Direct Response Fundraising

31

Jan

Integration Revisited


puzzle1“Integration” has been a buzz word in membership development for over a decade, and if last week’s DMA Nonprofit Conference is any indication, it shows no sign of going anywhere any time soon.

Ten, fifteen, years ago, integration was about coordinating the relatively limited range of constituency building instruments at our disposal to optimal effect. It meant bolstering a direct mail campaign with an advance telemarketing effort and vice versa. Or testing the placement of a TM effort in a multi-part DM membership renewal series. And when email arrived on the scene, it came to mean a much more multidimensional mix of DM-TM-EM direct response communications.

Today with social media a given, albeit evolving, part of our constituency building programs, and with the rapid rise of text as an important mobilization and fundraising tool (as of Friday, the American Red Cross had raised $30 million via mobile toward Haiti relief) “integration” has taken on a whole new meaning.

It’s no longer just about our Membership Department learning how to use the tools and get them to work together. Today, integration is about something even more complex: getting people to work together.

Gone are the days of Membership here, Marketing/Communications over there, Online down the hall, and Program on the fourth floor. As we’re all reaching into the same toolbox for instruments to enact our missions, where one department ends and another begins suddenly isn’t quite so clear any more. And so nonprofits – even the really big ones you’d think would have it all figured out – are left scratching their heads as to how to get Membership, MarComm, Online and Program to sit at the same table, not to mention puzzling where everyone should sit.

Who owns the database? Who owns the website? Who owns the communications calendar?

One VP of Online Services offered some possible answers at last week’s conference, by presenting several models for departmental integration. Not surprisingly, the speaker’s preferred model featured the Online Department as the spoke in the multi-departmental wheel, and the ultimate owner of the website.

Also no surprise: I couldn’t disagree more. Obviously, the hub should be Membership. And no doubt, there are dozens of Communications VP’s and Program Directors who will disagree just as vehemently with me.

While the debate will surely continue for at least a few more conference cycles, the good news, the real news – over text, social media, and whatever the next big thing may be – is that we understand now how critically important it is for our departments to come together. Real integration isn’t merely clever integration of our constituency building tools; it’s getting our departments and people to sit at the same table. It’s also fostering the imagination and open-mindedness to reach across it with “what if?”

So as we struggle with how to do that, what if … we stopped asking which department “owns” the website? Or who owns the Twitter account? What if we stopped asking who owns the Facebook page, or any of the tools we use to enact our missions for that matter?

What if we approached the puzzle of integrating our departments by challenging ourselves with a new, far more relevant, question: who owns our organization? And then let’s go from there.

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By , 01/31/10 • Posted in Direct Response Fundraising • Tags: , , , ,



14

Jan

Measuring Statistical Validity in Direct Response Fundraising


istock_000001430671xsmall1Statisticians are equipped with a broad range of detailed tests and tightly controlled procedures to determine the probability of an outcome.

But direct response testing isn’t done in laboratory. Our lab is the messy, busy, ever-changing world … which means it’s difficult to design a perfect test.

In this climate, there are always variables beyond our control that affect our results, whether it’s the mood of our donors or the media attention our cause is attracting. We saw those external variables at work last spring, when one client was about to open a major new facility. In the months before the big day, this organization was the focus of much excitement, and nearly daily articles and blog posts. And the direct mail package this organization mailed to acquire new donors performed incredibly well. But was this an accurate test of how this package will perform over the long term? Probably not.

In the real world, we also face limitations on the resources we have available – including the quantity of names we have available for testing.

Although we can’t always create absolutely perfect tests, we can still design ones that generate practical, useful and actionable results – and statistics can help. Here are a few tips to keep in mind to improve the statistical validity of your testing:

1. It’s not how many people you solicit; it’s how many responses you receive. In order to have a statistically valid test, you’ll need 100 responses for each test cell – 200 gifts for a simple A/B test. For a donor renewal effort with a projected 5% response rate, this means soliciting 4,000 names (2,000 per cell) for a valid test. In a new donor acquisition effort with a 1% response rate, you’d need to solicit 20,000 names (10,000 per cell).

Does this mean you shouldn’t test if you can’t get 100 responses? Not at all. We often test smaller cells – when we’re testing a new list in acquisition, for example.

Just knowing when your test isn’t statistically valid can help ensure that you’re not relying on flawed data. When your quantities are too low to be valid …

Test fewer elements. Is your appeal only going to be getting 100 responses? Ditch the four-way test, and try a split test for more reliable results.

