Here's a very simple way to make your direct mail fundraising a lot smarter and more targeted.
Separate your mailings to donors from mailings intended to get new donors.
I don't mean you must make these two activities into two separate and unrelated projects. That's a smart and time-saving thing to do. Furthermore, the creative differences between donor cultivation and donor acquisition are quite simple -- though important.
I mean analyze them as two separate activities.
Because economically, they are vastly different. Even though you can efficiently create and produce them together.
Here's the big difference:
When you're doing cultivation, you should be generating net revenue. Losing money usually means something has gone wrong.
But when it's donor acquisition, you will almost for sure lose money. And that's okay, because you are investing in future revenue.
And this is why you should never lump together the results of acquisition and cultivation, even though you treat them as one project.
Let me show you what can happen when you analyze them as a single activity: Let's say you did a mailing that included 1,000 donors and 9,000 prospective donors. The cost-per-piece was 75¢ for a total cost of $7,500. Your results to this project:
- Response rate: 1.35% (135 responses)
- Net income: $1,350 (average donation: $66)
- Return on investment: $1.20 for every $1 spent
Looking at this as a donor cultivation effort, you'd probably call it pretty weak. Looking at it as a donor acquisition, it looks very good!
The problem is, there are two very different truths hiding in the data. So let's take them apart:
Donor cultivation
- Response rate: 7% (70 responses)
- Net income: $4,850 (average donation: $80)
- Return on investment: $7.50 for every $1 spent
This is very good! But...
Donor acquisition
- Response rate: 0.72% (65 responses)
- Net income: -$3,500 (average donation: $50)
- Return on investment: 50¢ for every $1 spent
Not so great. In fact, this acquisition effort is on the edge of unsustainable. (Any time acquisition ROI is below 60¢, you are in failure territory.)
If you analyzed them together, you'd see either a discouraging failure that you should avoid doing again, or an exciting success that you should repeat.
But truth is you had one success and one failure. Knowing that, you can make smart choices.
Tomorrow: What should you do differently in cultivation and acquisition direct mail. It's not that difficult!
