Tuesday, July 28, 2015

Are Premium Acquired Direct Mail Donors Just As Likely To Become Regular Givers As Non-Premium Donors?

In my last blog, and in a recent article I wrote for 101fundraising, I mentioned that premium acquired direct mail donors have 'converted' to regular giving at about the same rate as non-premium acquired donors.

But in Australia charities are seeing lower conversion rates over time.  The rates are still brilliant - with return on investments (ROI) varying from 0.7 to over 1.0 in twelve months, but the decline is real.  At the same time these charities have invested more in premiums. So why the decline if it isn't premiums?

Two shifts in data that tell us why it could be...

1) Investing more in swaps and co-ops.

Swaps and co-ops get much better response rates and much better ROIs than other sources of data such as cold lists, subscriber lists and geo-demographic profile lists.  So they are good.

But the people who donate have definitely donated to charity before (which is why the lists work so well) and probably already been called by a charity and asked to be a regular giver. And they have already said no.  We know this because charities tend to not swap their cash and RG donors.

The obvious solution is to swap cash and RG donors, though I urge that you test this carefully and would be concerned that the volume is not sufficient to make this a viable tactic for most charities.

2) Donors are getting older (because of better targeting by charities).

There is a sweet spot for regular giving, and these three charts tell a great story.

The chart above includes face to face, but shows that basically, older people don't like regular giving as much.

When donors make their first cash gift they are around 63.

But older donors are better, and more likely to give again, so we see the average age on all gifts (ie most recent gift) they are much older.

As always, older donors are better.  But not as good as regular givers. But since regular giving only adds a bit onto the value of these donors (and should continue to do so) we like older ones anyway.

Finally, direct mail acquired donors have enormous potential value.

Us Europeans are obsessed with regular giving; we just need to come to terms with the fact that from direct mail cash acquisition is NOT step one of a two step regular giving program.

It is a multiple channel and multiple outcome activity where more value will come from further cash donations, major gifts, bequests and a little extra from regular giving.  Regular giving is the icing on the cake.

So it isn't directly premiums that are causing the lower conversion rates but many other factors, of which use of premiums is probably a minor contributor.

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