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How to Raise More Money Through Great Direct Marketing (Part 1) A mini-course with Mal Warwick and Anup Tiwari


How to Raise More Money Through Great Direct Marketing Part One of a mini-course with Mal Warwick IWRM, Kuala Lumpur, Malaysia 24 May 2008 Copyright Š 2008 by Mal Warwick


Direct marketing is full of surprises. The process doesn’t always work in expected ways. So, get ready for a counterintuitive experience. IWRM Kuala Lumpur 05-08


Is the blue wall behind, or on the side?

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Are the parallel lines horizontal?

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In this session 1) 2) 3) 4) 5)

Where money comes from What direct marketing is all about What’s “direct” about direct marketing? What determines success or failure? What do donors want the most—and what happens when they don’t get it?

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1) Where does money come from?

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Two sources of funds

Institutions IWRM Kuala Lumpur 05-08

Individuals


Individual fundraising: globally

35% Institutions 65%

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Individuals


Pop quiz! ƒ Assume that there are just three sources of philanthropic gifts: corporations, foundations, and individuals. ƒ In the U.S., what proportion comes from corporations? ƒ What proportion comes from foundations? ƒ What proportion from individuals?

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Giving in USA, 2007 = $295 billion Individuals $223 Foundations

$37

Bequests

Corporations

$23

$13

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So, where do all those individual gifts come from?

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The Tale of the Lake, the Pond, and the Stream

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The Lake

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The Pond

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The Stream

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2) What direct marketing is all about

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Principal fundraising techniques ƒ ƒ ƒ ƒ ƒ ƒ

Special events Major gifts Legacies Trusts and foundations Corporations Direct marketing

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Direct marketing ƒ ƒ ƒ ƒ ƒ ƒ ƒ

Telephone Television Email Web site SMS Point-of-purchase Street

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ƒ Direct mail – Donor acquisition – Donor renewal – Special appeal


All fundraising is a process ƒ It’s not an event, or a series of events ƒ Fundraising is about building mutually satisfying relationships ƒ Think from the donor’s point of view ƒ Donor involvement is key

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The Four Phases of Fundraising Investment Æ Legacies Involvement Æ Upgrades Interest Æ Renewal Identification Æ “Acquisition” IWRM Kuala Lumpur 05-08


Consider the long term ƒ ƒ ƒ ƒ

The payoff comes only with time In numbers, individuals are reliable, predictable Requires donor involvement Acquisition Cost vs. Long-Term Value

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Two fundamental numbers ƒ ƒ ƒ ƒ ƒ ƒ

Acquisition Cost Recruiting new donors usually costs money Average net cost to recruit one new donor Long-Term Value Many donors give again and again Average net value over 3, 5, or 10 years

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Pop Quiz! ƒ

You have mailed recruitment (acquisition) letters at a cost of $10,000. 200 people responded, sending gifts averaging $40. All were new donors. What was your Acquisition Cost?

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Pop Quiz! ƒ

Over 5 years, those 200 donors contributed an average of 3 times per year. Their gifts averaged $60. What is the Long-Term Value of those donors over 5 years?

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3) What’s “direct” about direct marketing?

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The basic components of a “pack” ƒ ƒ ƒ ƒ

Outer (“carrier”) envelope Letter Response device Reply envelope

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Other potential enclosures ƒ ƒ ƒ ƒ ƒ ƒ

Brochure Flyer Lift note or lift letter Involvement device Front-end premium Buckslip

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The basic characteristics of direct marketing ƒ ƒ ƒ ƒ

Built-in response mechanism Measurable results Ability to segment donor files Ability to test for incremental improvements

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One response device

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Measurable results ƒ ƒ ƒ ƒ ƒ ƒ

Rate of response (%) Average gift ($) Cost to raise a dollar (CTRD) Net per donor mailed ($) Acquisition Cost ($) Long-Term Value ($)

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Potential for segmentation ƒ To cut costs by limiting quantity ƒ To increase net revenue by focusing on most responsive donors or prospects ƒ To tailor communications to donors by adjusting for their individual preferences and proclivities

