More Donors Vs. Better Donors: Intangibles
For our viewers joining the program already in progress, for the past two posts (here and here), Betty (arguing in favor of better donors over more donors) and Mo (arguing in favor of more donors over better donors) have been debating.
Today, the final round of the debate: intangibles.
Mo: The implications of focusing on fewer donors scares me. My thinking is that you will draw the line at five-dollar donors and cut quantity and donor volume accordingly. Then, when you have fewer people on file and higher per-piece costs, you’ll have to move that line up to ten dollars. And so on down a death spiral.
Betty: As we’ve established, the amount that I’ll save by not having to have expensive means of communication to donors that aren’t going to pay back helps our bottom line. If anything, focusing on higher-value donors is a way of getting out of a death spiral by cutting out the people who helped us get there.
And we know that number of donors on file is a false metric. It ignores that some people are worth inherently more to the organization than others.
My concern is that there’s only so much time and attention you can give to a direct marketing program. Too much of it goes to the Sisyphean task of trying to get $5 donors to become profitable. Why not focus on what matters?
Mo: Because bulk matters too. When we go to lobby for legislation, officials ask how many members we have. They notice if we are a force.
And upgrading got us where we are. Look at your current high-value donors. They were $5 donors 20 years ago. It was cultivation and upgrade strategies that made us what we are.
Betty: That’s fine and dandy back when acquisition could turn a profit. But every year, acquisition becomes a little harder and a little more expensive. This isn’t kindergarten where everyone must have a turn. We are accountable to all donors that we have that we use their donations wisely. If we aren’t getting net money from a person, we owe it to all our donors to let them go.
Mo: Why not just customize your donor stream for them where you can make a profit?
Betty: You should if you can, but you can’t always. And keeping them in the mail stream does something else: it starts making your pieces that win in tests the ones that are tailored toward a lower common denominator. That’s the death spiral you should worry about: the temptation to cut costs by doing things like not personalizing pieces that don’t matter as much to the most marginal segments of your file.
Verdict: I’d like to know what you think. Personally, I buy some of Betty’s arguments here. There always is a threshold at which you need to cut some donors off. Rationally, then, it seems like there should be a threshold at which you should try not to acquire them. What that threshold is will vary from organization to organization.
The overall trick is that these are not mutually exclusive strategies. You may decide that your goal for lapsed donors is more donors – we just want them to give again – but that the goal for active donors is to get a higher average gift. Or just trying to get any non-event gift from event donors versus maximizing direct response donors’ value. Or separating out your most committed donors or the once with the most relevant donor identities for you and pushing the envelope on value.
But the key is to know where you are going. Because if you don’t, you might not get there.
Nick
3 responses to “More Donors Vs. Better Donors: Intangibles”
Behavioral Science Q & A
Integrating an individual giving appeal with other communications from a charity can have both positive and negative effects, and the outcome largely depends on how it’s executed. Advantages of Integration Brand Consistency: Maintaining a consistent appearance and messaging across all communications can reinforce the org’s brand identity and strengthen brand recognition and trust among your […]
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I’m not aware of any in-market tests specifically comparing recurring vs. gift frequency language. I suspect the answer might not be the same with all gift frequencies, nor with all people. It sounds like a great opportunity for you to test and find out what works for your audience. Based on the literature, here’s a couple […]
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Based on what we know from existing data, those renewal notices can actually be pretty effective in getting people to donate. They tap into our psychology – creating a sense of urgency, reminding us of past support, and using personalization to make the message hit home. They’re playing on our natural tendencies to feel obligated […]
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Interesting question. I had a quick look at the testing done on this topic. On the positive side, in all cases, over half of donors decide to cover the fee. In some cases, it goes as high as 65%. Not a negligible percentage at all. Here’s another test from iRaiser showing consistent results (see point […]
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There’s just one thing to consider when designing a supporter journey: the supporter. More specifically, you need to take into account: Who the supporter is i.e. their identity, which is the reason they support this cause, and their personality, which describes the way they “see” and process the world. These will determine the kind of […]
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I’m not an expert in this but a quick search surfaced this article on the effect of tax reforms on 2019’s charitable giving. The researchers didn’t find a reduction. Actually, they observed an “increase in charitable contributions in 2019, even with the lower tax rates and the dramatically smaller number of taxpayers who itemize their […]
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The argument that only so much time can be devoted to a DM program is a definite indication of someone who is not fully aware or experienced in the many facets that are involved in every mail campaign. Too many are not cross trained. In today’s DMM world it is more than “better” or “more”
Good analysis of costs from every aspect are required at all times. The donors in a house file should contain what campaign they responded to, what the ask was, amt they responded to, how often they responded etc.
What did the campaign look like… personalized in any way? Not just
Dear Sally, that’s common. A charity mailer has about 10 seconds for the respondent to look your envelope…. decide to open it, toss it, does it contain a benefit for them. Add response: Use a cursive handwriting font in blue ink for the address or a personalized message across the envelope. Test it against your control piece!
What does your document look like. As a former mailer the last line of the first page always contained a incomplete sentence. WHY? It required the reader to go to the next page! If continued on the back, add a right facing arrow, Human nature will automatically follow and your appeal is now continued.
Bottom line: Know your donors. Know what they respond too. Educate yourself in every path necessary from creative conception to the donors mailbox. Much can be gained from the creative artist conception of the campaign goal, experienced DM copy writers know which ‘hot buttons’ to focus on… small changes can cut costs. Same for printing your enclosures. Different printing processes can alter your printing costs. i.e. Use different printing company depending on your campaign enclosures & quantity. Printing costs will vary depending upon the capability of the printer to be used. Obviously different size & weight envelope will effect postage costs. Are you familiar various methods to save on postage costs?
In the overall debate the costs of better donors or more donors is just one segment. Better or more depends upon the campaign goal plus how a prospective donor was initially selected for acquisition. You don’t send the same mail piece for acquisition that you do to retain a donor or to reactivate a donor.
How deep in your house file do you mail a donor until he is now costing money to even mail him?
Its a complex industry with several third party industries involved. Education is vital. More donors doesn’t mean better donors. Analysis of Cost per piece, postage for piece is imperative! ROI is the total sum of All Investment costs. Thank you.
All this can be true and yet there are still times that more versus higher-dollar is the central question before you:
– Where do I start my acquisition ask string when I don’t know the donors: low to attract more donors or high to bring in a higher average gift.
– With my last dollar in acquisition, do I add additional names from the list modeled for high average gift or high response?
– Do I put a premium in the package, which could boost my response rate but potentially bring in donors with a lower lifetime value?
– What do I try to get my board to care about more?
When I said there is only so much time and attention you can give a direct marketing program, it wasn’t in spite of all the factors you mention and many more — it was because of them. We only have so much time on this big blue marble; more urgently, we only have so much time in each day and the mail, email, ad, phone call, etc., needs to go out.
Thus, it’s easier when you have an overall philosophy. If you believe your program exists largely to get people who will be future major donors, you make different choices from one who wants to show political mass through numbers. It’s the same way that McDonalds doesn’t have a truffle burger with gold leaf and Michellin-star restaurants don’t get you fries in a paper bag.
Your observations are spot on. Understanding the donor segment or target audience (DMM) and how the organization’s mission might fit with donor/audience values can be part of BOTH conversations. Quality AND Quantity are reached by establishing:
– an evolving donor analysis
– donor interest in our mission
– likelihood the donor shares our values
Thank you for the reminder!