The more money a charity raises, the more it can do. More money means helping more people, saving more lives, and solving more problems.
Yet many fundraisers wish for nothing more than a small group of extremely loyal donors. The more loyal the better. 100% retention is the ideal, anything less and there's something wrong. No donor should ever quit, for any reason.
Large and expensive fundraising programs that generate lots of one-off gifts or regular donors who quit early are frowned upon. Often called 'churn and burn', the whole business of mass market fundraising is not just imperfect, it's sometimes conflated into a sin and labelled unethical.
So is it better to have a small group of very loyal donors, or a much bigger group of less loyal ones?
Let's start with the perfect ideal:
Charity A's donors are 100% loyal. The last time the charity asked these donors for money, every single one responded. And each donor gave a whopping $500 average gift.
That kind of charity is seriously donor-centric. And talk about best practice, there would be case-studies galore -- and quite a few awards -- in store for any charity that accomplished what so many fundraisers can only dream of -- perfect donor relationships. No attrition, whatsoever.
And let's contrast that with a charity that has 50% retention. Half their donors never gave again. What's more, the donors who did give gave much less, only $100 on average.
It sounds like a meat grinder. Every year the charity has to get new donors to replace all the ones they're losing out of this leaky bucket calling itself a fundraising program.
Subtract the rhetoric and add up the numbers
It would seem like higher retention rates are better. A higher donor lifetime value must be good. And attrition must be bad. If half your donors are leaving, there must be a problem.
But scale matters too. And scale is often overlooked in this type of discussion. You might have really loyal donors who are each worth a lot, but how many of them do you have? And is that really raising you the most money?
In the example above, Charity A has 100% retention and an average gift of $500. But how many of them do they have? Let's say they have 1,000 donors.
Charity A raises $500,000.
And let's take Charity B with it's revolving door of donors. A measly 50% retention rate and a paltry average gift of only $100. Let's say they have 20,000 of these people they call "donors", cough, cough...
Chartity B raises $1,000,000.
Now factor in economies of scale
Scale, or how many total donors you have, makes your income higher, but it also reduces your costs, by spreading them out across a much larger number of people. The bigger you get, the less it costs to ask each donor.
Let's say it costs $100,000 in staff and administration costs to run each of the programs above.
Charity A raises $500,000 a year. So $100,000 takes out 20% of the money raised. Dropping them down to net income of $400,000.
Charity B raises $1,000,000. So $100,000 reduces net income by only 10%, down to $900,000 -- more than double the other charity.
Let's say that admin costs are actually higher for Charity B. Even if admin costs were double ($200,000 a year), the charity would still end up with $800,000 net -- still double the other charity.
In fact, even if admin costs were $500,000 a year, Charity B would still raise $500,000 net. And that would still be more money than what Charity A raises.
Test, Measure and Reinvest Profits -- Grow Even Faster
Some people look at a 50% retention rate and see red. They hear "lower average gift" and roll their eyes. But think of these as just numbers, that's all they are. Instead of making value judgements about them, use them as the financial measurements and tools they were meant to be used as.
A charity has a 50% retention rate. So what. That's not good or bad. It's just a number. The average gift is $100. Costs are $500,000 and total income is $1,000,000.
That means that every dollar you spend on this program turns into two dollars by the end of the year. It's like a bank account that pays a 100% interest rate. If you were presented with the opportunity to open a bank account with a 100% interest rate, what would you do?
You would put as much money into that bank account as possible. In fact, you could mortgage your house to the bank for, say 8%, and put that money into the account earning 100%.
The same thing happens with a "high-volume" fundraising program that can reliably and measurably generate an attractive return on investment. As you put more money into the program, it gets bigger, it gets progressively cheaper to run, and is increasingly profitable over time.
Never doubt that a small group of caring people can change the world. But a much bigger group can change a lot more, much faster.
At the recent Fundraising Institute of Australia Conference, Guide Dogs Victoria won the Best Acquisition Direct Mail Pack for large organisations raising over $5 million a year in Victoria.
But they should have pocketed the award for the ‘Pack that keeps giving’. Except that the award doesn’t exist.
