Focus On: Lists: Prospecting Lists that Work
You can have the most deserving cause and a highly compelling appeal, but your direct mail is going to be wasted if it’s sent to the wrong lists. That’s why, for any direct mail fundraising campaign, the list is the most important element within the nonprofit organization’s control — that, according to Mal Warwick, chairman of Mal Warwick & Associates Inc., Berkeley, CA.
While existing donors — those already on your housefile — certainly respond best, you can’t rely on them as your sole source of names. Attrition is bound to happen, even with the best of donor lists, so it’s absolutely vital to have ongoing name-replenishment programs in place in order to maintain and increase your organization’s donor base.
Developing a successful list-prospecting program will give you an ongoing source of new donors. And while it’s well-accepted that most donor-acquisition mailings are done at a loss, the good news is that with careful prospect list selection, the donors you bring onto your file will stay there for several years.
Consider your “ask.”
The first step to maximizing the potential of any direct mail donor-acquisition program is to determine the right kind of names for your kind of appeal. Matching the list to the “ask” is one part of the list-selection process, says Denise Inglisa Hubbard, the senior vice president of MKTG Services, a relationship-marketing firm based in Newtown, PA.
“Depending on the package, the complexion of lists used will differ,” says Hubbard, who handles both management and brokerage for the National Parks Conservation Association, Civil War Preservation Trust and Wilson Quarterly.
A straight appeal package is going to have a larger percentage of donor names in the mix, whereas premium-based packages featuring address labels or other goodies tend to include more non-donor files, she explains.
Next, look at the availability of appropriate prospect list sources. Among the sources you’ll want to consider: known nonprofit donors, direct mail buyers such as catalog customers and magazine subscribers, and compiled names.
The more aggressive your program, the more likely you’ll be to look into testing deeper into the non-donor names.
Even compiled lists are now performing better and might be worth another look, experts say. Mimi Natz, director of media for The Domain Group, a Seattle-based direct mail agency that works with nonprofits, says she’s constantly looking to databases for information to use for modeling lists.
“When it comes to profile analysis, straight demographics is just too broad a measure,” says Natz, who argues that psychographic data sources are much more useful. “We look at not just who they are in terms of age and household income, but also what are their lifestyles and their interests.”
Testing outside the core
Finding key indicators for great non-core lists isn’t that difficult, Hubbard says. But it does take some digging. One logical place to look for information is data cards.
“If the nonprofit has their list on the market, this proves to be a great idea generator for list-test ideas. Reviewing usage of lists is always a great source,” she explains, adding that organizations need to look at lists from similar nonprofits.
Here are some other questions to consider as you examine those lists:
- Look at the continuation usage of the list. Has a competitive organization used the file?
- Is the editorial content of the publication or the product offerings parallel to the organization’s mission? The closer the tie, the better the results.
- Are the demographics comparable to the current donors?
- What is the source of the names? Direct mail-generated names will be better performers than a controlled circulation file, all other things being equal.
The mantra of direct marketing professionals everywhere is test, test, test, and that, Hubbard says, is the road to successful prospecting.
“Finding the right balance [of non-core lists] for a nonprofit is all in the testing — reading results, drawing hypotheses and retesting,” she says.
Read on for three other professionals’ insights into these and other challenging lists issues.
Mark Briggs, database marketing manager, Eastern Paralyzed Veterans Association, headquartered in New York City
FundRaising Success: In direct mail acquisition, what percent of your organization’s mailings typically go to other nonprofit lists, general consumer-response lists or compiled lists, etc.?
Mark Briggs: Our mailings generally consist of 25 percent nonprofit, 45 percent consumer response and 30 percent compiled [lists]. As the majority of our appeals include premiums, consumer lists have consistently worked well for us and make up a greater percentage of our total list usage than most other nonprofits.
FS: How important are list exchanges to your direct mail prospecting efforts? Is it difficult to manage and negotiate exchanges?
MB: Exchanges remain an important part of our acquisition programs. Our list management and brokerage firm [Mokrynski & Associates] has done a wonderful job of maintaining exchange balances and negotiating arrangements. Some balance disputes have occurred in the past but are generally limited to only a few lists. Overlap between lists is an issue but nowhere near that of housefile duplication. Most nonprofits seem to have a much lower turnover rate than the consumer lists that we use, causing higher duplication rates with continued usage. Our mailing plans allow for periodic resting of lists to allow new names to accumulate.
