The latest Pareto Benchmarking figures show that the number of new donors acquired by the 82 participating charities in 2016, was less than in 2015.
These charities include a majority of charities raising over $20m in 2016, and a good selection of medium sized fundraising organisations as well.
With more than 65% of all regular givers and appeal donors acquired by face to face or direct mail, whatever happens to these two channels influences the big picture more than anything else.
Direct mail grew solidly until last year despite postage costs increasing dramatically, the Australian dollar falling from 1:1 to 1:0.75 and Australians falling from being ‘the wealthiest people in the world’ to just pretty rich (on average!)
By the end of 2015, intense acquisition strategies from many charities, large budgets and our small population of people aged over 65 (the average age of a direct mail donor is around 73) led to many charities simply running out of new people to ask.
Unless charities have great mid, major and bequest donor strategies in place, direct mail has slipped from being a great acquisition tool to just an OK one. Annoyingly we haven’t a ‘replacement’ channel working at scale to bring in the older demographic.
However, direct mail can’t be looked at on its own as its about the donors not the channel in isolation. The long term benefit is really in bequests. Despite taking many years, the potential of direct mail with a good bequest program in place is extraordinary.
Just 5,000 new direct mail donors could be worth $5m with a good legacy marketing program.*
Unless you are an animal charity or responding to intense media covered disasters, my advice is to only invest in direct mail acquisition if you have plans in place for donor retention, upgrade (of mid value donors) and especially that bequest fundraising plan.
The other dominant channel is face to face, I have been predicting a peak in face to face volumes for about three years. I guess if you predict your football team will win every year, people forget all but the year you got it right!
Unfortunately I hung in there, and this time I was right. Fewer new monthly givers signed up through face to face in 2016 than 2015.
Despite all this, face to face is still miles ahead of any other channel for acquiring large volumes of monthly givers, and beats direct mail without bequest follow up on five year return on investment.
We have had good growth in online lead generation and phone calls, but the volumes are still comparatively small. TV, radio, press ads and other channels are just a blip on total volumes, but very important to the few charities getting it right.
New monthly givers signed up by non face to face channels usually have better retention, but there simply aren’t that many of them.
So what does this mean for Australian charities?
We have a small population, our costs are higher than most other markets and our average donations much higher.
We have to really look after the donors we get. I have mentioned mid value, major donors and bequests already – and they are key – but critically we need to increase our focus on donor love (donor care, supporter service, whatever you call it in your organization).
Here are my tips for all charities fundraising through individual gifts:
- Be on top of your data. Measuring campaigns is fine but you really need to be on top of tracking key indicator numbers, key performance indicators and running ongoing analysis to identify trends. And this is for your whole program, individual programs, donor segments and even some individual donors. Produce monthly reports, or even better dashboards, and make sure they are understood and the information is acted upon. It is important to make sure the quality of your data is managed effectively. It’s all well and good to make ‘fixes’ with an agency or mailhouse, but make sure you apply any fixes in your systems too, otherwise it may not be ‘fixed’ for the donors next interaction.
- Acquire more donors. If you are acquiring donors and modeling a break even within two years – don’t stop! In fact, if there is any more capacity you can use (e.g. lists or face to face go for it. Just make sure you check the compliance credentials of any suppliers).
- Know your donor. A true donor communication survey is key for donor care, major donor work, bequests and more. It can even help with future direct campaign results! Key to good donor care is to understand your donor and use a survey year after year.
- Thank properly. This doesn’t mean just send a receipt with a short thank you letter. Every time we conduct mystery shopping, charities come up badly. Donors deserve a beautiful thank you letter, telling them how their gift will help. Then they should get a follow up telling how it DID help. Hardly anyone does this, so, it is easy for your charity to have the best donor care around.
- Ask properly. Personalise copy. Not just name and address, but donation amount, reflect their support, personalise paragraphs depending on their survey responses and previous donations. It is important any personalisation included relates to the donor, and isn’t just changing an adjective in the copy depending on their giving level. Take time to think about where the donor is in their giving journey, what they’ve told you and ensure your copy reflects this well.
- Use the Pareto Principle. Donors who give larger than average gifts will likely give you more larger gifts. You don’t have resources to spread equally, so prioritise those with the best potential to give more. About half your donations will come from just five per cent of your donors. Use the survey and look at previous giving to work out who they are.
- Meet donors. The best fundraising happens face to face, but any full time major donor fundraiser who spends more time NOT meeting donors is either under supported or in the wrong job. There are usually around 220 working days for a full time person. A full time bequest or major donor fundraiser should be spending 180-200 of those visiting donors. ALL fundraisers would be speaking to donors. Making thank you calls, checking in on how the fundraising you do feels for your donors. Aiming to understand more and more about your donors. If you have not spoken to a single donor in the last month, pick up the phone now
- Hold staff and suppliers accountable. Make sure they know what is expected and make sure good KPIs are in place and understood. Ensure suppliers are compliant with regulations.
- Try some new stuff. Finally, and only if you have made sure you are doing all the above! Budget for R&D with no income expected. And please – on behalf of the whole sector – let us know how you get on!
If you want to be part of Pareto Benchmarking next year please email Jesse Zarb.
* 5,000 direct mail donors, average age 73, average bequest in Australia $59,273. Benchmarking shows 0.4% of all such donors have become bequestors, with more advanced bequest programs achieving 2%. $1.2m-$5.9m.