Why aren’t we celebrating longevity? Is it no longer ‘de rigueur’? Clearly not if this direct mail pack is anything to go by.
When I was working in the music industry, legends like Geoff Travis of Rough Trade Records (the man who gave us The Smiths) used to tell a young exec like me: “It’s not about the first album, it’s about the second one. If you can survive the financial and artistic quagmire of your second album, then you’re in with a chance.”
Well, what can I say… ‘move over Beyonce!’: Guide Dogs Victoria has lodged the same acquisition pack no less than 13 times and stayed at the top of the charts with an average 9% response.
So what is Guide Dogs Victoria’s secret behind this inspiring success? Having been lucky enough to be part of the team that created this pack, I think I might be able to answer that: the pack ‘that keeps giving’ keeps giving to prospective donors too.
It all boils down to the 3 Ps: Personalisation, Premium gifts and People Power. The stories and pictures, the asks and the rewards are structured in such a way that people feel they get the attention they deserve.
In other words: ‘give and you shall receive’.
Guide Dogs Victoria’s acquisition pack got a 15% response when it first went out. By the time it reached its thirteenth lodgement it was still pulling nearly 12%. 33,000 new donors swelled the ranks of Guide Dogs Victoria supporters at an average cost of $15.
$15 per new donor. That’s about 3 cups of latte in the CBD in your region.
So next time you get through your third cup of latte in a day, imagine you just acquired a new supporter for your organisation.
There’s a widely held belief that premium direct mail is somehow bad for you. It’s not “donor-centric”, it hurts your “relationship” with your donors, I’ve even heard people claim it “reduces lifetime value”.
Nothing could be further from the truth.
This so-called “donor-centric critique” is nothing new, it’s been around for over 30 years. After three decades, if premium direct mail really did reduce lifetime value and if it really did wreck financial ruin on any charity that tried it, then these designs would have died out a long time ago. In reality, there is more premium direct mail being mailed now than ever before. And for a very good reason – it works and it continues to work year after year after year.
The reason for that is simple. Premium direct mail is the most donor-centric form of direct mail design possible. The best performing premiums often have little to no relevance to a charity’s mission – but they are very useful, desirable, and therefore more relevant to the donor themselves.
Greeting cards, for example, work best when the charity’s logo is removed. They work even better if they are designed for any occasion and completely blank on the inside. And greeting cards work the best when several are sent at once, with a mix of themes and designs. Greeting cards that “match” get much lower response.
The best way to get a premium to work better is to add the donor’s name to the premium, not your logo. If you put your logo on a pen the response rate drops. But put the donor’s name on the pen, and the response rate rises, put their name on a refrigerator magnet (as shown above) and the same thing happens. Personalise as many items as you can, and watch your response rate soar.
Also, remember that lifetime value is a financial calculation. It is an actual number. Lifetime value is not a merit badge you get for adhering to a vaguely defined set of principles labeled “donor-centric”. Lifetime value is mathematical, it’s not a philosophy.
By rejecting premiums, by tossing out name labels, by focusing solely on “storytelling” and earnestly reporting to your donors all the compelling examples of your “transformative work”, you do not by definition increase your lifetime value.
Lifetime value is driven by 1) the response rate to each appeal, both cold and warm, 2) the frequency in which you ask, and 3) the average gift.
If you yank premiums out of your program and the response rates drop dramatically, which they usually do, then that will make your lifetime value go down, not up. If you “rest” your donors and ask them less frequently, your lifetime value will also go down, not up. If you replace a house appeal with “donor care” or a “soft ask”, your lifetime value goes down, not up.
And likewise, if you add premiums to your direct mail, response almost always rises. If you use really good, really well tested and really effective premiums your response rates rise dramatically, and that also makes lifetime value go up, not down.
If you use premiums for both cold mail and warm appeals, the response rates will rise for both. And when that happens, your second and third gift rates rise, and your donor retention improves.
In other words, using premiums to increase your lifetime value is donor-centric. You are mailing things to donors that they value, they appreciate, and that they can use. In return, they reward you by donating at a higher response rate each time, and more frequently. That is what donor-centric fundraising is really all about, and premium direct mail is what actually delivers it.
