This article was featured as the cover article in the January 2013 issue of Journal (of the DMA Nonprofit Federation.) Download a PDF of the article as it appeared in the magazine.

Our ground-breaking study uncovered how donors are using the options given to them.

Once upon a time, donors knew how to behave.  When asked to write out and send in a check, many did.  When we called them, many dutifully pulled out their credit cards.  Or when told to phone in a pledge of support, they responded.  Those were the days…

Stations that participated in the study ranged from large to small and included a mix of TV-only and joint-licensees.

Luckily, those days aren’t quite gone.  But a recent study of over 8 million philanthropic transactions and mail records over the past 5 years uncovered some useful donor behavior that confirms that donors’ “traditional” relationship with the organizations they support may be a thing of the past.

Response rates not looking so good (or so you think)?

Like many organizations, you’re probably tallying results to your last mailing.  How did it do?  Chances are your response rates are either flat or declining.  A lot of organizations have seen a drop of as much as 20% over the last 5 years.

But there may be a flaw in how you’ve been looking at responses. That number might only count donors who’ve responded the “old fashioned” way – by completing the reply form, writing a check, sealing the reply envelope, affixing a stamp and mailing it back in.  You’re not to blame – that’s the way response rates have always been calculated.

Wait, you say.  You also sent an integrated email.  You probably have that response rate on your campaign report too.  On its own line.  Separate from the mail.

But what about all the things that aren’t reported?  Gifts on your website.  Where did that money go?  Did any “white mail” come in?  Or calls to your donor relations department?

And what about those folks who got your integrated email but instead of clicking on it to contribute went back to the direct mail piece and transacted their gift through the mail?  That’ll make your email response rate look worse than it really is.

Your direct mail response report probably isn’t telling the whole story.  Yet that’s how many organizations judge the success of their direct marketing efforts.  And it’s time that changed

Integrated marketing is good

A large urban library in the Pacific Northwest has participated in a city-wide foundation matching gift program for the last couple years.  On a single specified date, the foundation encourages city residents to go to its website and make a contribution to one of the hundreds of local organizations listed there.  That date happened to coincide with the library’s spring direct mail appeal.  It had dropped nearly 50,000 pieces of mail just a few weeks before.  The library raised more money from more donors than any other organization through the foundation’s campaign that year.  And fully half of those donors received some kind of direct mail from the library during their campaign.  Coincidence?  Maybe or maybe not.

Inspiring multi-channel behavior isn’t totally new in the not-for-profit world and it has been the focus of a lot of effort especially over the past several years.  Sending mail during a telemarketing campaign or following up with an email are more commonplace.  And some organizations are using even more, and in some cases newer, tools to support older ones.  Advertising, direct response TV, social media and other tools are being added to the mix.

We’re all putting an extra emphasis on how best to integrate different channels.  The internet ushered in this new way of thinking.  But while the media may be new, the multi-channel strategy isn’t.  Now we just need to track the full effect of these smart strategies and tactics as they relate to donor behavior.

Seek and you shall find

The truth is that people are still giving to the causes they support; they’re just doing it in different ways.  Which is why we undertook a major analysis to figure out just how donors are behaving when given other options or when other options are simply made available.

On average, stations are seeing 7% – 8% in add gift response come from the web with an additional 4% – 5% from “other” sources and 2% – 4% from emails. These “lost” gifts represent a potential increase of 15% – 20% in response rate!

Multi-channel conversion is even greater for Lapsed gifts with more than 10% of direct mail response now coming from the web and an additional 3% – 4% from other sources. Email response is particularly strong with up to 8% of response from members clicking to make a gift.

New members are particularly geared to a switch in the medium of giving. As many as 16% of acquisition responders transact their initial gift other than in the mail. This means that if properly counted, response rates could really be up to 25% higher than is currently reported!

We partnered with 9 public broadcasters from all over the country – they ranged in size and geographic region and included both TV and Radio stations — to analyze over 8 million of their transactions and mail records going back to August 2007.  Our study looked at traditional direct mail contributions, email responses, web and telemarketing gifts and even people who pledged their support during one of the stations’ famous on-air pledge drives.  We knew there would be some channel migration, but our study showed that over the last 5 years it has accelerated at an astounding rate.

