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Marketing Challenge
A non-profit organization, which annually solicits charitable donations from its
members, introduces a new charity.
Direct Marketing Application
Non-Profit/Educational Fund-Raising
Background
This 325,000-member non-profit organization conducts fund-raising campaigns on a
regular basis to support several charities that have been important to its members.
These campaigns (which we also handle) have become a tradition for the organization
and a core group of member/donors are very supportive of them.
The organization had plans to start a new charity and was looking for ways to support
this effort. A direct mail fund-raising campaign was one of the strategies.
Because of our experience with past campaigns, we were asked to develop a fund-raising
program for this newly created charity — one that was still unfamiliar to the membership.
What We Recommended
Our first recommendation was to target only the best prospects by mailing only to
past donors, realizing that the vast majority of members never respond to donation
requests. It was expected that mailing to non-donors — particularly with a new charity—was
not going to be productive.
We also recommended that past donors be further segmented by the amount of their
donation. This would allow us to "version" our direct mail packages to
individuals according to their gift history. In other words, to maximize the donation
size, we used different donation forms depending on a donor's history.
In addition, we recommended creating a full-page direct response ad and insert for
the organization's magazine. This would allow us to reach the entire membership without
incurring the substantial cost of mailing to the large number of non-donor members.
As for creative, we recommended a personalized direct mail package that included
a standard #10 window envelope with teaser copy, a personalized two-page letter,
donor form, reply envelope, a four-color brochure and a lift note.
What We Did
We worked with the organization's data processing department to segment the membership
list by gift history. In all, six segments were created, including a segment for
non-donors.
We then created a single direct mail package in six versions — one for each segment.
Each letter and each donor form featured a personalized salutation and individualized
bar code which allowed for automated response tracking.
Mailings were sent to all of the donor segments as well as a random selection of
the non-donor group (as a way to confirm that non-donors would not respond).
How It Worked
Overall, the program achieved a 375% return on investment. All of the donor segments
brought in more money than was spent while one segment produced an ROI of more than
3,500%.
As predicted, the test sample of non-donors produced very poor results bringing in
less than 10% of its mailing cost.
The magazine insert failed to cover its costs but did increase awareness throughout
the membership and it is believed (although it cannot be substantiated) that this
awareness helped increase response to the direct mail.
Part of the success of this program was our ability to reduce costs by excluding
all but the test sample of the non-donors from the mailing. Instead of mailing to
the full membership of 325,000 (at a cost of approximately $225,000), we mailed to
just 66,000 past donors and 10,000 non-donors members (at a cost of approximately
$55,000).
Subsequent Activity
This was a solo mailing primarily because it was a new charity being introduced
to the membership. Future fund-raising would become part of the organization's general
fund-raising effort which supports all of its charities. |
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