Have you ever received a gift from someone who clearly chose something that they like, not what you like? That’s what lots of charities do today, in the name of being “donor-centric”. They send their donors stuff the charity likes, not stuff their donors will like or want. Donors punish charities that do that. They send less money.
Send your donors premiums that they will like, not what you like, and you will discover what donor-centric premium direct mail is really all about, and why it has worked so well for so many charities for so many years.
By Derek Glass
Yesterday like many Sydneysiders, I went to Martin Place to leave some flowers and I was very deeply moved by the outpouring of compassion I saw from so many people, and from people of the Islamic faith in particular. I was also inspired by the I’ll Ride With You (#illridewtihyou) campaign on twitter that unfolded yesterday morning and went viral around the world. It made me very proud to live in this country. I made a short video tribute to the experience, called Hold my hand, I’ll ride with you.
My thoughts and prayers are with the family, friends and victims of the terrible tragedy this week in Sydney. And like so many Australians, I truly believe that the only way to get through this is together.
By guest blogger David Diamond
I think those of us who are in fields associated with marketing of any type do ourselves a disservice when we pay too much attention to what we're doing. We call it 'measurement', in the name of business justification for continued funding. But, really, it's just a lame way for us to avoid having to innovate.
What we miss is the chance to zoom out and take a good look at the things that have truly shaped our world and society. Was Stairway to Heaven written using survey results? Was Gone with the Wind directed by a focus group?
If we want to connect with people - donors in this case - I say we stop focusing on what could have been done slightly better and start focusing on what could have been done completely differently. Innovation is not just a marketing term; it's what drives things forward. If we always use the returns from Campaign A to mold Campaign B then we are adjusting, not innovating.
I've been told that celebrity spokespeople can be good for driving donations. Why is this? Is it mere recognition? If that were the case, you could put anyone in the news on a campaign. I think it's about people wanting to hitch their wagons to the people who make life interesting.
Then we, as marketeers, study the hell out of it until we release Boston's second album - perfectly calculated and perfectly unnecessary.
People are becoming increasingly sophisticated when it comes to how things work. They respond to surveys differently than they used to. And they value 'good' better too. Great NPS codes are tough to come by simply because few people are willing to exude gratitude for what is considered an expected level of service or quality.
And this is how it should be. Bad results are our educations - They're infinitely easier to work with than good results because good results encourage us to do the same thing over again. And this means, of course, that we cease to innovate and we lead ourselves to the next bad result.
I figure that marketing exclusively by measurement is for marketers who have run thin on ideas. And I think that is what happens when our focus is backward instead of forward.
There's a saying in aviation that a pilot must stay ahead of the airplane. It means that safety is jeopardized when a pilot is responding to an unforeseen current situation rather than planning for the next. I see that in Marketing too much. If you hit a patch of bumpy air while flying, you fly through it and report it to others so they can avoid it. You certainly don't go back and try to do it again.
Focus on the negative and you'll never move forward because you'll burn all the emotion you'll need for tomorrow's inspiration, and you'll be compelled to fix yesterday's bumpy air.
David Diamond directs global marketing for Swiss digital asset management software maker, Picturepark. He has authored DAM Survival Guide, and Flight Training: Take the Short Approach. He was awarded the 2013 'DAMMY of the Year' for his educational contributions to his industry. Diamond was a founding member of the Academy award-winning 1980s pop band Berlin. Connect with him on LinkedIn.
By Derek Glass
It is often recited that one disgruntled donor speaks for an average of 10 disgruntled donors.
The statistic is often recited whenever a donor complains about a charity’s fundraising activity. The most common complaints are about face-to-face programmes, telemarketing and direct mail, particularly premium direct mail designs.
Anyone involved in any of these direct marketing media is familiar with the problem. You talk to thousands of people on the street or over the phone, and some are going to complain. It’s almost impossible to avoid.
If you send out 20,000 pieces of mail, and someone complains, and you multiply them by 10, they are still only speaking on behalf of 0.05% of your donor base. 99.95% of your donors do not feel the same way.