Where that migration was happening was also surprising.  Conventional wisdom would dictate that current donors would be the most likely to know an organization’s web address and how to donate online.  And they do – results show that on average, 7% to 8% of response to additional gift or appeal direct mail campaigns come in through a station’s website.

But they’re not the most likely.  The number of direct mail-to-web converters is even higher for lapsed donors with greater than 10% of response to a direct mail piece coming in online.  That’s up from about 4% just 5 years ago.

What’s more, an additional 4% to 5% of those direct mail responses came in through “other” ways – including the pledge drives and their donor services departments.  And stations that sent email saw up to 8% of their responses from people clicking through to online donation forms (which shows that if your organization isn’t sending emails, it could be missing out on some substantial revenue).

But the real story is in acquisition. Everybody’s response rates are going down, right?  Or maybe it just seems like they are.  The reality is that gifts just aren’t being counted correctly!  On average, stations in the study are seeing up to 12% of their acquisition response come from the web, while “other” channels count for around 4%.  These “lost” gifts represent a potential increase of 20% to 25% in response rate!  What organization wouldn’t love to be able to count that “missing” money (and prove to leadership that response rates aren’t as anemic as they may seem)?

Keep marketing, but track response correctly too

Most organizations don’t have pledge drives of course (although many are using Direct Response TV), but it’s not the tools that matter; it’s how you use them.  Luckily many organizations are fairly forward-thinking in how they market to their donors.  Now it’s time they become equally advanced in tracking donor behavior.

Donors are still responsive to direct mail – they’re just choosing to respond in a variety of ways other than by mailing back the reply form with a check.  People have their preferences for the channels they like to use and if you don’t give them an opportunity to use them, you’re limiting the ways that they can respond and potentially leaving money on the table.

A large, national animal rights organization recently split their mailing universe into 4 groups: The first was sent postal mail alone, the second got only an email and the third and fourth either got an email before or after the direct mail hit.  It’s no surprise that the joint email/postal mail panels won out when all of the response channels were combined (sending the email after the direct mail did slightly better).

But what was surprising was how their donors chose to go online.  Included in the postal mail piece was a “vanity URL” – a web address that goes right to a form to make donating and tracking donations easier (for example, “http://www.animalrpeople2.org/giveagiftnow”). Of all the millions of direct mail pieces that went out with that address, only three people – 3 – chose to type all that in.

You can’t fight human nature.  If someone wants to go online, they will.  If they don’t, they won’t.  But very few people really like having to type a long URL into their browser.  They’ll either search or go to your homepage.  So make it easy for them.

And match contributions to their original source.  It’s extremely important, and will lead to better reporting to your leadership; a clearer picture of how your donors interact with you; useful data for where your fundraising resources should be allocated; and potential for greater revenue, retention and a healthier overall fundraising program.

© Carl Bloom Associates, Inc. All rights reserved.

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Yes, many of us are waiting for the retiring Boomers to become our big new group of contributors. But who will save the Boomers? It seems that as a group, Boomers were pretty poor planners for their futures and many are in real trouble. Whatever the exact statistics, we can probably count on only a modest percentage of them being able to support non-profit organizations, while the others may need help. We need to find and target those boomers with the dependable income to support us.

“New Poll Reveals a Future of Financial Worries For Many of Us” states a headline from an article about Boomers’ retirement and investment plans. In this poll, among the noteworthy findings for fundraisers are:

• 44%  of Americans born between 1946 and 1965 are not confident that they will have enough money to live comfortably in retirement.
• 57% say they lost money in the economic downturn and have to delay retirement.
• About 55% have some confidence that they’ll be able to live comfortably during retirement.
• More than two-thirds of these with higher income feel ready for retirement (we’d better learn how to find these people).
• Median retirement savings is at $40,000 (due to a quarter of this population having saved nothing). Among those who have saved something, the median savings is $100,000. (Again we need to find the group above the median.)

According to this article there are about nine things Boomers could do right now to help themselves. You can read about the eight others in the article, but one is: What you’re paying for in comfort today, you won’t be able to afford tomorrow. So scale back your lifestyle!

Well, I don’t need to tell you we need to make sure that “scaling back your lifestyle” does not include curtailing giving to non-profit organizations. And we definitely need to identify those who do NOT have to scale back.

