Acquisition

Mobile Marketing

By Keith Elliott, Nicola Long, Sean Triner

SMS could be the next big channel in fundraising, yet Australia’s networks are doing little to facilitate it. Sean Triner, Nicola Long and Keith Elliott look at how to unlock what potential there may be in SMS fundraising.

Face-to-face was definitely the last ‘big thing’ in fundraising, and while charities need to continue acquiring donors through face-to-face, where can they look for new growth and a fresh market of supporters? It could well be SMS donations, but if it is, what are SMS donations and how well placed is Australia to embrace this channel?

The most straightforward SMS donation campaigns are those advertised around emergencies or at concerts, where a number is advertised and people can SMS this number to make a donation. In the United Kingdom, this is really easy to set up – the charity just applies online for a service such as Vodafone’s ‘Just Text Giving’ program, and the charity also gets 100% of the donation.

Key in the hand of telcos

For Australian charities, there is no such off-the-shelf product. Telstra’s media team didn’t return our call, but Vodafone’s Karina Keisler, General Manager – Corporate Affairs and Public Relations, explained the company’s position on SMS giving.

“We have looked at the [UK Vodafone] program and love the concept,” she explains. “Unfortunately, we are not in a position to manage a project of this scale right now and have made a conscious decision to focus every dollar and internal action to count toward an improved customer experience.

“Our customers tell us a consistently good network experience is of most importance and this is what we are focused on delivering,” she adds. “We remain in conversation with our global peers on this initiative and we are very supportive of the concept in Australia.”

Keisler’s closing sentence leaves the Australian fundraising sector with some optimism.

How can we fundraise through SMS?

These big campaigns abroad have indeed raised money, but they only work for one-offs – like emergencies and concerts. Beyond the ‘big campaigns’, ongoing use of an SMS call-to-action to donate is not sustainable as this tactic rarely covers the cost of getting the number advertised in the first place. It is, after all, acquisition.

SMS donations alone can never scratch the surface of what face-to-face has achieved in Australia, but our British friends – who can take the credit for the explosion in face-to-face nearly 20 years ago – think they have the answer. Many charities there are advertising a premium SMS (PSMS) number, giving people a reason to donate, and then following them up with a regular giving call.

You may be thinking ‘this is not new’ and, indeed, it isn’t. Many campaigning organisations have been using a similar technique to generate leads for years. Ideas like ‘SMS this number to get your free climate change action pack’ have been used and clever online videos aimed at getting prospective donors to give mobile numbers are also around.

Converting generated leads is already proving effective in Australia, so SMS has the potential to become a great source for those campaigns if the right environment can be achieved. An Amnesty International Denmark campaign presented at last year’s International Fundraising Congress in the Netherlands showed the channel’s potential, with a 21% conversion to regular giving of responders to an SMS request.

Many hurdles ahead of SMS?

Jan Chisholm, General Manager of Fundraising at Vision Australia, believes the big hurdle is not quality of fundraisers, donors or agencies – it is getting the Australian telecommunication industry to follow the lead of British counterparts in agreeing to facilitate and pass on 100% of all PSMS donations to charity.

“The regulator doesn’t acknowledge donating by text as legitimate yet,” explains Chisholm. “I can buy a ring tone or sign-up to a chat line by SMS, but I can’t donate to charity without a special exemption – which is not easy or standardised.

“No Australian telecommunications providers yet waive gift processing charges, and the size of the donations is too limited when you do get the chance to do them,” she adds.

Australian telcos also need to work with aggregators so supporters can make a PSMS donation from any network they are subscribed to. That way, if a donor sends a PSMS to a Telstra number from a Vodafone number, the donation will pass through both parties for free.

Another potential barrier to entry is that even with a 15% conversion rate, an organisation will need to be generating 1,100 leads a month to acquire just 2,000 regular givers a year. That’s a lot of leads for many charities. While the conversion rates sound great, fundraising decision makers need to carefully monitor the cost of generating the PSMS leads as well as the cost of the calls.

