Monday, April 8, 2013

Donor Fatigue Fatigue


Please let me tell you a story.

One day, the fundraiser (I will call him Bill) of a small state based charity asked a consultant (Ulrika) to help his charity with their tax time  direct mail appeal to mailed in May.

“Of course” said Ulrika.  After all, she had helped them before and it had worked well.  She had written an appeal that raised more than any appeal before from the 3,000 or so previous donors.  However, they had not done another appeal with her for a couple of years after that because the fundraiser changed and they embarked on another strategy.

Bill explained that the other strategy (focused on building awareness) hadn’t really done much, and their money was low.  However, they had sent a Christmas appeal in November and it had done well.

“Great” said Ulrika – “that means that there are enough donors still with us, so we should be able to do well with the tax appeal.”

“Oh no!” said Bill.  “The May appeal will be mailed to new people; we are worried that we have bothered our current donors a bit too much and there is donor fatigue.  After all, the Christmas appeal didn’t do quite as well as the Christmas before – even though we only mailed them once in between.”

Ulrika was quiet for a bit.  Oh dear, she was thinking, where do I start?

Can you spot the flaws in Bill’s approach?

Right now I am in San Diego a the AFP conference, with maybe 5,000 predominately American, fundraisers.  Chatting to people made me realise that Bill is not alone in misunderstanding a very basic and fundamental, unbreakable 'truth' of direct marketing.  The truth is the recency, frequency, value rule (also known as RFV or RFM where the M stands for Monetary value).

RFV is a mathematical rule that gives you three clues about the likelihood of a positive response from a donor who is mailed.

Recency - the more recent a donor donated, the more likely they are to donate again.  

The chart below shows this in action on a warm appeal - this is real data.  {By warm appeal, I mean an appeal sent to people who had donated before).  Although it is broken into years, the rule holds true over months too.



Frequency - the more times a person has donated, the more likely they are to donate again. The chart below is from the same data as the one above, and just looking at those who have donated just once, and those that have donated more than once. 



Recency and frequency work hand in hand with the fact that charities that mail more frequently - if they are mailing good stuff - have better 'life time value rates'.

Value - the value of a previous gift gives you the best clue as to the potential value of the next gift.  But even high value donors still follow the recency and frequency rules.



The process of acquiring a donor (getting them to give for the first time) is expensive, so charity must maximise the life time value of a donor.  

Bill is falling for ‘common sense’ over ‘reality’.  He thinks that most donors don’t like to be bothered too much asking them for money.  They probably tell him that too.  But the reality kicks in with a little direct marketing concept that works across all products, not just charities.

Look at the data, don't make assumptions based on feelings.  Generally speaking, mailing more frequently than once a year will INCREASE donor loyalty, not decrease.  A charity like Bill's with 3,000 donors should be mailing perhaps at least four and probably six times a year.

Donor fatigue fatigue is when you get tired of people thinking that they have donor fatigue when it simply isn't the case.

Sean

1 comment:

Usha Menon said...

Spot on Sean .... here is something about Donor Fatigue that I blogged about a few months back. http://ushamenonasia.com/blog/?p=37

Usha

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