“Nobody wants direct mail fundraising letters!”
Have you heard that one? There’s a general perception that direct mail fundraising is out of date, or not necessary now that we have inexpensive, effective email.
But as most fundraisers will tell you, direct mail still works. Data does not back up the assumption that “direct mail is dead.” Direct mail can yield a great ROI, if you base your strategy on donors and their interests, drawing them closer to your cause and inspiring loyalty.
The problem with direct mail isn’t that no one wants to hear from you, or email has eclipsed the need for it or even environmental concerns. The problem arises, as it does in all fundraising activities, when you try to apply a one-size-fits-all solution to an audience that expects personalization.
There was a time when mass messaging worked. Before the advent of automation tools, no one expected their nonprofit communications to be personalized unless they were making a major gift. A generic letter addressed to “Dear Friend” wasn’t off-putting when no other experiences were personalized, either. It was the best that could be expected.
That’s just not the era we’re in anymore. The modern donor receives personalized experiences from every brand they interact with and their expectations have changed. As automation and personalization rose in the for-profit sphere, donor retention continued to drop in the nonprofit world, and giving among low and mid-tier donors has been seriously impacted.
These days, impersonal institutional communications simply feel different. When your favorite brand emails you to tell you there’s a sale on a product you like or Netflix is ready with suggestions for what you, personally, might like to watch next, but your favorite nonprofit can’t seem to remember your name or anything about you, it’s hard to build trust.
It’s entirely possible for nonprofits to offer donors a personal experience informed by their behaviors and signals. In fact, it’s more than possible, it’s absolutely necessary. Nonprofits can’t risk handcuffing themselves to the old model, where they push their agenda on donors. Now, nonprofits need to respond to what donors are telling them instead.
This approach is called responsive fundraising and it’s the way to offer all of your donors the level of personalization that used to only be available to major donors. Run with automation, and responsive to donor signals and behavior, it appeals to the modern donor by recognizing their individual passions and interests.
Instead of sending every donor the same piece of mail at the same time, what if you could tailor the mail to their preferences and behavior?
For example, imagine a new donor makes their first gift, either online or off. This donor has different communication needs than a long-established donor does, and with a responsive approach, you can meet their specific needs. You can send the new donor a welcome series, to introduce them to the cause over time, while continuing a different communication schedule with your long-term donors.
This level of specificity seems overwhelming and labor-intense at first, but marketing automation can make it much less time-consuming.
It’s easy to see how automation applies to digital communications. You may already automate some of your emails, like an automatic welcome series or sending a receipt after an online donation. But automation can work offline, too, including in direct mail.
One of the Virtuous Automation features that helps nonprofits create true multi-channel engagement is Letters on Demand. Letters on Demand allows you to take a responsive fundraising approach to direct mail, making it personal, relevant, and timely.
Here’s how it works:
This is a very different approach than the mass mailing you may be used to. It’s not unusual for fundraising professionals to be skeptical at this point. After all, part of what makes direct mail “cost-effective” is the low cost per piece, which you may not get by sending smaller, targeted batches.
There’s good news on that front. First of all, you’ll target donors by engagement behaviors and their stage in their donor journeys. This can still create fairly sizable segments. More importantly, you’ll find that responsive direct mail has the potential for a much higher ROI than traditional mail. Even though cost per piece goes up, you still raise more money with this approach.
For example, consider a traditional campaign, sent to all current donors en masse. Imagine you’re sending to 10,000 donors, at a cost of $1 per piece. Once you add in your internal costs to create and produce the appeal, it costs you $15,000 to make and send the appeal.
This appeal is not targeted to donors’ interests, or informed by their behavior. Consequently, a lot of them are not going to respond. At a 7% response rate, with an average gift size of $50, your total revenue would be $35,000 gross, $20,000 after costs. Your final ROI is 75%.
Depending on how your own direct mail response rates are doing, 7% might not seem so bad. It pales in comparison to the potential of a responsive direct mail appeal, though, when you consider that you could see response rates more in the neighborhood of 18%.
Even if you spent more to produce and send it (let’s say 7,000 donors at $2 per piece plus internal costs for a total of $24,000), your response rate and average gift size are likely to go up when you use a responsive fundraising approach because your ask is targeted to the specific donors you’re sending the letter to. If your average gift size increased to $70 and your response rate to 18%, you’d be looking at revenue totaling $88,200 gross, $64,200 net. That’s a 153% ROI.
Do you see why the initial cost shouldn’t psyche you out of a responsive approach?
Responsive direct mail, powered by automation, lets you leverage all your data across channels. You can start small. Here are three ideas to get you started.
Instead of writing a general appeal to your entire audience, create segments based on their website behavior. Then write each of those segments their own letter, based on what they care about most.
For example, if you’re an organization with a mission about clean water access, you may have some supporters who visit the pages on your website that care about building wells, while others focus on disease prevention. Instead of trying to speak to both groups with one letter, write each segment their own letter. The work of writing two letters is more than worth the results of pre-selecting donors who are already engaged on a topic.
When a donor has made a gift, sending a thank you letter is a must. Nonprofit direct mail tools like marketing automation can help you make your letters stand out and feel personal, by importing relevant gift data.
A generic thank you letter is much better than no letter at all, but a personalized letter that acknowledges the details of the gift keeps building the relationship with the donor.
Where do your donors live? These days, it’s easy to feel like the answer is, “inside the Internet,” but they do have real, physical addresses and communities.
If your data reveals that you have concentrations of donors in specific geographic areas, consider creating specific geographic segments and targeting events just for them. Then you can help donors build relationships with each other and encourage hyper-local engagement by introducing them to neighbors who share their passion for your cause.
Don’t give up on direct mail. While our email inboxes become more and more cluttered, our postal mailboxes have some breathing room. Direct mail puts your message right into donors’ hands, with a physical reminder to take action.
Don’t settle for low ROI and decreasing response rates, just because it’s what you’ve always done before. Make your direct mail responsive, and see how your results change.
Traditional fundraising strategies no longer work. This blueprint explains why today's donor expects more, and how nonprofits are shifting to responsive fundraising.