“Regular giving conversion of PSMS donors needs to be looked at in the same way as any other acquisition – it is not going to make you money straight away and there is an investment needed,” explains Chisholm. “But I want to explore every channel that is convenient to the lifestyle of all potential donors. Text to donate as an acquisition source is a great idea, although the money isn’t made there – it is all in the follow-up.”

Making a financial gift is a great filter or propensity indicator of donors. The difference between someone putting their hand up to say ‘I care’ and someone actually giving a financial gift is huge – the donor is much more likely to become a monthly regular giver than the carer.

Potential in regular giving by SMS

An exciting new development in this space is the approval of regular giving by PSMS in the United Kingdom. The British regulator and local telecommunications companies are allowing regular charitable donations to be billed through a donor’s telephone account.

“This allows people to make an ongoing commitment without having to hand over their credit card details,” explains Chisholm, who is encouraged by the move. “It is all processed via the account holding telco.”

This should allow for shorter conversion calls and fewer errors when writing down details. It does, however, raise some yet-to-be-answered questions on subsequent activity, according to Pareto Phone Chief Executive Officer, Bruce Cotton.

“Of course, the fact that the regular gifts can be made through the bill sounds great, but we don’t know how it will pan out with retention, prompted upgrades and auto upgrades,” he explains. “It will be a while before the Australian regulators and telcos all end up agreeing on a system similar to that in the UK, but I hope Australian charities will ask and push to make it happen instead of waiting for the telecommunications providers to do it.”

Paul De Gregorio of UK-based agency Open Fundraising reckons SMS could be the next big thing. “SMS is breathing life back into channels that were starting to tire,” he says. “SMS is a brilliant tool for fundraisers as we all keep our mobile phones close, so when we are moved to act we can donate in seconds.

“What follows should be good fundraising and retention,” he adds. “Of course we are going to ask for a regular gift, but the really smart charities are starting to bring mobile into their retention activities too.”

So, what can fundraisers do to change the situation? Here’s some ways to take action:

  • Lobby both telecommunications companies and regulators – individually and maybe collectively through the Association for Data-driven Marketing and Advertising and the Fundraising Institute Australia.
  • Vodafone is a company active in both the United Kingdom and here, and appear to be proud of the service it offers in the UK. Do you know anyone high up there? What do they think? Are they even aware it is a problem?
  • A few companies who could benefit are already working behind the scenes, but most of these are from overseas. More Aussie companies and charities need to join the chorus.
  • When a board member next tells you they don’t like face-to-face, ask them to contact a telco Chief Executive Officer to express their desire for fee-free PSMS donations to be prioritised in Australia.

SMS technology that goes around Telcos

With so many challenges in replicating the UK model for SMS donations via Telcos, Pareto decided to partner with a local Australian company that specialises in SMS technology, who already work with many big commercial brands. We are now able to offer charities a viable SMS donation function that by-passes Telco’s in the set-up using some clever software. The real benefit of this software lies in its ability to be adapted to suit a charities particular marketing campaign without requiring support from Telco’s or The Telecommunications Regulator. Uses can include campaigns which follow up appeals, generate cash donations via text to call, simple low cost “hand raising/lead generation” campaigns all the way through to complex advocacy campaigns which link supporters with their local politician.

How does this work in detail

Option 1:

A charity can send a broadcast text to all current and lapsed supporters who have a mobile phone number. This broadcast SMS will have a simple key message/call to action that asks the receiver to reply E.G. “Donate now to help researchers find a cure”.

The charity could also incorporate a SMS call to action across all media channels that ask potential supporters to text “Donate now” to a specific number E.G. Billboards, Press, Radio, TV and Events.

Once an existing or new supporter texts “Donate now”, they will then receive an automated text reply from the unique “Donate now” number. This reply will ask the supporter for some further information such as name, email, postcode etc….

Optional extension:

A charity also has the ability to follow up Option 1 with an automated phone call. Once an SMS is sent by a supporter; an instant automated call back is triggered. This automated call can be tailored to the requirements of the campaign i.e. it may feature a celebrity, CEO or an advocate delivering a short recorded message followed by several options for the supporter –

a)      A survey whereby the supporter can register support based on specific questions using their keypad

b)      Leave a short recording of a supporter voicing their support which can then be sent to an MP’s email, based on the supporters postcode

c)      A secure automated payment transaction which facilitates the supporter making a donation via their Credit Card using their mobile keypad. Practically all income generated via this means goes direct to the charity less a small percentage fee for processing.