But what about the people who did respond with a donation? And do they also represent others like them? Absolutely. Every person who responds to your appeal is – likewise – representative of 10 others who did not take up your offer but wish they could.
So if you send out a mailing to 20,000 people, and you get a 5% response rate, you can multiply that number by 10 and it’ll give you the corresponding representative number of people who feel the same way.
A 5% response rate means that almost 50% of the people contacted feel the same way. They support your cause and would like to give. If you see a 10% response rate, virtually everyone on your donor base agrees with you and supports you. And the fact they didn’t give right then, right now, often has nothing to do with you at all.
Much of the problem comes from people’s natural bias towards negative thinking. It’s much easier to imagine the worst possible outcome. It is much harder to embrace the positive aspects of a situation, even when those positives far outweigh the negatives.
And this is a perfect example of negative thinking bias. We all know that one person’s feedback speaks for 10 other people. But often, the multiplier is only used when counting up the number of complaints you receive. Rarely do we consider the fact that every instance of positive feedback – like a donation – also represents the mindset of 10 other people as well.
By Derek Glass
In the 1990’s, I worked for PETA as their Director of Membership Development and helped expand PETA from their base in the US throughout Europe and eventually to Australia. I would like to say that all happened because of my diligent application of direct marketing “best practice”, however, nothing could be further from the truth.
PETA launched onto the international stage thanks to a series of ever more over the top publicity stunts. It all started when 80’s supermodel Christy Turlington famously posed for the very first I’d Rather Go Naked Than Wear Fur ads.
Since then, hundreds of other celebrities throughout the world have posed for the same or similar ads for PETA. In Hollywood today, when you get offered a PETA ad, you don’t say no. It’s a sign “you’ve arrived”.
Then there was the famous red-paint attack on Naomi Campbell while she was modeling a fur coat on the runway for Fendi in Milan in the mid 1990’s. The incident only happened once, but the publicity was so big that even today, when you mention “PETA” to almost anyone, the first thing that comes to mind is red paint splattered on a fur coat.
Working at PETA, I never really knew what to expect each day. Like when they decided to name serial killer Jeffrey Daumer as PETA’s Man of the Year. Apparently, when not eating humans he was a strict vegetarian.
Yet out of all this seemingly unhinged chaos, PETA at the same time successfully expanded its fundraising, including a successful direct marketing program, a wide range of merchandise, a huge social media following, a large and very generous major donor base and a well developed bequest and planned giving pipeline.
And the same can be said of Greenpeace, which originally shot to fame on the basis of riveting videos from the 1970’s showing activists in small boats positioning themselves between a pod of whales and a giant Japanese whaling ship.
Amnesty International’s profile and fundraising really took off once they made the connection between a pen as a device of torture, or as a device for freedom.
And WWF is a great example of how something as simple as a well designed logo can become so iconic it is virtually irreplaceable.
And that is why I think the Motor Neurone Disease’s “Ice Bucket Challenge” is an unmitigated success, and deserves none of the criticism it’s getting from various quarters of the fundraising profession.
It is amazing singular moments – like the Ice Bucket Challenge – which have launched many of the best known and most successful charities today.
by Amel Bendeddouche
Every fundraiser will tell you the same story: “Gladys Smith left us a fortune. We couldn’t figure it out. She wasn’t on the database.” Any decent bequest officer will give you the real story: “Actually, Gladys was a donor. Every year she bought Christmas cards from us.”
No one gets bequests out of nowhere; someone has triggered the gift. Many charities in Australia try to recreate that trigger with a tick box wedged into their direct mail reply forms or a question embedded in a donor survey.
But how much is a tick box or a question worth? How much time and effort is it going to take you to establish if it’s worth anything, and, if so, how much and when will you receive the monies?
Imagine a 42-year old mother of two signing up at a shopping centre for $20 a month. She then ticks a box in her welcome kit stating her intention to leave you a gift in her Will. At her age, she isn’t going to die for another 40 years. And 40 being the new 30, she’s hardly likely to run off to her solicitor to have her Will written. She might add you in a Codicil years down the line - if she’s still considering you as her charity of choice, if she’s got anything left to leave, and if her children don’t take the lot.That’s three big “ifs” in a row.
