Long live direct mail!
By Sharon Tillman, Senior Account Director
Each year as charities start budgeting for the coming financial year, I’m asked this question – is direct mail fundraising still worth the investment?
In a world where there is increasing activity in digital communications and fundraising, research shows that direct mail is alive and well. And it refuses to go away – because it works!
Pareto Benchmarking shows, year after year, that direct mail:
1. Is the second most valuable stream (next to F2F) for generating donor income.
2. Delivers the largest volume of new donors.
3. Is still the number one method used to target middle donors – those giving $1,000 – $5,000.
4. Delivers the largest pool of bequest prospects.
5. Delivers the most valuable monthly donors with the lowest attrition rates.
But in an increasingly multi-channel world, why is direct mail still the backbone of most successful fundraising programs?
1. Direct mail appeals to the donors that matter
Generation X, the Baby Boomers and the Matures make up more than half of all charitable giving in Australia.
And they’re active in the digital space and consider themselves to be ‘digitally savvy’.
But, according to Australia Post – and in line with Pareto Benchmarking findings – they still prefer direct mail to any other forms of outbound marketing or fundraising. And they’re more likely to respond to direct mail than any of the other generations – even it they sometimes give their donation online.
That’s because these are the generations that were receiving direct mail long before digital communications existed, making it all a bit more familiar.
But this doesn’t mean that our key donors only make their donations via direct mail. Research shows they’re seamlessly moving between all channels. But how they use those channels is what, as fundraisers, we must understand.
2. Direct mail drives a lot of online giving
Today, fundraising success is rarely about a single-giving channel. And attribution tracking (identifying how one channel influences responses in other channels) shows us donors are interacting with our organisations in many ways.
At a presentation at the Non-profit Conference in Chicago, a keynote speaker showed an example from a museum that found that only about 13% of their direct mail campaign revenue could be attributed directly to the mail piece. Instead:
– Almost 40% went to on-site donations
– 26% went online
– 17% went through the retail site
– 5% telephoned their donation.
This is a clear example that shows that if you aren’t yet on board with attribution tracking and analysis, you’re most likely missing income directly related to mail.
And if you don’t have that information, it’s difficult to make an informed decision about investment into a direct mail strategy.
3. The use of direct mail is changing
It’s expected that direct mail costs will continue to go up and ROI and retention will likely continue to go down. And in most instances, these are the things you can’t control.
What you can control, however, is using direct mail strategically so you can reduce your own program costs and generate the highest net revenue.
The future of direct mail is niche fundraising at volume – sending to highly targeted and qualified prospects, to get a better return from those who have been asked.
For example, Pareto works with charities that have chosen to change their strategy and reserve more of their direct mail for higher-level donors to remain cost effective, while utilising more digital communications and fundraising for lower-level donors.
But, whether you have a well-considered strategy in place, or whether you’re new to the direct mail space, my recommendations are
– Don’t view direct mail in isolation – have a strong middle donor and bequest donor program in place to capitalise.
– Be prepared to make a long-term investment into testing and monitoring – and have realistic expectations.
– Commit to investment in data analysis and insights. Good data management is the bedrock of effective direct mail. And sophistication in segmenting and targeting continues to improve.
What are Pareto’s direct mail predictions for 2019?
– Charities that focus on the donor experience and great service via all channels will have a thriving direct mail program.
– Direct mail acquisition investment will continue to move from a quantity to quality approach – fewer new donors but better lifetime value of those that are recruited.
– The focus will shift from donor numbers to donor lifetime value (and how engagement, satisfaction and commitment influence this).
– The equation of number of donors out and number of donors in no longer works – that’s because a longer-term donor is worth 3, 4 or 5 times the annual value of a new donor.
– The organisations that will thrive will be those that have:
1. A long-term direct mail strategy and budget
2. Best practice direct mail tactics (focused, tangible, targeted & personalised)
3. Additional opportunities for donors to support their cause via more asks, maintained number of asks, different ways to show support etc.