Option (C) can be included in conjunction with either option (A) or (B).

The real benefit of adapting this technology is its low cost of implementation coupled with its ability to generate engaged supporter leads for charities to convert via a Regular Giving phone conversion.

For more information on Vodafone UK’s Just Text Giving program, including how it sends nonprofits free information packs on how to leverage the free service, visit: http://goo.gl/Kjyfn

Sean Triner, Nicola Long and Keith Elliott
Sean Triner is the Founder and Nicola Long is the Head of Client Services at Pareto Fundraising. Keith Elliott is Client Development Director at Pareto Phone.

This article was first published in issue 42 of Fundraising & Philanthropy Magazine in February 2013.

Why an ROI of 1.0 in acquisition could be a bad thing

By Sean Triner

Direct mail is having an amazing resurgence in Australia.  Charities have been used to large volume acquisition mailings pulling maybe 1.0% response rate.  An initial return on investment of 0.70 would be considered really, really good.

But more recent innovations – particularly using ‘premium’ packs – have lifted response rates considerably.  Many charities are achieving response rates unheard of on large volumes; 3.5% is now met with a little bit of disappointment even though it is fantastic.

These packs tend to be large, with lots of elements such as these two examples posted out recently.

Even though they cost more to print and post, they can do very well indeed.

Recently, we have had quite a few actually break even on acquisition – something very rare not long ago.

When the results below came in, Pareto staff and clients were jumping up and down with joy… (the results are NOT one of the packs above, they are different examples).

This means that the $215,000 raised covered the cost of this pack in total.

So why am I saying this is not a good thing!?

Well, as a one off it isn’t – but if we keep getting ROIs of 1.0 it really means that we are not taking advantage of a great opportunity.  It means we are not targeting enough people, not going ‘deeper’ into less responsive lists and donor sources.  It is good news – but only if we interpret it correctly: that it is an opportunity for more acquisition.

Please note: an acquisition resulting in an ROI of 1.0 is an exceptional and unusual result, and is not one to budget for or expect.

Australians gave more to charity in 2011 than ever before

By Sean Triner

The latest Pareto Benchmarking figures – derived from looking at actual transactions across 45 charities in Australia and New Zealand – revealed that Australians gave more money to charity in 2011 than ever before. Double checking annual reports of the largest fundraising organisations not in benchmarking confirms it was a good year.

Regular giving (automatic debits) has grown enormously over the past ten years. In fact, for professional fundraising organisations such as Cancer Council NSW and WWF regular giving accounts for more income than ‘one-off’ donations.

 

 

 

 

 

 

 

 

 

 

 

 

As you can see from the chart above, across the group, around a third of individual gifts came from bequests, a third from regular giving and a third from occasional donations such as those sent in response to direct mail.

Direct mail had been pretty flat over the last few years, but has begun a new resurgence in growth as new creative approaches lift response rates from around 1% to over 4% for many charities. This is from sending letters to people who had not previously donated to the charity.

We expect this growth to accelerate as more and more charities have recently succeeded with their early tests. However, it can take a long time for them to accelerate their programs so the growth will most likely be reflected in 2013 data (to be presented in 2014).

Face to face (people on the street, knocking door to door and asking for monthly pledges) goes from strength to strength, with these 45 charities acquiring more donors through face to face last year than any previous. The only thing holding back further growth in this area is capacity from the face to face providers – they are mostly full up.

But it is not all rosy on the face to face front – one charity in the group lost 60% of its new face to face donors within one year. The average is around 45% but the best manages to keep most of its donors, with only 36% attrition.

