The Problem with Direct Mail …

18 Jul The Problem with Direct Mail …

18 July 2023

By David Allen, Development for Conservation

WARNING: The contents of this post have a high geek factor and may be harmful to your sense of world order.

For all the harping I do about treating all the numbers in your communications as suspect (See All Numbers are Guilty Until Proven Innocent), that only goes for what you communicate with others. The fundraising numbers you collect – and pay attention to – are really important FOR YOU. For example, here’s one for me:

2,000

As in: I’ve only met one single land trust organization that consistently has 2,000 or more individual donors each year and does not have a significant direct mail donor acquisition program. That organization is the Ice Age Trail Alliance and is as much a hiking club/trail organization as it is a land trust.

Here’s why there’s not more:

Imagine that 2,000 donors gave your organization money last year. The highest one-year renewal rate I’ve seen is about 85% (and they didn’t have a lot of new members coming in). The norm is 70-75% and for many organizations, it’s lower than 70%.

But let’s say that yours is 80%.

That means that 400 donors who gave you money charitably (not including ticket and merch buyers) last year will not give again this year. For your land trust to stay at 2,000, you’ll need to replace them.

Or more.

Every year.

Just to break even.

There aren’t many alternatives to direct mail that will help at that level.

Also, the number 2,000 is the number many consultants (including this one) who have studied land trust sustainability use as an estimate of the minimum number of donors a staffed organization needs to be sustainable over the long run.

If 2,000 is the number needed for sustainability, and it takes a robust direct mail acquisition program to achieve and sustain that number of donors, why aren’t we all busy getting really good at direct mail?

And sustainability isn’t even the best argument.

Let’s look at this another way: If your database will allow it, go back 5 years (to 2018) and look at the population of individuals who made first gifts (donated for the first time) that year. Now track those donors forward to the end of 2022 and calculate how much money those donors have given over the five years. The result is called the 5-year Value of these members, and if you divide by the number of donors, you’ll have the average 5-Year Value per donor from 2018.

In my experience, which admittedly is based in direct mail, it cost about $150 (range = $80-300) to recruit members five years ago and about $30 per year to send them information, invitations to events, and renewal letters. I’ve been collecting this information for land trusts each year for about six years. My data set now has more than 40 different land trusts included.

The MEDIAN land trust experience is $800, but the RANGE goes up well over $6,000. (The statistical median is the one in the middle when the data are all lined up in order.)

You can track this information for your organization, too, and it would be a good idea. Go back as far as you can and start looking at the “classes” of new donors making first gifts to your land trust each year. If you can, measure the donors you recruited by different methods. Then track the 5-Year-Value per donor at 3 years, 5 years, and 10 years if you can get it. Look at the trend lines and see what stories you can tell from the data. (If yours is NOT one of those included in my study to date, please send me your 2016, 2017, and 2018 data. I would love to include it.)

Here’s where I’m going with all this: I believe the 5-Year Value for direct mail donors is different than for social media donors, project donors, and event donors. In short, I believe direct mail donors are worth more. And so far, the science data bears this out.

Here are several more things I have come to believe:

• The decision to go paperless (including eschewing direct mail recruitment) almost always costs you money in lost donations.
• It doesn’t matter whether you call your annual donors “members” or not. It does matter how you treat them. They need to feel like they matter – like they belong.
• The great majority of people responsible for land trust fundraising across the country have no experience with direct mail acquisition programs at all.
• That includes people who DO have experience with crowd-funding, text-to-give campaigns, Giving Tuesday, email and social media metrics, and so on. And some of them are now consultants, steering their clients away from direct mail.
• An organization can lower the cost of acquiring donors by mailing to better lists and by writing better letters.
• An organization can increase the 5-Year-Value by not giving up too easily on donors who ignore renewal letters, by asking for more money each year, by engaging current donors in project campaigns, and by actively marketing a planned giving program.

So again the question: If $150 investments today result in $800-6,000 returns in five years, why aren’t we all busy getting really good at direct mail?

I’d love to hear your thoughts. Here are a few of mine:

• It’s expensive up front: Acquiring 400 new donors each year from direct mail would require an annual investment of $60,000-80,000 or more.
• It doesn’t return profit right away: If it costs $150 to recruit a donor, and the donor gives $35 as their first gift, you’ve lost money the first year. In many cases, fewer than half will renew the first year, so even if those who do renew were to increase their gift to $50, you’re still behind after two years. It’s in the third year that investments in membership begin to pay off.
• It’s intimidating: Direct mail is technical writing, and it’s counter-intuitive. To the uninitiated, it doesn’t make sense.

“This stuff shouldn’t work, or at least it shouldn’t work here, in my neighborhood/town/city/county. I don’t like it, therefore no one will like it.

• There are bad stories out there: In a perfect world, brokers wouldn’t rent-out old lists, and printer/mailhouses wouldn’t endorse nonprofits sending out bad stuff. Organizations that send bad stuff to bad lists flop, and the flopping stories get shared. Which reinforces the narrative that direct mail doesn’t work – even though it does with good letters and good lists. Better than anything else out there.

The real problem with direct mail is that we don’t believe the science. We in the land trust community hold up our use of science as a point of pride. When our “gut” says one thing and the science says something different, we go with the science – that or we contribute to the science by conducting peer-reviewed experimentation.

But we’re unwilling to consider behavioral science applied to fundraising as science. We don’t believe it. Instead we rely on our “gut.”

When everything settles out, you want donors who make initial gifts, renew those gifts with increases every year for decades, make major gifts (for them) to a project or several they fall in love with, and leave you in their will.

Sustainability gives you an argument to use direct mail to find such donors. 5-Year-Value gives you an economic metric to consider as well.

How are you measuring your donor acquisition strategies, and are non-direct mail strategies working for you?

(BTW, if YOUR organization has more than 2,000 individuals who write you checks every year AND you don’t use direct mail to recruit them, I’d love to know about it. Aside from the “exception that proves the rule” idea, I’m also intrigued by innovative success stories.)

Cheers, and have a great week!

-da

PS: Your comments on these posts are welcomed and warmly requested. If you have not posted a comment before, or if you are using a new email address, please know that there may be a delay in seeing your posted comment. That’s my SPAM defense at work. I approve all comments as soon as I am able during the day.

Photo by Daniel Brachlow courtesy pixabay