determine the impact of this mailing structure on your file.

After you look at your first bill for an acquisition and regain consciousness, you will rediscover the value of warm leads. Just because you started a paid mail program doesn’t mean that the free tips discussed earlier, especially about working to turn your Web site into a constituent generator, don’t still apply. On the contrary, free is often the best possible price. Adding to the original thoughts, now that you’ve run a program, look at lapsed donors as another source of (re)acquisition. Generally speaking, lapsed donors once renewed will be more loyal to your organization than an outside acquired name and they generally acquire more inexpensively.

So far, I’ve been talking about mailings – online and off – as one size fits all. In reality, if time and money were no objects, each communication you would send out would be handcrafted and uniquely personalized and there would be bespoke artisanal direct mail pieces coming out of Brooklyn and Portland in lavender scented envelopes.

In truth, you aim for something in the middle using customization. That will be the topic for the rest of the week.

Your first acquisition mailings