Australian and New Zealand charities can join Pareto Benchmarking for free – email bm@paretofundraising.com

New Donor Diagnostics

By Andy Tidy

Wouldn’t it be nice if when you recruited a new donor, you knew how much they would be worth in the long term? All donors are not equal, and they don’t behave as if they are, so identifying their differences and adjusting the program they receive accordingly, is the key to maximising net income and achieving the best long term return on investment.

The question that needs to be addressed is ‘what are the metrics that need to be monitored that will allow you to see as early as possible how valuable a donor, or a group of donors, will be and how they should be treated?’ Depending on your recruitment mix, these will vary.

Regular Giving Recruitment

For regular giving recruitment, the key performance indicator that needs to be monitored is attrition. Three month, six month and twelve month attrition will identify any issues there may be in the short and medium term. For a long term view, it needs to be measured over two, three or four or more years. Attrition is usually represented as a percentage of recruited donors but there are other ways of looking at the impact attrition has.

The average number of payments made by donors who stop giving is a useful comparator. For example, if the attrition of your regular giving recruits is heavily skewed to the first few months, then you will get fewer payments per lapsed donor than if the attrition is more evenly spread out over the year. This will have the effect of increasing the amount of “lost income” – defined as the difference between the expected income from a regular giving recruit (12 times the monthly value) and the actual amount received. The lost income amount provides a tangible financial value to the attrition.

Upgrade likelihood is another metric that will contribute to long term value, monitoring the proportion of active donors that have upgraded, and the value of the upgrade allows you to monitor the contribution your upgrade program makes.

The last element you need to consider for RG recruits is their propensity to make additional contributions. This is usually in the form of a response to a cash appeal. The recruitment channel is usually the main determinant of whether a regular giving recruit will also make cash gifts, but there can also be variation by list source, payment type, age and other variables.

Once these metrics have been calculated, the next step is to look into any underlying variables that influence them. These will include channel, age, payment method, agency (if Face to Face), DM list and gender. Monitoring and slicing by these factors will allow you to pick up any sub groups that are over or under performing, and adjust your strategy accordingly.

Cash Recruitment

When we look at a cash recruitment program, the metrics that need to consider are different.

Second gift rate is usually the first that is measured. As per attrition for regular givers, this can be looked at after three, six and twelve months. What needs to be measured, along with the second gift rate, is the value of the second gift as this will be a key factor in the long term value of the new recruits. Donors that upgrade on their second gift are flagging to you that they have the potential to donate more – looking at the asks these donors receive will help maximise their long term value.

Along with second gift rates and value, the number of subsequent gifts per year will be a driver of long term income. Those recruits that respond to multiple appeals in the year following acquisition will go on to be some of you best donors.
The proportion of new cash donors that convert to regular giving will vary depending on your strategy – testing of the best approach is ideal if you have enough recruits.

Ongoing Costs

The final element in any assessment of the long term return from acquisition is costs. The recruitment cost is fixed at the time of acquisition, but the ongoing costs can be controlled. By looking at the performance of the new recruits using some of the metrics outlined above, it is possible to quickly ascertain which donors justify the extra expenditure – such as donor care – and which groups of donors need to be cost managed.

Cost management of donors is particularly important if the recruitment contains large volumes of low value one off recruits. These donors need to be given the opportunity to make additional gifts, but by keeping an eye on their net contribution we can make sure that the program as a whole is not compromised by their poor return.
In the same way, monitoring the return from upgrade, additional cash asks and reactivations to regular givers will ensure the net return is maximised.

Creating reports to look at the performance indicators above, when combined with campaign analysis of the initial acquisition, will allow decisions about acquisition and donor development strategies to be made promptly and therefore profitably.

If you need assistance with recruitment analysis and planning, we’d love to help you out. Give us a bell on 02 8823 5800 or email us at canyouhelp@paretofundraising.com.

I’m going to do direct mail acqusition – what do I need to know?

By Fiona McPhee

4 musts for direct mail acquisition

Last year in Australia & New Zealand direct mail activity recruited over 75% of new cash donors and 6% of new regular givers. Whether you love it, hate it, are bored of it or wish you could just use digital to save on costs, the fact is direct mail remains a key opportunity for your donor recruitment.