So, if tick boxes and survey responses are only worth the effort the donor put into them, then what kind of communication works better? And who should it be targeted to?
At Ask², we love to ask. And the clients who do best with bequest fundraising send communications that are clearly and only asking for a gift in a Will. The entire discussion is not bashful at all. On the contrary: the charity offers up lots of information, and the donors provide lots of details in return. If you are serious about acquiring bequest donors, the key is to ask. Ask to be put in the Will. Ask about what you’re going to get. And don’t pretend to be doing something else.
A bequest appeal we recently produced for one of our clients resulted in 2% of the mailfile telling us: “I’ve done the deed and here’s what I’ve left you.” All very nice but why were we statistically confident that these responses were worth x amount of dollars and would ‘convert’ in x amount of time? Targeting.
Targeting is where you set aside recency, frequency and total value of donation – and bring in the following big guns:-
Age: An 85 year-old who is not recorded on your database is a more valuable prospect than a 42 year-old monthly donor.
Gender: Women generally outlive men and they make the greatest proportion of charitable donors.
Marital Status: ‘Ms’ or ‘Miss’ fare even better than ‘Mrs’.
Children – the less children a donor has and the older they are, the more will be left over for your charity.
Factors such as income, home ownership, and postal code are also predictive of higher or lower bequest values. Postal codes, combined with other variables, can also be used as a “proxy” for age when that key data element is not available.
Those key insights are changing the landscape of bequests marketing in Australia. My 80-year old neighbour recently received a charity letter asking me for a bequest. She had never previously communicated with that charity. Brilliant.
Targeting a bequest letter to a very high age demographic can generate responses that will produce income within a short space of time, and subsequent bequests can then be tracked over a 5 year timeframe.
I’ll assume the response rate to this letter to be in the region of 0.20% and sent to 50,000 prospects. Over 5 years, let’s say that 10% of the respondents die and ‘convert’ into actual income, with an average bequest value of $50,000. If the cost per piece is about $2, you net $400,000 in the first 5 years. That’s the topline.
If you want to get a more detailed picture, factor in the kind of bequest that’s been left to you, how long it will take for full distribution to occur. That’s why asking what type of bequest has been left to your charity is important. Information about distribution and timing can be garnered from your Finance Director.
And bear in mind that Wills are a goldmine of information. They tell you about the types of gifts that are left to charities, but also which other organisations you’re sharing the cake with. They also tell you a lot about the people who leave you a gift.
Lastly, take a look at the world around you. Bequests are subject to interest rates and other geo economic factors. Why not ask your donors to make their gifts index linked?
Bequest fundraising, when communicated the right way and targeted the right way, can be a measured and predictable fundraising channel. You can control what is happening. You can tell the story of Gladys Smith because you wrote it.
Many fundraisers think they need to “wean” donors off premiums once they’ve acquired thousands of them with premium cold mail designs. And as soon as the weaning begins, those donors financially punish you for it.
One of our clients gets an 18% response rate from cold mail, using an overseas produced premium design. Then they mail those donors a domestically produced non-premium design and get a 9% response rate.
What does that say? It says donors want premiums, they respond to them. They are not happy with just a letter, a story and a reply form. No matter how good that story is, the premium makes even more of an impact.
Some people point to this kind of result and say that premiums don’t work, the donors have poor retention. Nothing could be further from the truth. Premiums increase first gift rates, and when you continue to use them, they increase second, third and subsequent gift rates too. You just have to keep using them.
Premiums lift the response rates to house appeals in just the same way they lift the response rate to cold mail. Use them in both programs and your house appeal response rates will jump just like your cold mail does.
Then, add a gift to your thank you letters. It’ll get you a higher response to future appeals than if you mail just a letter alone. Use premiums in all communications. Add premiums to your newsletters, to your bequest communications even. The Cancer Council NSW’s bequest packs offer a scenic Harbour Cruise, for example.