Don’t extrapolate. When you don’t test a statistically valid quantity, you can’t assume a larger group will behave the same way. Don’t make the mistake of ordering 50,000 of that new list just because your first order of 5,000 performed well.

Plan to retest. Always retest. More on this later.

2. Beware of anomalies. As you review your results, keep an eye out for outliers. Did you get a $5,000 gift to your regular membership appeal? A $1,000 gift to your new member acquisition? Large gifts will artificially increase your average gift and skew the results of your test.

To get a better sense of which results are repeatable, remove gifts from your analysis that fall outside of what is normal for your organization. As with all things statistics, there are fancy ways to identify outliers. But since we’re talking practical models for direct response, you can also look at your average gift and try to make some reasonable determinations. For an organization with average gift in acquisition of $75, we’d look carefully at all gifts above $200 to see if our test results changed when these gifts were excluded.

3. Mind the LARGE differences. Don’t just look at whether your test gets a higher response rate than your control. Pay attention to the magnitude of difference, as this can indicate how likely you are to get the same result again.

Small differences, such as a lift in response from 4% to 4.25%, are more likely to be caused by random variation. When we see a larger lift – a response rate increased from 4% to 5% – we can have more confidence that this result will be repeated if we were to repeat the test.

Even with a huge lift, we can’t assume we’ll always get the same result. When segment A generates a 4% response and segment B generates a 9% response, we can’t know that those response rates will stay the same. What we can say is that B is highly likely to outperform A if the test were repeated.

4. Test, Test and Retest. Testing often raises as many questions as it answers. Perhaps a new list looks promising, but doesn’t yield enough responses to make a statistically valid assessment. Or maybe a change to your package increases response by an amount that’s meaningful to the organization but small enough that you can’t be confident that it is repeatable.

That’s where retesting comes into play. If initial tests indicate a winner that’s not statistically valid, retesting can affirm – or make you rethink – testing results.

As you design and analyze your next test, keep these guidelines in mind to ensure you’re drawing the most accurate conclusions you can from your test results. And if you have any other tips you use, post your comments here or email us at nthfactor@nthfactor.com.

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By , 01/14/10 • Posted in Direct Response Fundraising • Tags: , , ,



3

Jan

New Year; Good Old Basics: A 5-Minute Testing Refresher


monopoly-go-squareNo matter what your organization’s fiscal year is, the beginning of a new calendar year is like returning to “Go” in your donor communications. It marks a reset of your Annual Fund or membership program and the beginning of a new dialogue with your donors that will build over the coming months and culminate with your year-end campaigns.

What better time then to revisit the fundamentals of how you communicate with your donors and measure the efficacy of your communications – a.k.a. testing? Here’s a 5-minute refresher on what you need to know (or remember) about direct response testing in the year ahead.

  1. You need to test. The great thing about direct response fundraising and constituency building is you can measure your results and test strategies to learn what works best. Although you won’t be able to say why something works or doesn’t, you will be able to say what works. But you need to test new ideas and validate existing ones on an ongoing basis to be assured that you are doing what works.
  2. Testing usually costs more, but it’s worth it. It’s tempting to cut a test to meet a tight budget. But when you amortize the lift or savings you get from test results applied over time, it’s easy to see the greater cost of not testing. For example, if a direct mail test that cost you $500 to implement showed that you could save $100 by switching from a business reply envelope to a courtesy reply envelope, you will have lost money up front on the test. But apply that $100 savings per mailing over the course of time, and it really adds up.
  3. Testing is more work, but also worth it. You have to think harder to come up with meaningful tests. You have to deal with more complicated project specifications, write more copy and analyze more results. But your extra efforts will translate to better results and maximize donor contributions for your organization’s important work.
  4. Only test things that you really think will make a difference. Just because you know you’re supposed to test (see #1), it doesn’t mean you should test any old thing you can think of. Only test things that you genuinely believe have the potential to have a significant impact on your results. Developing meaningful tests takes a good deal of creative and strategic thinking on your part (see #3).
  5. Likewise, focus the majority of your tests on the best performing segments of your donor file. Your best donors are always going to be most responsive to your communications, so perfecting your solicitation approaches to your best donors should be your priority. That’s not to say that you shouldn’t test approaches to reengage lapsed donors and improve results with marginal donor groups. (In fact, it’s always easier to reinstate a lapsed donor than to find a brand new one, and reinstated donors tend to have a greater lifetime value than new ones.) But balance is important. For starters, focus 75% of your tests on your best donors, and tweak your formula as you go along based on your testing results.
  6. Test one variable per segment. If you want to accurately measure test results, make sure that you only test only one variable per test cell. Why? If you change multiple variables, you won’t know which was responsible for lifting (or suppressing) your results. Some of the elements you might test per cell would include subject line, premium, carrier envelope, landing page, insert, letter length or microsite, to name just a few.