If you are trying it for the first time, have tested and want to roll out with further testing or are a seasoned campaigner, it is worth considering the following essentials of direct mail acquisition.

1. Proposition/offer – be focused

One of the most common fundraising challenges is to work out what we can say to people that will convince them to support us. In classic marketing it’s called the ‘offer’; some call it a ‘proposition’.

The challenge isn’t finding something to say, rather finding the most important thing to say. A single offer will always beat multiple offers, but more too often I see acquisition fail because an organisation tries to communicate everythng they do and offer a multitude of ways to support in the one communincation.

A strong proposition can mean the difference between a mediocre communication and something that connects with the hearts and minds of your potential supporters.

This is your acquisition challenge because different people have different perspectives on what is important. Looking at this from the perspective of the wants and needs of your target audience is the best place to start.

2. Audience selection (promote swaps, co-ops, tepids, lists with names)

Direct mail offers the opportunity to target – it’s important to consider what types of audiences actually respond to direct mail offers when crafting your targeting. I often get told ‘I need to attract a younger (lets define this as under 40) audience’. After I ask ‘why’ and ‘have you considered whether the ‘older (lets define this as over 55) audience you successfully have working has been explored to its greatest extent’, I then pose the question ‘is direct mail the best channel to find this audience?’ More often than not the answer is no. Direct mail works for audiences who open their mail.

Considering the most responsive audience direct mail generates for cash donations and regular gift sign-ups to charities is over 55 (once we reach the 75+ age group RG responsiveness starts to decline), there is a plethora of opportunity and the decisions you make here are critical (and can have a heavy influence on your proposition or how you vary your proposition).

My basic approach here is:

1. Explore your own data set (house file) – most organisations will have access to data that is currently not actively supporting but has shown some interest in your cause (in order to end up on your database). This data (which I call tepid data) is often the most responsive for direct mail acquisition (considered targeting and testing is required – how data was obtained, recency and quality will all impact returns).

2. Swap with another charity (yes you can do it, possibly you will have to adjust your current privacy statement and advise your donors giving them the opportunity to opt out, but it is not illegal). Hands down, list swaps with other charities are generating the highest response rates for direct mail acquisition. Even if the charity is not in the same sphere as you (e.g. animal welfare can swap with human right or environmental causes and get brilliant response rates). Just make sure you are swapping like-for-like.

3. Join a data co-op. These programs are generating strong response rates for direct mail acqusition and as more charities join the stronger the opportunities.

4. Profile your best donors and rent look-a-likes. Robust profiles are delivering strong results in today’s market. Many suppliers will run a profile for free which will not only give some good geo-demographic insight into who your best donors are, but will then allow you to rent names that match this profile. Make sure you are not sending in rubbish for profiling and consider how robust the profile is when making selection decisions. Remember you need to profile the type of donors you want to recruit more of. What you don’t want to profile and therefore target are low value or lapsed donors.

5. Rented names will generate a better response than unaddressed for direct mail. I would de-prioritise unaddressed mailings until you have a proposition and pack that are performing well – then you can test. Just because the data is ‘cheaper’ does not mean you will get a better return – the far lower repsonse rates from unaddressed will likely mean your ROI is unsustainable.

3. Focus on why me, why now & benefits (donor and beneficiary centric)

If the proposition is the most important thing you will say to engage with your prospective supporter, the story you tell to support this has to be crafted with the prospective donor in mind. It needs to focus on the ‘why me?’ (as in why me the prospective supporter), the ‘why now?’ (why is it critical I consider this offer now) and the ‘benefits’ of the solution to the need you are asking people to support offer the prospective donor and your beneficiaries.

Focusing on what the audience thinks and feels about the need/problem, beneficiaries and the solution is the best place to start. If the audience you have selected likely has no awareness of the need, no likely connection or compassion towards the beneficairies and the solution is not something they can likely connect with, you need to reconsider your audience or your proposition.

Notice I didn’t mention your organisation? That’s because who you are, your history, where you are located, how many staff you have, your long winded/broad mission, who is on your board and which celebrities think your brand is great are not what is going to get these prospective donors to repsond.