FS: Has your list universe changed at all in recent years?
MB: Our usage of fundraising lists has declined somewhat in recent years as housefile match rates increase and universes continue to decline. The usage of modeled compiled lists has increased rapidly in the last year.
FS: Where do you look for new list-testing ideas? Have you had much success testing “outside of the box” (i.e., using compiled lists and databases, catalog lists, magazine subscriber names)?
MB: We have always been an aggressive tester of new lists. Most new tests come from the catalog and compiled categories as other areas are showing only very limited growth. Many are tests from outside of our normal target demographic zone, and some have produced surprising results. The rollout rate has averaged around 15 percent to 20 percent in recent years.
FS: Do you typically work with brokers, an agency or both when it comes to lists for mailing?
MB: Our broker is excellent at constantly reviewing and renegotiating pricing and usage arrangements for each of our mailings. As our internal development staff is lean in size, we rely heavily on our broker, and he is an integral part of our strategic team.
FS: How aggressive do you need to be in your direct mail fundraising efforts to maintain and grow your file? What’s your timeframe for recouping those acquisition costs?
MB: We would like to be more aggressive, but limited list universes and increasing duplication are definitely factors affecting growth. Constant testing and model development are imperative to maintaining file size. Some resources have been shifted to focus on donor retention and lapsed-donor reactivation. Donor segments with no gifts in the past four to six years have been successfully reactivated with renewal rates equal to or exceeding those of newly acquired donors.
Shawn McKenna, director, individual gifts program, Juvenile Diabetes Research Foundation, headquartered in New York City
FundRaising Success: What percent of your organization’s donor acquisition mailings typically go to other nonprofit lists, general consumer-response lists, compiled lists, etc.?
Shawn McKenna: We mail 100 percent to response lists. I have tested various catalogs and subscriber lists with some success. We focus our list selection around the idea of concentric circles extending outward from the target with the center of the bull’s-eye being our primary lists, and moving out from there to other response lists, then to compiled lists; however, we don’t mail to any compiled lists at this time.
FS: Where do you look for new list-testing ideas? Have you had much success testing “outside of the box” (i.e., using compiled lists and databases, catalog lists, magazine subscriber names)?
SMcK: Our financial commitment to direct mail prospecting is not that large: Only about 5 percent of the organization’s income is from direct mail prospecting, and we only mail about four to five million pieces a year.
As a result, we don’t go outside the center too much. As I said, we look at our list strategy like a series of concentric circles with the lists closest to the center, or hub, being those lists that share two or three characteristics.
The first characteristic we look for is if there’s a health connection. Next, are there children in the household? Third, is there a response to a premium-based offer? Any two out of three can make that list worth testing.
Taking those characteristics into account, other children’s-based charities like cystic fibrosis are an example of our first-rung prospect lists. Parents of young kids who are also proven direct mail responsive, like Disney catalog buyers, would be my next logical target. If I had to mail more, these are the next lists I’d be going to.
FS: What are some keys to making non-core lists work for your prospecting efforts?
SMcK: In fundraising (and this sounds very simple, but it’s 100 percent true), we are seeking people who read the mail piece and then write and mail a check. [With] catalog lists, a “cash” select versus a “credit card” select will make a big difference. (A catalog has to have a meaningful universe of “cash buyers” though, or it’s not worthwhile as there would be insufficient universe to continue on).
Reading a catalog [and] then calling an 800 number with your credit card or reading a catalog and going online to order merchandise are different behaviors from the reading/writing-check mailing behavior we want to stimulate to repetition.
FS: What other factors are important when making selections from general consumer lists?
SMcK: The dollar select can be relevant [with regard to renting catalog lists]. Consider your appeal’s “ask” amount: Do you need a $100+ buyer (as a select) if you’re asking for a $10, $15 or $25 ask? Probably not. Further, if the average order on a catalog list is $50, ordering the $100+ segment will get you a better quality/more committed buyer. But you can make the mistake of paying for an unneeded select if you order $50+ buyers from a list whose average order is $100 or more. Point is to make sure whatever dollar select you go for, [it] is relevant to either selecting the high-enders or eliminating the low-enders from that file.