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Segmentation ƒ Select some donors or prospects, omit others ƒ Key for cost-effectiveness ƒ Four components of segmentation: – Recency – Frequency – Monetary level – Source

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Act on the Pareto Principle

20%

80%

80%

20%

Number of donors

% of revenue

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A simplified segmentation Segment

Description

Notes

A

High-value

Very best donors

B

Core

Solid, reliable

C

Active

Fairly recent donors

D

Lapsed

No gifts in two years

E

Former

No gifts in three years

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Testing for incremental improvements ƒ ƒ ƒ ƒ

By comparing results using different lists By comparing results using different packaging By comparing results using different messages By comparing results using different combinations of media

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Example of a test ƒ Longstanding control package: $20 “Annual Membership” offer ƒ Test: $10 “Individual Member” offer ƒ A/B split, two panels of 30,000 names each

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Which Ask won? ƒ $20 Individual Membership? ƒ $10 Introductory Membership?

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Ask amount test Package

# gifts

Response

Avg. gift

$20 Ask

188

0.62%

$28.47

$10 Ask

246

0.82%

$24.02

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What you need to know about every donor ƒ The date, amount, and source of every donation ƒ Ability to measure frequency of giving for any period of time ƒ Ability to identify the first gift, the biggest, the last, the amount of cumulative giving ƒ Through what channel or source the donor was recruited, renewed, upgraded IWRM Kuala Lumpur 05-08


4) What determines success – or failure?

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Factors that determine success Copy Offer Format Design List

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List variables include ƒ ƒ ƒ ƒ

Donor vs. non-donor “Hot” vs. “warm” vs. “cold” Client vs. non-client Volunteer vs. non-volunteer

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The “offer” ƒ Next in importance to the list ƒ Offer: how much, why, how, benefits ƒ “Your gift of $25 will save the life of a malnourished child.” ƒ “Your gift of $25 will save the life of a malnourished child and we’ll send you free a beautiful calendar.”

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Many offers in fundraising ƒ ƒ ƒ ƒ ƒ

Membership or donor-acquisition Annual fund or membership renewal Special appeal Monthly giving program invitation Upgrade appeal

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5) What do donors want the most—and what happens when they don’t get it?

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Pop Quiz! Research demonstrates that the #1 desire of donors is: a) b) c) d) e)

Free gifts A personal visit from the executive director Prompt acknowledgement of their gifts Newspaper ads listing their names Invitations to donor parties

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Pop Quiz! Research demonstrates that the #1 desire of donors is: a) b) c) d) e)

Newspaper ads listing their names Personal visits from board members Free gifts Information about the programs they’ve supported Sex

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And what happens if donors don’t receive these things?

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Donor attrition: Year 1

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Donor attrition: Year 2

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Donor attrition: Year 3

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Donor attrition: Year 4

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Donor attrition: Year 5

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Donor attrition: Year 6

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Donor attrition: Year 7

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So, what do donors want? ƒ ƒ ƒ ƒ ƒ

To be treated as human beings, not statistics Kindness and courtesy in every contact Appreciation for their gifts Recognition that they are virtual partners Information that inspires their trust

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The two most powerful words in fundraising ƒ “Thank you!” ƒ Three keys to effective thank-yous: – Fast turnaround – Friendliness – Personalization ƒ Jerry Panas: “Say thank-you six times” ƒ Appreciation is more important than recognition IWRM Kuala Lumpur 05-08


“Almost without exception, donors said they wanted information, and if they received it, they would continue their gifts and increase them more and more generously.” —Penelope Burk, Thanks!

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That’s all for now, folks! ƒ ƒ ƒ ƒ ƒ

For more information: Mal Warwick Associates Phone +1 (510) 843-8888 Email info@malwarwick.com Web www.malwarwick.com

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Mal Warwick & Anup Tiwari_Mini course part 1 direct marketing  

How How to toRaise RaiseMore Money More Money Through ThroughGreat GreatDirect Direct Marketing ( Marketing (Part Part1) 1) A mini-coursewit...