If someone is going to engage with your direct mail piece, you need to focus on your beneficiaries (the people/animals/cause) that your offer is going to help the prospective supporter impact on.

Yes being a well managed, trustworthy, financially competent organisation is important, but that is not what motivates hearts. It is needed in the background.

Ask yourself:

  • What is the specific (remember we are being focused) problem or issue you are addressing? Because as a prospective supporter I am going to know about this and care, not know about it but care because you’ve told me, or it won’t interest me (and we accept that not everyone you contact will care).
  • Where will the money go? How will it be spent? Because as a prospective supporter I need to know.
  • How/why does it actually help people/animals/the environment? Because as a prospective supporter this is who/what I care about – I want to know that by doing what you are asking me to do (e.g. make a cash donation or sign up for a regular gift) I am going to change a life / solve a problem and feel really great about myself as a result.
  • What about this work is appealing or interesting to this audience? Because not everyone will care about every aspect of the work.

What messages will work for attracting and, equally as important, maintaining relationships with potential donors? Whilst many budgets will separate acquisition from retention activity your plans should not. Acquisition is merely the first step in the conversation – if you are not considering what you will say next and how it relates to what you said first, take a step back and review your plan.

4. Cheaper is not always better

Yes ROI is an incredibly important measure – it’s the first measure I look at when assessing the outcomes of acqusition activity. Pushing costs down is one way you can improve your ROI – if you have a successful campaign. A low cost pack that doesn’t work isn’t going to help your ROI. Similarly, mailing a really low volume as a test might keep your costs down but it will ensure you can’t test much at all and run a high risk of results not providing any statistically valid insights and therefore you will have no idea if the outcomes were by chance.

I suggest developing the best execution you can, keeping in mind you can always test removing elements or trying cheaper versions of elements through testing, but if your initial test does not succeed its hard to justify adding pieces in to further test.

I also suggest mailing test cells be no smaller than 25,000 units – that means if you are running one test you need to mail at least 50,000 units so that each test cell has at least 25,000 units in it. And by one test I mean testing just one thing e.g. a list or the letter or an additional component in the pack, not a combination of these.

What to expect from direct mail acquisition (yes I know you know, but have you made sure your boss/board is aware?)

Do not expect to break even if you are making a cash ask

  • If your boss or board expects you to make a profit from your testing, take the time to re-set their expectations. In the absence of previous results on which to base your roll out projections the more than likely scenario is your cash donor acquisition will not breakeven. Some things will work and others won’t – so overall the campaign will deliver a bottom line that may be brilliant or mediocre but critical is taking what did work and working towards you desired ROI.
  • Sourcing free print, lists or creative can mean the difference between being able to run a camapign or not, BUT the likelyhood of these ‘free’ offers being sustained long-term are low and as a result important learnings never get applied. If you are fortunate enough to receive ‘freebies’ always ensure your roll-out budget assumes you have to pay for everything – this is your future reality. And also consider the control you have over ‘free’ offers – if the creative is free but is not strategy please consider the value of undertaking the activity.
  • This is not to say breakeven and positive ROI direct mail acqusition activity does not happen. We have seen some brilliant success over the past 18 months testing pack components and offers that are doubling response rates against control packs and deriving donors at break-even and in some cases, a profit. Consider the use of external support to inform your activity – there is a huge amount of learning out there that an organisation is unlikely to ever uncover on their own.

Complaints
Expect them and be prepared, but don’t stop just because you get them (in fact be concerned if you don’t, as you have not hit an emotional nerve). If there is a belief within your organisation that every communincation you send should be universally liked and well received, then your program will likely be hampered by blandness.

Follow Up
The need to be ready to thank, engage and convert your new donors – if you don’t have a plan and resources for this when you lodge your direct mail acquisition, then DON’T MAIL. With fewer than 45% of new cash donors going on to make a second gift your acquisition spend will be wasted.

If you need help developing your acquisition proposition, managing your targeting, developing the most effective pack execution or managing your testing or assessment of results, please don’t hesitate to give Clarke Vincent a bell on 07 3015 4021 or drop him email.