publication date: Jun 26, 2011
author/source: Alan Sharpe
The secret to success at acquiring donors through the mail is to ignore your initial results. The results you generate in the first few months of your direct mail acquisition campaign might delight you or they might distress you, but they will almost certainly mislead you. Don't decide to continue or halt your program based on short-term results. That is reckless.
Here's the problem. If you mailed two acquisition packages and Package A brought in 140,000 new donors while Package B brought in only 86,600, which package would you consider the winner?
Or if Package A generated a response rate of 1.3% while Package B generated only 0.6%, which package would you consider the winner?
Looking at these short-term results alone, you and I would declare Package A the winner. And we'd both be wrong. Look beyond the first results
We'd be wrong because we looked at the short-term results and not the lifetime value of the donors acquired from each package. Mercy Home for Boys and Girls
in Chicago was making this mistake in the 1990s. Its control package consistently outperformed other packages in response rates and cost per donor acquired.
That control package included return address labels as a premium. And, because the package brought in more donors than any other package tested against it, Mercy Home thought they had a winner.
But as postage and list costs went up, Mercy Home did two vital things. They began testing cheaper packages against their control. And they began looking not only at short-term results, but also results that went back seven years. Two-thirds of donors never gave again
What they quickly discovered was that donors who responded to Mercy Home's premium package with one gift rarely gave a second one. During seven years of mailing that control package, the charity acquired 217,000 donors, but only 69,000 gave a second gift. So Mercy Home actually acquired only 69,000 donors, not 217,000.
Looking back seven years, Mercy Home discovered that Package B, even though it generated a lower response rate and brought in fewer donors initially, eventually outperformed Package A, the premium control package, in cost per donor acquired and lifetime net revenue per donor!
The key to this was that a much larger percentage of donors who responded to Package B gave a second gift, and a third gift, and a fourth gift. Over time, these donors proved themselves more valuable than the one-gift-only donors who responded to Package A.
The lesson for Mercy Home, and for you and me, is to take the long-term view in direct mail donor acquisition. Always look beyond your initial numbers to measure the success of your acquisition efforts.
Look at lifetime value. A mailing that appears to bomb today might be a winner - eventually. And a mailing that appears to win today might be a loser. You just have to wait to find out. Alan Sharpe is a fundraising practitioner, author, trainer and speaker. Through his weekly email newsletter, books, handbooks and workshops, Alan helps nonprofit organizations worldwide to acquire more donors, raise more funds and build stronger relationships. Alan is the senior strategist at Harvey McKinnon Associates. For more information or to contact him, visit http://www.raisersharpe.com.