Donor Acquisition – Direct Mail

By | November 17, 2017

Fill the Bucket

Direct mail acquisition is the way you add new donors to your direct mail program. It’s a numbers game. If you’re doing it right, the acquisition itself should be a money losing proposition. In other words, your donor acquisition should spend $1.25-$1.50 for every $1 that you raise. Your donor acquisition should be pulling in DONORS, not dollars.

The reason for this is based on what’s called the ‘response rate’. Your response rate is the number of donations you get divided by the number of mail pieces you sent out. So if you mailed 1,000 letters and got 50 donations, your response rate is 5%. With donor acquisition, response rates tend to be between 0.5-2%. An excellent acquisition brings in 20 donors for every thousand mail pieces. The relatively low response rate is caused by the fact that you are mailing a lot of pieces to people who may or may not know your organization, and have either never given or not given in a long enough time that you consider them back in the ‘non-donor’ pile.

You have to spend money to make money. Donor acquisition enables you to grow your overall donor database, which will then begin to produce consistent revenue when you regularly cultivate your donors. Your cultivation mailings typically has a response rate of 5-10% and a cost of $0.05-$0.20 per dollar raised. The more donors you have acquired, the more donor you’ll have in cultivation and the greater your overall revenue.

How do you fill a leaky bucket

The reason for a constant program of donor acquisition is donor attrition. People in your donor cultivation file will stop donating for various reasons. A healthy direct mail program will know the rate of attrition and will plan donor acquisitions that will reverse that decline and include a healthy increase.

An image that is often used for the donor acquisition/donor attrition battle is a leaky bucket. You want to fill up a bucket (your donor file) but it leaks (donor attrition). You need a scoop (donor acquisition) that will replace the water that is leaking from the bucket at least as fast as it runs out. You can fill some of the holes to slow the leaks (donor retention), but the bucket isn’t ever going to be water tight.

Tell the story

The main character of the donor acquisition story is the mail piece, also called the ‘package’. It needs to grab the attention of the person who opens the mailbox with some ‘open me’ appeal. The first battle with donor acquisition is convincing a potential donor to tear open the envelope. Think about the fundraising letters that you have gotten from organizations that you’ve never heard of before. They use a variety of different strategies to get you to open the envelope. Some use images of people in the midst of hardship, some use ‘make a difference’ language, others use envelopes that are unusual shapes or sizes, even others will use a premium (like those letters that give you address labels or a nickel) just to get you to open a letter. Think about the fact that some organizations believe that it is worth sending out 100,000 nickels ($5,000) just to increase the number of people who open the letter that they have sent.

Once the envelope (sometimes called the outer) comes off, the package consists of the appeal and the reply device. The appeal is your opportunity to tell your story and convince a donor to invest in your organization. The style of your appeal should be tailored to the audience that you’re trying to reach. Again, think about the different kinds of mailings that you have gotten. Which ones have moved you to donate? Typically, the more successful letters tell the story of an individual who has a problem that your donation can solve. “Steve is a disabled veteran who doesn’t get enough to eat.” Speaking in generalities – “100,000 people are hungry!” – tends to be too abstract to be really effective. It’s hard to imagine 100,000 people who need something to eat. It’s easy to visualize Steve.

Once your appeal tells the story, it needs an offer. The offer in your letter might be, “Your gift of $100 will give Steve a Thanksgiving turkey, plus food for the whole next week.” The offer tells the donor what their donation will accomplish, in a such a way that it stirs a compelling need to donate in the reader. How to best do that is debatable, but the bottom line is that you have to ask for the gift. You should be trying to create a tension for the reader that is only resolved if they take out their checkbook and make a gift. If you are afraid of asking too boldly in your letter, the ask might get too mushy to really stir people to donate.

The reply or response device is what the donor uses to make their donation. These come in various forms, but often are a tear-off slip of paper attached to a business reply envelope (called a BRE). The reply device is important because it will often offer suggested giving levels, capture additional information, and give space for an additional call to action like, “Yes, I’d like to make this a monthly recurring donation” with a checkbox. The reply device will also have the name and address of the donor, as well as coded information (the string of letters and numbers at the bottom) that identify which acquisition mailing moved them to donate.

Plan for success

One of the nice things about direct mail is that you can do the math to plan your annual campaign. Let’s say that you’re an organization that has 10,000 active donors, and that you have an 80% retention rate. That means that next year, 8,000 of your 10,000 donors will still be giving. If you set a goal that you want to increase your total number of donors by 10%, then that means you have to add 1,000 donors (an increase of 10% over 10,000) PLUS 2,000 more donors (to replace the 20% lost to attrition.) To mail enough pieces to add 3,000 new donors, you divide the number of new donors by your average response rate (say 1.5%) to get 200,000. You need to mail approximately 200,000 potential donors to meet your goal of increasing by 10% year over year.

You don’t have to send 200,000 letters all in one shot. It’s a good idea to do several acquisition mailings during the course of your fundraising year. People give for different reasons and a ‘no’ today might turn into a ‘yes’ six months from now. To be successful, you should think about doing at least 2-4 acquisition mailings per year.

Remember, donor acquisition is a long-term commitment. If you want a strong direct mail program, you need to commit the necessary resources for acquiring new donors year after year. Your donor bucket starts leaking on day one, and if you don’t work diligently to keep it full to overflowing, you’re going find yourself looking into an empty bucket wondering, “where did all the water go?”

Fundraising got your head spinning? Don’t know quite where to start? Check out Key Concepts and learn the basic ideas that will help you build and maintain a strong and growing donor base.