Secrets for Maximizing Your Net Revenue

By Jeff Brooks

Why is it that great wisdom always seems to be wrapped in paradox? Why can't the saints and sages just give us clear, non- contradictory instructions that we can follow like a checklist? I don't know. But in a premature bid for guru-hood, I'm going to give you two secrets for improving your fundraising net revenue — and they are two opposite approaches.

Secret No. 1: Ask more

The more you ask, the more you receive. Fundraising is very nearly that simple.

"But," I can almost hear people saying, "if you ask too much, you'll annoy donors and they'll retaliate by not giving — anything you gain in the short term you'll more than lose to donor attrition."

For most donors, it doesn't work that way. With one very cool exception (that I'll show you later), I've yet to find any evidence that asking donors less makes them more responsive. In every test I've seen of contact  frequency, donors on reduced-contact schedules give less often and lapse at higher rates.

Donations are not mere transactions; they are the result of a relationship between you and your donor, and relationships are complicated. A donor's decision to give might not be motivated only by the piece of mail she received today, but by a whole matrix of inter- actions. It may take two, three or more points of contact to create the tipping point that leads to a gift.

A more paranoid way to look at it: While you are letting your donors "rest," someone else is talking to them, asking for gifts — and possibly getting them!

The fundraiser/donor relationship is like any other human relationship: Communication builds it; lack of contact can strangle it.

I'm not going to suggest you create a snowstorm of direct mail. That would be financially irresponsible. And annoying. There are much more refined ways to increase meaningful contact with donors. Like these:

● Maximize your season: If you have a strong fundraising season, the best time to profitably increase contact with donors is during that season. You might find that you can send mail at a surprisingly rapid pace during that time.

Most of us raise most of our revenue in the last quarter of the year. (In some cases, it's the last week of the year!) Contact during your season is probably more effective than contact in the off-season.

Start your season early — or prolong it. This doesn't work for everyone in all cases, but it's well worth trying. I've seen Thanksgiving fundraising start in early September and Christmas extended all the way back to mid-August.

● Send newsletters: Donors usually respond positively to newsletters. They are a great way to thank donors and show them what their giving accomplishes. For many organizations, newsletters are as effective at  raising funds as appeal letters — sometimes better. If you aren't sending a newsletter, start now!

● Receipts: Your receipts can be more than mere gift acknowledgments. They can be key touchpoints with your donors, sharing good news or special needs. By making your receipts more interesting, you can increase receipt income significantly. Be sure to include a reply device and a return envelope with all receipts.

● Telemarketing: Don't let your own distaste for this maligned medium turn you away. It can be very  effective; some donors respond well to telemar- keting. The cost is higher than direct mail, but you can expect response rates that dwarf what you get from direct mail.

A word of caution: A sudden, significant increase in contact can be counterproductive, giving you lower response across the board. If you decide to send more mail, do so gradually.

Secret No. 2: Ask less

You can save a tremendous amount of money by sending less mail to people less likely to respond. Two facts can help you do that:

● The strongest indicator of likelihood to respond is recency. The more recently someone gave, the more likely she is to give now. A donor who has given within the last three months is many times more likely to give than one who last gave 12 months ago.

If you're mailing a full schedule to people whose last gifts were 12 or more months ago, I can almost guarantee you're wasting money.

● The best predictor of gift amount is previous gift amounts. Donors tend to keep their gift amounts at the same levels. The most common way donors increase their giving is by making more gifts of the same amount, not by making larger gifts.

To wisely send less mail, put these two facts to work for you: Segment your donor base by recency and gift amount; then trim segments that have given less recently and give lower amounts.

Just ask
Here's the coolest move in the business: If you ask donors how often they want you to contact them, they will become more responsive. You're probably thinking I left something out of that last sentence. I didn't. Just asking them what they want you to do improves their responsiveness.

It doesn't matter what they tell you to do or even whether they respond. They will reward you just for asking — that means all groups, from those who ask you to contact them less often to those who don't respond. This is the only way I know of to get more revenue by asking less. Really. Try it. 

Smart math tricks
You know there have to be donors out there who are going to give only one gift a year, and who don't need a whole bunch of contacts to prompt that one gift. You also know there are donors who give at the drop of a hat (or direct-mail package). And all kinds of variations in between.

If only you knew who was who! Think of how much pointless mail you could avoid sending. Think of the decrease in complaints as you brought your communications in line with donor behavior. Imagine how much money you'd save.

There are ways to do that with statistical models and other sophisticated techniques. Just don't try it at home, kids. Get professional help.

Jeff Brooks is creative director at Merkle. Reach him at jbrooks@merkleinc.com