Insights from Mailing Analysis Will Improve Your Fundraising Results
Results for direct mail fundraising should be analyzed either annually or every 6 months, with a focus on comparison to prior mailings, the prior year’s outcomes, and the budget.
Top level mailing goals may include increasing the net amount raised, gaining new donors, improving response rates, the average gift and the number of gifts. Other goals might be important as well, depending on the program.
Mailing analysis can highlight imbalances in the program, or address problems identified during the annual fund analysis. For example:
Annual Fund Analysis shows that the program is losing donors faster than new donors are joining. Retention and recovery of donors are lower than benchmarks. Mailing analysis might then reveal that new donors are not being renewed, more deeply lapsed donors (three or more years lapsed) are not being solicited and thus not recovered, that donors are not receiving donor impact reporting between appeals, or that donor impact reports/newsletters don’t include a reply envelope.
Poor renewal rates can lead to the examination of the messaging, style of writing, design issues, or an audit of stewardship.
Annual Fund Analysis benchmarking shows that the number of second or third gifts per donor per year falls below the expected benchmarks. Mailing Analysis might show that donors are not being solicited for multiple gifts during the year.
The annual percentage of new donors is too low. Mailing Analysis shows that many prospects are not responding to the solicitations.
What influences direct mail fundraising performance?
You must drill down into the details to understand the results and whether the goals for mailing have been achieved. Here is a list of factors we examine during Mailing Analysis, which we’ll further discuss and provide examples for below.
What was the mailing ‘package’ – that is, the design and contents of the mailing?
a. What type of mailing was it? An appeal, or donor impact reporting?
b. How well was it written and designed for the purpose of effective fundraising? In other blogs and articles on this site we teach best practices and show many examples of writing and design.
c. Were personalized notes added to a segment of the mailing for your best donors?
d. Was there any testing of copy or design?How large was the mailing list and what was the balance of current donors, lapsed donors, non-donors and other segments?
Were recipients asked for a specific amount and if so, how much?
When was it sent?
How many times have you communicated or appealed to the donors throughout the year?
Because of the interplay of these and other factors, results can vary greatly between different non-profits, as shown in the following tables of anonymized results.
The Benefits of Mailing Analysis
The benefits of mailing analysis include:
recommendations on how to improve results
increasing loyalty
raising more money
Focusing on cost doesn’t lead to improved results; the Net Raised is a far more important metric. It is driven by communication, both via solicitation and stewardship. Be sure to communicate through direct mail, email and social media throughout the year.
“Donors feel deeply rewarded any time they have a chance to see the ways in which their gift is having a real impact on the cause they’re supporting. By making a practice of showing donors, on a regular, consistent basis, how their contributions are actually solving a problem, nonprofits are rewarding their donors for their commitment.”
Range of Performance for Fundraising Mailings
What is the typical size, response rate, etc. of the mailings our customers send?
In the following table we present numbers for mailings we have recently analyzed. (The numbers in each row are not for the same mailing but show the smallest, median or largest for the metric in the column heading for all mailings analyzed).
Letter appeals that mail at bulk non-profit rates.
Letter appeals that are returned to clients for personal notes.
Benchmarking Mailing Performance
Response rate, average gift and cost to raise a dollar are common metrics, and we routinely measure them. The cost shown here is what the nonprofit pays us for our services, which usually include copywriting, design, and project management and always include printing, mailing and postage. Cost of labor for the staff at the nonprofit is not included in these numbers.
At an organizational level, these metrics can vary widely because the goals or practices of the organizations differ. That’s why using a metric like the oft repeated “direct mail cost to renew donors shouldn’t exceed 20 cents to raise a dollar” isn’t very helpful. For example, mailing donors from only the last 24-36 months can improve the cost to raise a dollar now, but can have a negative impact on your program over time by failing to recover lost donors. The important information is in the details: what were your goals, what did you do and how did you measure results. Is your donor pool and net amount raised improving over time?
What is the Year over Year Performance?
This year over year comparison shows the increased giving many organizations experienced during the first year of the pandemic. It also shows that the decision in 2020, to significantly increase the number of mailings by reaching out to all donors, including those who had already given that year, resulted in higher costs but also brought in many more dollars. The question around these 2022 results is, why did the total gifts, average gift and net raised drop, even though the response rate increased? The answer was found in a shift of several large gifts from the fall mailing to the end-of-year mailing.
Comparison of Mailing Formats
As most nonprofits know, adding personalized notes to appeal letters improves response. Five Maples routinely returns dozens or hundreds of prepared letters to our clients, chosen by them so they can add handwritten notes. After staff or board add notes, the letters are mailed first class. The figures below show how much more is raised for this segment (while recognizing that the donors chosen are usually those with the highest capacity and affinity).
Sometimes mailings are sent at first class bulk rates, as shown below. The higher results for these are not due to the first-class stamp, but rather because these letters usually are part of a major donor or special project appeal. They are usually mailed at the end of the year to arrive just before the holidays.
Fundraisers are often surprised to hear that a donor-impact-style newsletter usually raises more than it costs to print and mail – if it is put in an envelope with a reply envelope included, as shown below.