Statistical validity is a big consideration that I’ll address in my next post (so check back next week). Also coming soon: real life test results that may surprise you.

To be sure you don’t miss a thing, subscribe by email (in the box in the upper right column), RSS or Kindle. And as always, I want hear your thoughts –so post them here, or email us directly at topics@nthfactor.com.

Looking forward to being connected in 2010!

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By , 01/03/10 • Posted in Direct Response Fundraising • Tags: ,



10

Nov

The Best Point of Entry? Your Door.


doorGood development professionals put a lot of time and effort into creating points of entry for prospective donors to their organizations. You may be familiar with this strategy from Terry Axelrod’s point of entry event model, but the concept of creating opportunities for prospective donors to discover and become engaged in your organization has long been at the heart of development.

In direct response membership development, major points of entry include:

Direct mail. When an individual makes an initial gift to a direct mail solicitation, they self-identify as someone who is interested in your work and who may be interested in building on their investment in your organization.

Website/Email. Offering your donors a reason to register/subscribe on your website helps open the door to further dialogue and deeper engagement with your organization through giving or volunteering.

Social media. Interacting with people via your blog and in social media also opens the door to further dialogue that can lead to giving.

For many organizations, these are the three most trafficked points of entry to membership and sustained giving. But there’s one more, often overlooked in direct response membership development, that also merits attention: your organization’s front door.

If you’re the type of organization that people visit – like a theater, museum, zoo, animal shelter, hospital or a park – you are in the fortunate position of having prospective donors experience what you have to offer by walking through your door, literally or figuratively, every day. But to turn those prospective donors into real ones, you also need to have a solid strategy and process in place for continuing the dialogue with them after they leave.

Ideally, you already collect email and land addresses of people who visit you. You make brochures containing giving opportunties available to visitors in your lobby. And you provide easy communications sign-up opportunities.

But these are passive asks and passive name collection strategies. And if you follow up by merely rolling registrants into pre-existing, passive cultivation communications (like your newsletter or email communications), or solicitations designed for donors (like your year end appeal), then you’re probably missing opportunities to convert visitors into donors.

For example, let’s say you’re an organization with tangible membership benefits that give members access to your programming, and expire if not renewed – like a museum, an association or a fitness and recreation organization. Your members experience what you have to offer every time they walk through your doors, but for some reason they never seem to respond well to your Annual Fund solicitations. Why? It’s a weak way of bridging the gap from member to donor because  it doesn’t acknowledge the member’s unique relationship with you.

A better strategy for converting members to donors begins with thinking about your relationship with your members and their perception of your organization. Why do individuals become members of your organization? When are members most likely to make an additional gift? What are the obstacles to giving? Do your members know that you are a nonprofit organization and/or perceive the need for your work?

When you look at it this way you may find that the better conversion dialogue with your members begins with their experience with your organization, their satisfaction with their membership, what they enjoyed on their last visit, and the opportunity to give you advice on how you can improve your services. And when you ask them to share more about themselves with you, you in turn can begin share more about yourself with them. Like how much you appreciate your members, what exciting new programs you have coming up, and the fact that you rely on additional gifts from members to keep your doors open and your programs thriving.

So as wonderful prospective donors come through your doors and enjoy what you have to offer, think about how you can move beyond “join our mailing list” and “please take a brochure,” to build more meaningful, rewarding relationships with your visitors and members.  

Have a success story or idea on building relationships with visitors and members? Share it here by commenting below, or email us at topics@nthfactor.com

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By , 11/10/09 • Posted in Direct Response Fundraising • Tags: , ,



8

Sep

Back to Work Address


books-pictureWith Labor Day behind us, it’s officially crunch time for all of us involved in nonprofit development. We have year-end appeals to produce, annual reports to mail, goals to meet and – if we’re real gluttons for punishment – galas to manage.