Every time you contact a donor, send them some kind of gift. Reward your donors every time you talk to them, and they will pay much more attention to you over time.
Donors don’t hate premiums. When a premium doubles your response rate, that’s feedback. Really, really positive feedback. Why on earth would you take it away?
It is fashionable in fundraising these days to say that fundraising is not about raising money. Instead, it’s an alphabet-soup of other things, like: acknowledgments, bonding, communication, donor centricity, engagement, friendship, grace, harmony, inspiration, joy, kindness, loyalty, nuturing, one-to-one, passion, quality-over-quantity, relationships, storytelling, thanks, understanding, vision, worthiness, xanadu, yoda, and even Zen…
... but it’s not about money.
Forget what the dictionary says, many fundraising experts swear hand on heart that fundraising has nothing to do with money. One guru recently went so far as to cast money as the “dark force” in a comic strip in which fundraisers are superheroes and money is the villain.
But whenever I hear that sort of palaver from the fundraising intelligentsia, I’m not just reminded of the dictionary’s official definition of fundraising, I’m also reminded of the opening lines of Suzi Orman’s famous book The Nine Steps to Financial Freedom.
The book begins with a simple quiz, and asks you questions like “Do you keep money in numerical sequence in your wallet?” and “Do you check your bank balance each day?” and “Do you know how much you spent on groceries last week?”
In other words, do you pay attention to your money? Like any relationship, if you don’t pay attention to your money, it will go away and end up in the hands of someone who cares about it more. And likewise, the more attention you pay to your money, the more you get.
And this is why I cringe whenever I hear someone going on about how fundraising isn’t about money. Dismissing, ignoring or minimizing the role money plays in your fundraising “strategy” is an intoxicating idea, but it can also leave a nasty financial hangover.
Money should sit at the center of your relationships with donors. You should know exactly how much you raise from each donor. Along with their name, you should have a monetary value affixed to every donor. Pay attention to the money you raise. Care about the money. Think about it. Count it, every single day.
The more attention you pay to your charity’s money, the more you will raise.
I guarantee it, or your money back.
Being a face to face fundraiser in LA, Chicago or New York really stinks. Your colour-coordinated outfit and ipad is simply no match for the drunks, bums, and hookers who long ago figured out the best street corners and who defend their turf with zeal.
Being a media buyer for a charity using DRTV to recruit monthly donors in the US is even worse. 1 “tarp”, or enough ads to reach just 1% of your target market, can cost $1 million. You need $10 million just to “test” DRTV as a tool to recruit monthly donors.
It’s been like that for over 20 years. That’s why a long time ago US charities learned how to use direct mail to acquire monthly donors with tremendous success. Hundreds of US charities bring in over $1 million a month from monthly donors – acquired by direct mail. It’s a simple technique, but requires looking at both direct mail – and regular giving – in a completely different way.
Here in Australia, the average age of a cash direct mail donor is about 70 years old. The last thing people that age want is something that automatically debits their savings each month. That’s why when charities try to convert cash direct mail donors to regular giving, they often get a low response rate.
So Bill Them Later
To get around this problem, many charities simply offer their direct mail cash donors a monthly “billing” option for their regular monthly gifts. They do not force the donor to hand over their credit card or direct debit details. Instead, each month they send the donor a “reminder”. It’s also a great opportunity to share news and the latest updates on your work.
If you have a donor’s credit card or direct debit details and you run their monthly pledge through each month, you usually get a 90%-99% “response rate” depending on the donor’s tenure.
When you send the donor a monthly reminder, and you leave it up to the donor to decide each month, you don’t get anything close to a 90% response rate. It’s more like a 40%-60% response rate.
In other words, you can mail these donors 12 times a year, and get a 40%-60% response rate. And you can send donor care to your heart's delight each month too!
This dramatically increases the lifetime value of cash direct mail donors by simultaneously increasing the response rate to each appeal, and increasing the mailing frequency to 12 times a year.
Some people may look at a “bill me later” option for regular giving as a “glass half empty”. But just run the numbers and it becomes very obvious, very quickly that it is indeed a glass half full. And that half-full glass holds millions of dollars just waiting to be raised.
