Drilling for Truth

Drilling for Truth: The Power of Testing in Fundraising

December 7, 2004

By Carter Wade

Are you constantly testing in your fundraising program? Are you learning one or two new things every month? You should be. Here is a quick summary of recent findings from direct mail tests conducted by the Domain Group for a client involved in international-humanitarian work.

COMPELLING TEST RESULTS AND CONCLUSIONS

1. Donors read their mail. Sometimes there is a temptation to reduce the cost of a direct mail appeal package by eliminating the letter and relying on a double buck-slip form: one part a short personalized message, the other a reply coupon. We conducted two separate tests to determine whether including the letter would increase response. In both cases the packages that included the letter secured a higher response rate, higher average gift and higher net revenue than the packages without the letter.

2. Integration of efforts using different communication channels -- telephone and direct mail -- works. Two randomly selected audience groups of 10,000 donors each were mailed identical appeal packages. The test group also received a pre-mailing alert phone call. The response rate of the test group was 15.6 percent higher, and net revenue from this group was 45 percent higher than from the group that did not receive the call.

3. Donors appreciate a good deal. Two test panels of 10,000 donors each were involved in a matching-gift offer test. The direct mail packages sent to both panels were identical except that the test group's did not contain the matching-gift offer. The results were no surprise. The panel that received the matching-gift offer responded at a rate 56 percent higher than the group without the matching-gift offer. Net revenue was 53 percent higher from the matching-gift panel.

4. Package inserts or alternative response options might sometimes depress response rates. We tested giving donors the opportunity to sign up for ongoing electronic funds transfer by including a "send me more information" check box on the reply coupon. We also tested whether inserting an information flier would boost EFT sign-ups.

Unfortunately, when the EFT option was promoted with the check off box, response declined by 15.8 percent and net revenue declined 34.3 percent. When the promotional flier was added in addition to the check box, response dropped by 19.6 percent and net revenue dropped by 42 percent compared to the control panel that did not receive the EFT option. The take-away value from this test is to stay focused on a single message and response option in your direct mail appeal packages.

5. A cover letter included with newsletter packages sent to frequent givers can generate higher response. We included a separate cover letter from the organization's CEO with the newsletter package sent to frequent givers. The response rate from those receiving the cover letter increased by 16.6 percent compared to those who received no cover letter. When the cost of the cover letter was added to the overall cost of the package, net revenue remained unchanged; however, the cover letter might contribute to a stronger relationship and increase donor loyalty.

6. Personalized copy referring to a donor's previous gift can build donor loyalty. We often include copy in appeal packages that references the donor's previous gift amount and the project his gift supported. We have learned over the years that this type of referencing affirms donors and helps to accomplish the donor-loyalty cycle elements of affirmation and reporting. A recent test, however, indicates that such referencing doesn't always boost response.

A direct mail appeal package focusing on an emergency situation in Africa was mailed to two randomly selected groups. The test group's letter referenced their most recent gift amount, reported a few details about the project they had supported, and encouraged them to give again for the emergency project. The control group received the same package but no reference to their previous gift.

The control group outperformed the test group with a 5.3 percent higher response rate, 9.4 percent higher average gift and 16.7 percent higher net revenue. What did we learn from this test? While it's important to affirm donors for their previous giving, and report back to them on how their gift was used, the nature of the given appeal package might not lend itself to specific previous gift referencing. In this case, for example, the emergency nature of the package was probably diluted by the previous gift reference.

A FINAL WORD

You should be regularly testing in your direct mail fundraising program. But remember, not all tests can be universally applied. Your test results may be very different from what we have reported here. The make-up of your donor file, the nature of your cause, your brand positioning, and your communication style and content are unique to your organization.

Carter Wade is director of Strategic Planning at the Domain Group. He can be reached via e-mail at cwade@thedomaingroup.com or by phone at 206.834.1504.