So what are you doing reading this blog? You have work to do, and not a moment to waste! Quickly then, here are five shorthand reminders of what’s really important for your Q4 fundraising efforts:

  1. Renewal is still more important than upgrading this year. Here’s an article from our website with more on this.
  2. That said, you can always upgrade a committed donor more successfully and cost-efficiently than you can reinstate or engage a lapsed donor.
  3. But it’s also more cost effective to reinstate a lapsed donor than to find a brand new one.
  4. And yet, as your donors come and go, it’s still important to invest in brand new donor acquisition.
  5. Last but not least, it’s more important for your year-end efforts to be on time than perfect. Think 90% perfect;100% on time.

Do you have any other year-end essentials to suggest? Share them here! And be sure to check back often for more year-end fundraising tips.

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By , 09/08/09 • Posted in Direct Response Fundraising • Tags: , , ,



6

Aug

That Was Then, This is Now – Direct Mail 2.0


Mailbox with clipping pathLet me just begin by clearing something up. Direct mail fundraising is not dead. (Here’s a nice article from Mal Warwick by the way on why.) In fact, for the vast majority of nonprofits, direct mail is still the most powerful, cost effective means of constituent engagement and giving.

But how we’re using direct mail as a tool for fundraising and membership development is changing. And it will continue to evolve as the ways in which people communicate and get information does.

So what’s different? For starters, direct mail isn’t the only point of entry for new members to your organization any more. Prospecting used to go like this: prospect gets mail piece, prospect makes gift, prospect becomes donor. Today, donors are discovering and engaging with organizations online in a variety of ways. And so prospecting programs, previously expressed on a spreadsheet in terms of mail out and donors in, have to accommodate more layers now.

In programs where we used to be able to draw a direct line from prospect to donor, thanks to the web and evolving electronic channels for engagement, we now have an interesting new state of involvement between prospect and donor: that of the action-taker. By action-taker, I mean a person who hasn’t yet made a gift, but who has engaged with an organization by signing a petition or responding to a survey or sharing online in any number of ways, like telling their story, posting a picture, being a fan or making a comment.

As a result, our direct mail programs (and email and telemarketing programs) are changing to accommodate the business of conversion – i.e. the defined program that solicits action-takers via the appropriate media to take the next step in their involvement with the organization by making a gift.
Encouraging donors via direct mail to engage and give online

Encouraging donors via direct mail to engage and give online

 
Another change is we’re using direct mail to actively promote giving and engagement in a different channel: online. Where we used to merely list an organization’s website as part of its address on letterhead, we’re now encouraging donors to go online to give.
 
Why? When a donor gives online, they also give us something of great value to our ongoing dialogue with them: their email address – and, hopefully, permission to use it to communicate with them. Driving donors online via direct mail also allows us to convey additional information that might help deepen a donor’s engagement. But perhaps the most compelling reason to a fundraiser, affirmed by Target’s Internet Giving Benchmarking Analysis, is that average online gifts are larger than offline gifts. Moreover, donors who engage and give via multiple channels are thought to have higher lifetime value.

For all the ways direct mail is changing in the digital age, it’s also still the same in quite a few. At a time when 140 characters passes as communication, it’s especially nice to know that longer letters still often do better.

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By , 08/06/09 • Posted in Direct Response Fundraising • Tags: , , ,



25

Jul

The Shape of Things to Come


half-full-glassIn June, Target Analytics released its Index of National Fundraising Performance for Q1 2009 indicating that direct response giving to nonprofits in the Target Index (35 million donors translating to nearly $2 billion in giving) was down in the first quarter of the year. This was not surprising on the heels of Giving USA’s report a couple of weeks earlier that giving in 2008 was down 2% from 2007. In fact 2008 represented the first decline in giving, in current dollars, since 1987.

I realize that all this sounds awful. But fortunately, as both Target and Giving USA will tell you, their data is only part of the story. There are two other important things you need to know:

1) The Target Index represents 79 nonprofits. Big ones, who lead the way in direct response fundraising for sure. But still, just 79 nonprofits. According to the Foundation Center, there are 1.5 million nonprofits in the United States.

2) Although it may have been 2% less than the previous year, Americans gave over $307 billion to charities in 2008. This represents the second year ever, and in a row, that charitable giving has exceeded $300 billion. And it occurred in the worst economic crisis since the Great Depression.

An informal polling of friends and colleagues has turned up a sense of cautious optimism for Year End ’09. In fact, we’re hearing quite a few reports of increased individual giving offsetting declines in foundation and corporate giving. So I’m viewing the glass as half full for the second half of 2009.

Do you have questions, opinions or predictions for Year End 2009 fundraising? Post them in the comments section below. We’ll keep an eye on things and report back.

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By , 07/25/09 • Posted in Direct Response Fundraising • Tags: , ,



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