Jeff Brooks from Future Fundraising has been talking a lot of smack about the marketing communications and branding sector of late. Apparently, we’ve all been doing it wrong – particularly when it comes to charity branding.
And he’s written a book that – finally! – explains to all of us “stupid” people the right way to re-brand a charity, because until now the rest of us have been too clueless to have figured it out without his help.
Then, Roger Craver from The Agitator decided to inflame the debate even more with an article entitled When Branding Rears its Ugly Head. Which begins by saying: “Sooner or later someone in your organization, totally devoid of fundraising knowledge (likely the CEO, a board member or the spouse of one) is going to come up with the brilliant idea of changing your organization’s name.”
Very few charity CEOs I know are “totally devoid of fundraising knowledge”. Any CEO offended by that is justly so. And the suggestion that they leave decisions about branding to their spouses is even more offensive.
And if the idea does comes from a board member, then, they are the CEO’s boss basically. And most board members are very successful individuals in their own right, and the fact they sit on the charity’s board (possibly several charities’ boards) and they sign off on the budget, the fundraising strategy and the fact they are ultimately responsible and accountable for the outcomes means that, in fact, they have a lot of fundraising knowledge, thank you very much.
Nevertheless, Roger Craver inflames the discussion further, saying: “Heaven help you. Because if they succeed your organization’s likely to be out of business or at least headed for a fire sale. Nothing, and I mean nothing, is a more certain pathway to organizational suicide than an ill-thought-out expedition to the Land of Re-branding. You might as well just shoot yourself now and save the time and money.”
And then he just keeps throwing petrol on the fire...
"It's an old scenario, but one that seems to be occurring with greater frequency. The Chair or CEO or some Board member becomes enamored by the 'branding consultant'. After all, the consultant's done it for soap, deodorant and even some Silicon Valley whiz bangs. Spare me."
This sort of vitriolic, superlative-laden denunciation of an entire discipline of marketing is what is well and truly "stupid". And it is an absolute certain pathway to career suicide if you try to spew the same kind of bile at your CEO and Board - and especially if you throw that kind of mud at any of their spouses.
Jeff Brooks' and Roger Craver's latest broadsides against branding are nothing new, or original. They are walking down a well-worn path of direct response fundraisers who believe that they "know fundraising" - and assume that branding people don't - and that they therefore know better how to create a brand.
It's hubris. And any decent CEO or Board member who hears it will rightly call it that way.
Save yourself a lot of trouble and avoid buying into this kind of rhetoric. You are not doing your charity any favours by taking this sort of view - and you are not doing your career any favours either.
PS - You might notice that we haven't put forward an argument for why re-branding works. That's because there's no need to. Branding is a well-established - and proven - way to make money, and to raise it. And, it is not going to just go away. Smart fundraisers accept this fact of life. And instead of spitting the dummy, they embrace the process and give it the best possible chance of success. If you approach a re-branding exercise with a thicket of negative thoughts in your head, you will sabotage yourself and your charity's investment in branding at the same time. Nobody wins that way.
For years, it’s been the dirty little secret of direct mail fundraising – thank you letters don’t work.
One problem is that a thank you letter can cost the same, or even more, than the cost of sending the original solicitation. Especially since they are sent in smaller volumes and there are lower economies of scale. If you add in staff time, per letter, it’s even worse. Here’s how that brutally affects the bottom-line:
Average Gift: $50
Response Rate: 10%
Gross Income per letter mailed: $5.00
Cost per letter mailed: -$2.00
Net Income per letter mailed: $3.00
Cost per thank you letter: -$2.00
Net Income after thank you letter $1.00
Thank you letters take a big “bite” out of your net income, on a unit price basis. In order for the thank you letter to cost-justify, you need the response rate or the average gift to rise the next time you mail each donor. Sounds like a nice idea, but the problem is that the increase has to be, well, really big.
In fact, in the example above, the response rate needs to rise from 10% to 14%, or, the average gift has to rise from $50 to $70 - all on account that you mailed the person a thank you letter, and no other reason. And even if that happens, it means the thank you letter simply didn’t lose money. It still has zero net financial impact. In order for the thank you letter to win, to raise more money than not thanking a donor, the increase has to be even higher.