Goal of the Mailing
Some fundraisers (or their boards) are afraid to ask donors for gifts more than once during the same year. But as the numbers show, including current-year donors in each appeal to ask for an additional gift results in the highest response rate and the lowest cost. The few donors who object to being asked more than once can be marked in your database to ensure they only get asked once.
Unfortunately, while acquiring new donors through rental lists might be part of the solution, this almost always results in a loss for most organizations. We always recommend mining your current database (your “house list”) of contacts, participants, friends, alumni, visitors, patients etc. before considering a rental list. The response is much better and the cost much lower. Always focus on how to add more prospects to your house list.
What is the Recovery of Donors by the Year of their Last Gift?
We consistently find that soliciting all donors lapsed up to six years back is profitable. In other words, it increases the net amount raised for all mailings during the year.
But for some organizations going back further also makes sense.
Here is our advice.
Test going back 10 years in your end of (calendar) year mailing because it usually has the highest response rate for recovery of donors.
You can select certain deeply lapsed donors – for example, those who previously gave more than two gifts, or those you feel might have more affinity to your organization.
Lapsed donors who have received critical financial or life-recovery assistance, or who were very involved in the past, such as alumni or volunteers. They may now have reached a point in their lives in which they have the capacity to give or are thinking about their legacy, and the time may be right to ask them. You won’t know that up front; the only way to find out if going back 10 or even more years is right for your organization is to experiment.
What are the Results and the Return on Investment (ROI) for different segments within the mailing?
Net Amount raised and Cost to Raise A Dollar show the relative profitability of mailing segments.
But do you consider the future value of a new or recovered donor? The value of those future earnings should be included in the decision as to who to include in solicitation and stewardship efforts. When businesses decide how to allocate their investments, the expectation of future earnings is a crucial factor in the decision-making process. But most fundraisers don’t have an easy way to calculate that. We help by projecting future earnings for your mailing. Here’s how it works.
First, we identify your key annual fund retention metrics and expenses, as in this table (where we have used typical values for a well-functioning fund).
We use values specific to the organization to calculate the future value of a solicitation. In this solicitation example we see that each segment, except for the members who are not yet donors, is highly profitable. This raises the question, why aren't your members who haven't yet made a donation in addition to their membership, becoming donors at such a low rate? Exploring that question can lead to changes in communications, stewardship or engagement that improve the conversion of members to donors.
In another example, we tested 4 different rental lists for donor acquisition. As usual, all four lost money on the first solicitation. But when we look at the future value of new donors gained, we see that the HH list is actually a break-even investment and the BF list has quite a reasonable ROI.
Caveat: this method of calculation is missing two elements.
For one, it doesn’t include the value of staff time; it is just looking at out-of-pocket costs. With a little more work, staff time cost can be included. You’ll probably find it adds about 20% to the cost of the initial mailing.
Secondly, it is difficult to predict the number of major donors that might emerge from these new donors. In our example, using 5% as the average annual growth in gift value is too modest if several large donors are gained over time.
One other learning from an ROI calculation: it shows you the difference improving retention and average gift can make on the future value of your efforts.
Matchbacks: Resolving the attribution of online gifts and white mail
During the year, some checks will be received in the mail without a reply card and so it may not be clear whether to attribute the check to a mailing. This is what fundraisers call ‘white mail”. In addition, there may be an increase of online giving after a mailing, raising the question whether these online donors were responding to the mailing.
Comparing these difficult-to-attribute donations to the mailing list to determine who was probably responding to that mailing is called doing “matchbacks”. It offers a more accurate picture of the mailing performance. Five Maples does that routinely during mailing analysis and will report back on how many and who were matched back, as in this example.
Testing to Improve Performance
We can run A/B tests on messaging, design, typography, letter length, ask amounts or other aspects to find whether changes will improve performance. We know how to randomly split lists into balanced testing panels, control variables, calculate statistical power of the proposed test and report statistical significance of the results.
Ask String Analysis
We’re specialists in using custom ask amounts to maximize donor contributions. Ask strings are the custom amounts on a reply card or giving page that suggest different gift amounts for each donor or prospect. Variable ask strings mean donors are prompted with a gift suggestion that fits their own giving history. We’ve found that presenting the donor with these gift choices increases the average gift.
Below you can see the movement from one gift level to another based on the custom ask string each donor received on their reply form. Ask 4 is usually their last gift amount. Ask3, Ask2, and Ask1, are progressively higher amounts. The improvement in the amount given typically starts at 5% and upwards: in this case it was an impressive 20%.
Of course, there are other elements that may influence how donors respond to a mailing. But we find that the number of donors increasing their gift when given custom suggestions almost always exceeds the number decreasing their gift. By contrast, when donors are not asked for a specific amount, on average more donors decrease their gift than increase it. Experienced fundraisers know that asking for a “stretch” amount works, whether in direct mail or in-person asks.
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Consult our fundraising data analysis services or contact us today at garyh@fivemaples.com for a free consultation.
