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Direct Mail (Still) Matters

 

Direct mail continues to be the backbone of most charity’s fundraising programs. And it refuses to go away because it works.

Rising production and postage costs are affecting ROI, but it’s important not to judge direct mail only by its short-term revenue.

Direct mail works best when it’s used to build longer-term relationships with your donors. That’s where the big money is because it’s by far the best source for mid, high and major donor giving and bequests.

And it also works best when direct mail is part of an integrated appeal across multiple channels. In today’s complex fundraising world, success is rarely about a single giving channel.

What we know …

Pareto’s 2018 Benchmarking Report shows us that:

  • Next to face-to-face, direct mail is the second most valuable stream for generating donor income. It delivered 53% of overall cash income to charities analysed.
  • Direct mail still delivers the largest volume of new donors (48% in 2017).
  • Direct mail is still the number one method used to target middle donors (those giving $1,000 – $5,000) and still critical for generating bequest leads.
  • Direct mail donors, when converted to monthly donors, are the most valuable monthly donors by far with the lowest attrition rates.

Pareto Benchmarking also shows that cash income declined between 2016 and 2017, the second year of decline – predominantly the result of decreased direct mail acquisition by a number of charities. Income from retained donors was stable.

Is cutting back acquisition DM the answer?

Under pressure to bring in as much money as possible, as quickly as possible – and to reduce costs –  some charities have cut back on their direct mail programs, particularly acquisition.

But cutting a program is rarely the answer because often there’s no other option to replace the lost revenue.

And, by cutting acquisition DM, there may be little damage to be seen in year one, or maybe even in year two. But trust us, by year three that charity could be facing significant income challenges.

Between January 2013 and June 2014, the American Cancer Society (ACS) decided to pause their direct mail donor acquisition program amidst an organisational restructuring.

The program represented almost 41 million pieces of mail being sent each year.

Some of the outcomes:

  • New donors dropped by 11%
  • New donor revenue dropped by $11.3 million in the first year
  • The five-year impact on income: $29.5 million
  • The ACS Relay for Life raised $25 million less than the previous year.

That’s not all. The ACS gets more than $51 million in planned gifts from direct-mail donors. It will take years for the future loss of planned gifts to run its course.

As ACS found, direct mail is a crucial source of longer-term income and can seriously affect – in good and bad ways – the overall sustainability of your fundraising program.

So rather than reducing direct mail programs because they are no longer raising enough money, the challenge for fundraisers going forward is to reduce the costs of direct mail to generate the highest net revenue.

Today, the future of direct mail campaigns is niche fundraising at volume. We’ll send fewer pieces, to better qualified prospects, to get better results.

And the charities that will continue to succeed will continue to plan, validate, test and manage retention strategies. And they’ll have effective middle and high donor stewardship programs in place.

You can find our top 4 ways to help you make your direct mail work hard by clicking here.

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