I am not a prophet, I am not the son of a prophet, and I volunteer for a non-profit. And I’ve discovered through the years that charities who succeed at acquiring donors through the mail obey five immutable laws of direct mail fundraising. These laws aren’t carved in stone. But they should be.
Law #1: You Will Mail at Least One Campaign a Year
The only way to consistently grow your donor database and increase your revenue is to acquire new donors every year. If you go a year without mailing a donor acquisition package, you will experience a drop in current donors, a drop in new donors, and a drop in revenue.
Law #2: You Will Establish a Control Package
The key to success in direct mail donor acquisition is to acquire as many donors as possible at the lowest cost. The key is to establish as quickly as possible which direct mail package generates these results for you. Mail different packages to the same lists and see which package pulls in the most donors for the lowest cost. The winner becomes your control package. Mail that control package every year, and test other packages against it (test letter length, case for support, premiums, package design, inserts and so on), until a test package eventually outperforms your control package. Some control packages are so successful they are still in the mail after a decade.
Law 3: You Will Test Lists
The most important factor in your success at acquiring donors through the mail is not what you mail or when you mail but who you mail. You can mail a terrific letter to a lousy list and it will bomb. You can mail a mediocre letter to a terrific list and it can deliver acceptable results. The only way to discover which lists generate the most donors at the lowest cost is to test lists.
Law #4: You Will Interpret Your Results Correctly
Don’t get distracted by your Average Gift, Response Rate, Net Income, Cost Per Piece or Cost to Raise a Dollar. The only number that matters in acquiring new donors with paper and postage is Net Cost Per Donor Acquired.
Calculate your Net Cost Per Donor Acquired by dividing your net income (income minus expenses) by the number of donors acquired.
The biggest mistake you can make is thinking that a donor acquisition mailing is a failure if it loses money. Direct mail donor acquisition mailings almost always lose money. But they gain donors. The key metric is not how much money you gained or lost, but how much money you had to spend to acquire each new donor. Don’t look at costs, but cost-effectiveness.
Law #5: You Will Focus on Lifetime Value
You can acquire hundreds of thousands of donors cost-effectively every year but still fail at donor acquisition. That’s because the success of each acquisition campaign depends on how many new donors go on to make a second gift, a third gift, a fourth gift (you get the idea), and how many of these same new donors eventually increase their giving, join your monthly giving program, contribute to your capital campaigns, give a major gift and leave a legacy in their wills.
The key to donor retention, subsequent gifts and increased lifetime value is stewardship. Thank your new donors promptly (with a thank-you letter), welcome them to your organization (with a welcome kit), demonstrate how their gift is making a difference (with a donor newsletter), and ask them for a second gift (with a fundraising letter) sooner rather than later.