“On-Line is replacing Direct Mail” is an urban legend

URBAN LEGEND TOUTED BY EVERY BOARD IN AMERICA:  On-Line is replacing Direct Mail

Written by Sally Frank, Vice President

This is a true story. The result of tabulating year-end revenue streams and strategizing for 2015 for Client X (name has not been disclosed for privacy purposes)

 

Client X has a very robust online fundraising machine.  For an organization their size (both in terms of number of donors and budget), they’re beating all benchmarks.  Because of this, they have been strongly considering dropping direct mail acquisition, which, as you know, represents a very hefty investment with an increasingly longer term break-even point.  Their Board is in fact strongly urging them to do so.

The numbers seemed obvious. All standard reports show that online is not only more cost effective than direct mail, but in absolute terms, it is bringing in the majority of funds.  (We have many clients who point to amazing ROIs in online as a reason for dropping direct mail, until we show them the obvious:  the online portion isn’t scalable… easy to get a great ROI on $50,000 of revenues, but not so impressive when you need to earn several hundred thousand dollars in non-institutional funds).

We noticed a distinct correlation between peaks in online revenues and acquisition drop dates in 2013 and 2014.  Beyond that, we saw that while online revenues had been increasing in this client’s particular sector by 12 – 15% between 2013 and 2014, this client’s online revenues had decreased by 10%, which translates into a 22 – 25% real decrease.  It just so happened that the investment in direct mail prospection in 2013 was about 5 times as great as in 2014.  We were then able to upload the prospect files and match all online donors to names that had appeared on the acquisition lists.

We found that a full 30% of total online revenues—renewal and acquisition—had come from donors having received prospect mailings.

Of course those donors would have been coded as new online donors in the database.  There would have been no way for the caging company or for the team at Client X to know that these folks had received a prospect mailing.  To boot, the average gift of this pool of prospect donors who had opted to respond online was significantly higher, about 50% higher, than those who had responded with the business reply form or return envelope.

We tell our clients all the time:  beware of silos in fundraising and communications. While the number of opportunities to reach people increases exponentially, and their options to respond multiply, we never know precisely which message will encourage them to give.  Be a pioneer on your team. Convince your colleagues that you all have ONE goal—not a direct mail goal, an online goal, and a large donor goal. And analyze your results accordingly.  Do not assume that a mail donor will only use their response form to give a gift.

At Faircom we are implementing systems to harness these opportunities:

  1. We are increasingly pushing the option to respond online in direct mail pieces.
  2. We are cross-cultivating donors as much as possible with e-mail, snail mail, retargeting ad campaigns, and social media posts.
  3. We are innovating ways to capture all contact information for each donor—mailing address, e-mail address, mobile numbers.
  4. We are promoting traditional direct mail tactics—premiums, planned giving promotion, gift matches—to the virtual space.
  5. We are using virtual cues in direct mail—providing social media links, designing packages with a more “window” like feel.

 

Give us a call or shoot us an e-mail to find out more about it!

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