When it comes to magazine [lists], we look at paid versus “Bill me later” or trial subs. This makes a big difference. Again it’s an issue of the payment (hopefully a check was written versus calling in with the credit card to renew/subscribe). Also, DTP (direct to-publisher) versus agent-sold or other media (school plans, TV-sold, Web-sold) … will make a big difference.
And in all lists, three things matter the most. They are recency, recency, recency. This is the single most important variable. When people demonstrate a behavior (to buy or donate), they are most likely to repeat that behavior soon thereafter. The farther away from that you get time-wise, the less likely their repeating that behavior will be.
FS: Where can you locate this detailed level of list-selection information?
SMcK: In some cases a broker can ask about these types of selects even though they may not be on a list-data card. The more you know (or your broker knows) about the customer-acquisition strategies of “List X” (a list you use), the better. Names on lists are not just a compilation of demographics and interests; they are equally a compilation of people with similar demonstrated behaviors.
Kory Christianson, director of development, St. Joseph’s Indian School, Chamberlain, SD
FundRaising Success: In prospecting, what percent of your organization’s mailings typically go to other nonprofit lists, general consumer-response lists, compiled lists, etc.?
Kory: Christianson: We almost entirely rely on response lists for our donor-prospecting efforts. We have tested a few compiled lists but not with much success. Mostly, we mail to other charitable lists, particularly those with an interest in Catholic charities or Native American causes.
FS: How aggressive do you need to be in your direct mail fundraising efforts to maintain and grow your file? What’s your timeframe for recouping those acquisition costs?
KC: Our acquisition goal is a 2 percent or higher response rate coupled with a $10 minimum average gift. That keeps us to where, in terms of our front-end cost recovery, we’re recouping over 50 percent of our outlay in 18 to 24 months.
Over the last five or six years, we’ve had to be more aggressive than in the past in terms of prospecting to maintain and grow our donor base. But we are still probably 85 percent core and related lists, and 15 percent test lists.
In terms of the dollars spent and number of packages we mail, we have increased our efforts for acquisition over the years. What this reflects is probably not a significant change in list strategy; we simply allocated more resources to acquisition — going deeper into donor lists and expanding test lists. Plus, the cost of acquisition in terms of paper and postage has gone up.
FS: Where do you look for new list-testing ideas? Have you had much success testing “outside of the box” (i.e., using compiled lists and databases, catalog lists, magazine subscriber names)?
KC: We look at our demographics in terms of who to target: Our donor base is older and made up mostly of women in their mid-60s who give to other Catholic charities. Their average gift is $15 to $20, and they tend to donate two to three times a year.
We have had some success with consumer magazines and even tried some off-the-wall things like gardening lists when the package we mailed included a premium of wildflower cards. It wasn’t wildly successful but was an interesting test.
FS: How important are list exchanges? Is it difficult to manage and negotiate exchanges?
KC: The more we mail, the more we have to rent names. Right now, the balance is about 55 percent rental to about 45 percent exchange. I feel nonprofits are probably a little more open to exchanges than mailers in some other markets. In a way, you could say we are mailing against our competitors; but in a strange way, we help each other out, too. So it’s sort of like “a rising tide lifts all boats.”
FS: Do you typically work with brokers, an agency or both when it comes to lists?
KC: We work very closely with our broker, May Development Services, a division of Direct Media. At St. Joseph’s Indian School, we have a dedicated staff person who is devoted entirely to list processing and selections and who works closely with our broker.
FS: What are your plans for testing in the future?
KC: We’re staying pretty conservative. Rarely have we found many of our test lists that work well. We have tried lists such as Time magazine; Smithsonian [magazine]; parts of the Reader’s Digest [file], etc., but with minimal success.
That’s not to say that we won’t try something out of the box again. We certainly could be more aggressive, but this seems to be what’s working for us; our file’s been growing about 9 percent to 10 percent a year for the past couple of years, and we’re pleased with that.
Alicia Orr Suman is a freelance writer specializing in direct marketing. Formerly editor-in-chief of Target Marketing magazine, Suman also was co-founding editor of Catalog Success magazine; she has been covering the direct marketing industry since 1989. E-mail her at aorrsuman@aol.com.
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