Take the problem and bend it over
A lot of people dismiss this kind of data by relying on non-financial and highly qualitative arguments to justify sending thank you letters. Some people cite surveys that claim donors “like” thank you letters. But that is no guarantee the donor will give more, and what someone says versus how they actually behave is often starkly different.
Others simply suspend rational reasoning entirely and profess blind faith that maybe, someday, one of these donors will leave a massive bequest – all because of a thank you letter. But it is far more likely that won’t happen, either.
This “problem”, however, turns into a gold mine when you simply turn it over and think about it completely differently – by asking for an extra donation in the thank you letter.
Average Gift: $50
Response Rate: 10%
Gross Income per letter mailed: $5.00
Cost per letter mailed: -$2.00
Net Income per letter mailed: $3.00
Cost per thank you letter: -$2.00
Response rate to thank you letter ask: 10%
Average gift: $50
Net Income after both letters $6.00
In this example, by adding an ask to your thank you letter, you will also get a second response rate and average gift. This second response adds $5.00 to the net income per piece. It’s a significant change in the net financial performance of your campaign, over the same period of time.
Turbo Charge Your Retention
The additional response you get by asking for a second gift in your thank you letter also dramatically increases your second-gift rate, not surprisingly. The number of people upgrading from one gift to two, and from two gifts to three starts to happen at twice the rate it was happening before. This increases the proportion of “multi-donors” in your database, which causes the overall response rate for all appeals to rise over time. The lifetime value of each donor roughly doubles.
Many people simply assume that asking for money in a thank you letter will cause future response rates to fall. It does the opposite. Because it systematically increases the average frequency of donation, your response to future appeals rises, your retention improves and your attrition falls.
And then finally, there’s the question of how to ask for a donation in a thank you letter. This is the really easy part. We all know how to ask for money, we do it every day. There are lots of good causes and lots of important programs that need financial support. It’s really quite easy to think of a reason to ask for money in a thank you letter. All most people have to do is just get past the “taboo” associated with it.
The Road Not Taken By Robert Frost (1916)
TWO roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;
Then took the other, as just as fair,
And having perhaps the better claim,
Because it was grassy and wanted wear;
Though as for that the passing there
Had worn them really about the same,
And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.
I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I--
I took the one less traveled by,
And that has made all the difference.
The Road Not Taken is one of Robert Frost’s most famous and most misunderstood poems. It was originally written as a letter in early 1915 to the successful and widely published Welsh literary critic, biographer, and novelist Edward Thomas, who had recently turned his own hand at poetry, thereby crowding in on Frost’s turf.
The poem was originally sent to Thomas as a playful and gentle jibe about his often shifting interests, from one form of writing to the next. Always wondering and regretting where the other path may have taken him.
Frost was surprised when Thomas failed to understand the poem in the same way. Instead, it inspired Thomas to enlist in the British Army in July 1915, as World War I broke out, despite being a mature
married man who could have avoided enlisting. He was killed on Easter Monday, 9 April, 1916 in France at Arras by a concussive blast wave of one of the last shells fired in the battle, as he stood to light his pipe.
Today, Edward Thomas is remembered in Westminster Abbey’s Poets’ Corner and is regarded in English literature as the great “soldier-poet” of World War I.
The Road Not Taken was published in 1916, as part of Robert Frost’s seminal collection of poems Mountain Interval. Frost, who passed away in 1963, was widely acclaimed throughout his lifetime, winning four
Pulitzer Prizes for poetry and is regarded as one of the greatest poets of the 20th century.
Today, The Road Not Taken has been printed on billions of greeting cards throughout the English speaking world and inspires millions of free-thinking, entrepreneurial, self-styled iconoclasts in every walk of life.
But if you read the poem a few more times, and understand its historical context, a much more nuanced and cautionary message emerges.
Nevertheless, many people who read the poem simply cannot see the contrary second message embedded within it. The first reading is so intoxicating; some can never read it any other way. But the two
messages are still there.