This is a good illustration of how important it is to know what is and isn’t our market and how it can change, and to make sure what we perceive is not an illusion. Most importantly, we must adapt our planning and execution to what is happening rather than to what we wish were happening or the ways things used to be. That’s the only way to succeed. Otherwise, we’ll always be looking for reasons why something didn’t work.

If you would like to share any of your experiences in dealing with the real or illusory marketplace, please pass them along to us or comment below.

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We’ve been asked for advice on this critical pricing decision, and here it is: Don’t. Instead, you need to think about how to upgrade the gifts of high dollar donors, while discounting the basic rate so those who want to support you can find an acceptable level and frequency of giving – acceptable both for their pocketbooks and their pride.

Recent articles in the press, surveys and research back up this recommendation. “As Middle Class Shrinks, P&G Aims High and Low,” a Wall Street Journal article from September 12, 2011, details marketing plans of giant marketer Proctor & Gamble. Another Wall Street Journal article, from September 19, 2011, “Coke Tailors Its Soda Sizes,”  reports on a shift in product development and pricing in reaction to the unfortunate trend of the shrinking middle class, and of middle class shoppers trading down to lower-priced goods.

The shrinking middle class is the bad news. The good news is that people who have money aren’t skimping on their purchases. They are being up-sold, with more costly products designed for their pocketbooks and tastes.

So P&G offers Charmin Ultra-Soft for affluent shoppers and Charmin Basic for cash-strapped customers. Coca Cola is coming out with “Mini Cans,” dropping the price by 20% to lure more customers who are counting their pennies. For those who want more beverage (and calories) and have the money to pay for it, not to worry; Coke expects stores to increase prices on its 16oz., 20 oz. and one liter bottles.

These giant corporations are pretty knowledgeable when it comes to their markets and sales planning. So we fundraisers need to take heed. This would be the wrong time to increase basic rates; middle class people are strapped for cash. And even if they really aren’t, they feel they need to be careful in how they spend their money. Plus there are fewer of them as the economy takes its toll.

I would venture a guess that people who are having a hard time financially or may be unemployed in part populate our growing lapsed files. So we want to go easy on them. Now is not the time to antagonize them by pouring salt on their wounds.

A case in point is the saga of what happened to Netflix, as reported in the NY Times, September 19, 2001. Before their plans to split into two companies, Netflix announced a $6 monthly price increase for their dual services of Internet Streaming and DVDs by Mail. As a result the company very rapidly lost 1 million of its 25 million customers.

Many fundraisers are actually accommodating the middle class donor who increasingly feels pressed, by offering introductory discounts of $25 to $30. This is working well; tests show that net revenue from these lower asks are better than those of $35 or $40.

As for the higher dollar donors, it appears they are happy to spend more on products and services that confer status and make them feel good. So let’s give them the opportunity to feel really special. Let’s think of ways to confer greater status by upgrading their gifts and/or by giving more frequently as Sustainers. Let’s invite them to glamorous events. Perhaps we should even consider bestowing titles on them no one else has; has any one tried “Sir Donor,” “El General Contributor” or “Princess Giver?”

We trust that these thoughts will provide guidance for you in your planning. Please let us know of any experiences you have had with both high value and lower dollar donors, and any conclusions you have come to.

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Knowing the statistical requirements for test volumes, we can predict with confidence the reliability of the test outcome. We’re able to project future revenue that will be generated by each fundraising campaign. Armed with this information we can help you create cash-flow budgets and annual income forecasts.

Testing is a sophisticated art and science. It must take into account your realistic budgetary constraints along with a determination of which kinds of tests will be the most productive for your needs. And the timing of testing is critical in order to get you moving in the right direction most quickly and efficiently.

Whether you’re a CBA fundraising partner or not, we invite you to contact us to discuss ideas that could bring your program to the next level.

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From The Wall Street Journal

While Procter & Gamble used to aim its marketing at the huge middle class, now it is changing many of its products and the way they are sold, because many formerly middle class shoppers are trading down to lower-priced goods.  At the same time, upper income customers are not skimping on more expensive items. So P & G is now marketing to the top and the bottom of the consumer continuum, while targeting less towards the middle.

Does this have relevance for fundraising? Absolutely. It can’t help but affect the type and sizes of gifts that nonprofit organizations can depend on now and in the future. We share the same markets with P & G and every other organization that wants dollars from the public.

