Direct Mail Fundraising June 23, 2005

We send out a lot of direct mail and we track response rates. Frankly, I hate sending direct mail because it wastes a lot of material -- you're very lucky (or good) if you get more than a 3% response rate, and while it's a great marketing tool, it does make me uncomfortable. as a socially responsible CEO. But not so much that we don't do it as we test different ideas for Mission Research--direct mail does work. Most of our sales are from word of mouth and direct mail (though that will change in the next 3 months).

If you're like most nonprofits, you send direct mail to raise money. If you aren't, you probably should start. It works. The broader your support base, the more stable you'll be. And like Mal says in his books, you need to test everything and measure everything. You might get 1% response rate from one letter and 5% from another. Do you know, or do you just have a feel for what works? If it's the latter, you might learn that you can improve on your gut (what I call "informed intuition") by adding some basic metrics to your mailings, tracking who gets the mailings, tracking what messages work, and tracking your return on investment. We're building some of this into GiftWorks, but it's likely it will take until next year to really get it right for our customers (they'll tell us, I'm sure).

Consider this: if you spend $10,000 (crazy, right?) of your $100,000 budget on a single direct mailing that reaches 10,000 people in your area, including people in your database and people outside of your database from a decent list. Let's say you get a 2% response rate--just 200 people. If you get an average of $50 per person, you've covered your costs--$10,000. But that's just the beginning of your nonprofit's relationship with these new donors. Most will donate year after year, and it's likely some will increase their giving as your relationship develops with them. So that $10,000 investment now will pay back perhaps $50,000 over 5 years.

So your goals might be to raise money now. But sometimes it's important to plan for the future, and raise money, yes, but get new lifetime donors, too. I'm definitely no guru. Mal Warwick is a guru and has a lot of great articles he lent to us you should check out. But I know we do better here when we follow the same principles Mal talks about in his books and articles. Let me know what works for you--I look forward to learning what's worked for you!