Thursday, June 30, 2011

Measuring the success of emails

The Australian tax year ends 30 June.  Our system for making donations tax deductible requires people to make a tax claim including their donation.  Anything they donate is tax deductible.

This has a large impact on giving patterns of large donations, but also gives charities a useful deadline, and excuse to create urgency.  Such as John Jeffries has done in the email below.

I have received five of these types of emails in the past 48 hours, which is good stuff. Gets more every year; every charity should do something like this.

But what should a charity measure to assess the emails?  The usual answer is to look at actual responses to the emails.  This is useful, but doesn't tell the whole story, and could be looking at money that would have been donated anyway.

For charities with less than about 5,000 email addresses of donors, I am afraid they will never know for sure; they won't be able to get a statistically valid test answer.  But, on balance - send the emails and trust that your donors are not that different from everyone elses. 

For charities with more email addresses  Without a properly structured test, the charity can never know for sure how much extra was raised.  So test.

Assuming you are mailing everyone and using email to support the mailing, the best structure for the test is:

1) Complete your mailing targeting as usual.
2) Ignoring the presence or absence of email addresses, split each 'cell' or group of donors into two; control and email.  Assuming that your mailing expects about 10% response rate in to  (eg donors who have donated once, in last 12 months, $26-$50 could be a cell)
3) Email all the people in the email group that you can. It could be that only half of them have email addresses; that doesn't matter, still call them the email group.
4) Measure the total giving at the end of the appeal; control v email.  See which one raised the most net income, and look at total response rates. Check they are statistically valid. 

The alternative approach is to just select all those with email addresses, and email half of them - making sure the split is random and that each cell has about the same number of control and email subjects.  Again, measure total giving at the end of the campaign - not just email donations.

If you email me your test results, confidentially, I will add my interpretation for you.

Good luck.  If you are an Aussie charity and haven't sent a tax time email, you have about three hours to do it in...


Monday, June 27, 2011

How many times to mail?

Last week the UK Fundraising Group on LinkedIn began a thread about how often to mail people.

So how often should you mail?

At Pareto we look at data and try to work out what the optimum communications program should be to maximize lifetime value from donors. Donors are very expensive to get on board, and it is imperative that you look at your data to maximize return on that initial investment.

The most important factor for whether someone will give to you is whether they gave to you previously. Then, the most important variables are how recently and how many times. The more recent someone gave, the more likely they are to give again.So, mailing, emailing or phoning more often means that you are constantly communicating with donors more recently, and therefore more likely to get gifts from them.

Also, the biggest cause of attrition is not giving for a while (!). Fewer communications mean that the gap between giving is greater. If you don't communicate very often your attrition goes up, not down. Unless your communications are not very good.When it comes to asking donors for a monthly gift we also note that there is an optimum time. It does vary slightly, depending on cause, channel of solicitation etc but it is always going to be within a couple of months of a gift.

Four to six weeks is the right place to start. We are not alone with this approach, anyone else who measures life time value and optimum 'conversion' timings finds the same answer.

And this does not appear to vary between countries. We took that learning from data in the UK and applied it in Australia to find the same. Analyzing data across other countries gives us the same result.This approach is not aggressive, and is not subjective or an opinion. It is maths. Across any given data set, increasing communications tends to increase the lifetime value of that data set. Not just short term income, but overall giving.

Managed well it should also increase your number of bequestors.Jeff Brooks of the best fundraising blog, Future Fundraising Now advocates at least thirty asks per annum. That seems a lot, but he says that he has never seen increasing the number of asks decrease the total value given.The limit on the number of communications is likely to be forced on you for internal reasons - your capacity to produce multiple communications.

Also, increasing the number of asks is likely to increase total given, and increase retention but each time it also increases costs and reduces the amount given on that occasion. Consequently an initial increase in ROI as you go from say four to eight communications will reverse and you will probably begin to see a decline as you go from say eight to sixteen.

Even so, net income is the best measure - not ROI - from warm mailings to your own donors. It is better to raise $700k at a cost of $300k than $500k at a cost of $100k. More donors, more security, more room for error, more legacy potentials etc = more money in the end.
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