We see a number of nonprofits doing very well with “high-dollar” donors  ($100 to $1,000 and above)  and not so well with more moderate gifts ($35 to $99). That’s why many organizations, especially those with membership programs, offer discounted  “asks” such as $25 and below. This allows those people who are watching their wallets to still give t

o their favorite charities. We need to take this into account when doing acquisition campaigns and asking for additional gifts.

Target your prospects and donors based on the amount of their previous donations or purchases if you’re using rental lists, and apply demographic overlays to those on your own file.

I’m guessing you’ll find a lot of “ex-middle classers” and unemployed in your lapsed donor files.

CBA is planning a study of lapsed donors and members to see if this assumption is correct.

Health and advocacy organizations such as The March of Dimes and the Red Cross  that normally ask for small gifts are probably not as negatively impacted by these donor trends.

Please share your fundraising experiences regarding these shifts caused by the economy and the shrinking middle class.

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Those who know me will not be surprised when I post this to all my profiles and then re-post it with CBA’s profiles.  So you may be surprised to hear me say that the major account-based social networks aren’t everyone’s cup of tea.  In fact, the majority of people (the exact percentages vary depending on who you listen to) are lurkers — they like to read, but rarely comment and even more rarely post their own original thoughts.

Which make the recent study completed by brand consultant vöcanic pretty interesting.  Twitter claims to have 175 million users.  But that doesn’t really tell us how many people actually use Twitter on a regular basis (I may be showing my age — finally — but many of the people I talk to simply can’t figure it out).  So, vöcanic started digging into Twitter’s openly available data via their API (don’t ask) and did some math involving each user’s number of followers and people they follow.  Their results show that anywhere from 56 million on the high end to just 12 million on the low end regularly use the service.  By comparison, Facebook has about 300 million people that use their site daily (also, Foursquare has 7.5 million registered users and The Huffington Post reaches 30 million people each month).  That’s still a lot of people though.

Most interestingly, they quote a Facebook rep who says  “they believe that a user is not going to end up sticking around unless they make friends with 10 people.”  It is social media after all.   Whether it’s the big boys like Facebook and Twitter or it’s the local blog down the block, people will be drawn to the websites and the social media they prefer by an exceptional community experience.  Make that the focus of your marketing efforts — not trying to hit all 175 or 300 or 600 million people on your favorite social site.  We’ll have more on this topic in the near future.

Retweet this if you dare (no, really, we want the attention!)

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The administrative assistant will work regular office hours, Monday through Friday. Duties include:

• Maintain and update the membership database daily (includes processing incoming credit card payments), and prepare and mail New Membership Packets on a weekly schedule)
• Upload daily bank transactions, enter bills and allocate funds to proper accounting codes using QuickBooks
• Serve as first point of contact for incoming calls and letters to the office, answering questions regarding membership details and upcoming Association events, routing calls to appropriate staff members.
• Organize and maintain office inventories, preparing order vouchers for vendors; supervise the maintenance of office equipment (copier, printers, etc.)
• Provide support in scheduling, booking, and organizing annual meetings, locally and nationally

For more details and requirements, view the full listing online.  If you’re interested in this opportunity or know someone who would be perfect, let us know and we might be able to recommend your work!

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I’m compelled to note…that the vast majority of individual donor income for most non-profits is raised through the mail…Let’s keep that in mind as we fend off our Boards and Executive Directors who don’t understand why our direct mail budgets haven’t markedly decreased. They will when the mail stops working!

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While no one of these things will destroy the direct mail business, taken together they could lengthen deliverability times and even cause major disturbances locally.  We’ve already seen several issues with some of our clients and are reinventing some of the systems we use to plan and track campaigns.  We even touched upon these postal problems in our 11 Tips for 2011.

If you suspect you’re having problems (with the deliverability of your mail — we can’t fix everything) let’s track it.  We’re looking for volunteers to give us seed and first gift dates and other data that could help.  If you’re interested in participating, let your AE know!  Our shoot us an email at partnership@carlbloom.com and we’ll get you started.

UPDATE: JUST REMEMBERED: In one of the earlier posts I link to above, I noted that the USPS actually has over 36,000 retail outlets, compared to the ubiquitous McDonalds and Starbucks which have less than a half and a third of that, respectively.  Also that FedEx has about 1,600 locations; UPS has 1,300.

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