When it comes to lists, the tried and true isn’t always the way to go.

By Alicia Orr Suman

Nonprofits Share Their Strategies

The Colonial Williamsburg Fund, the annual-giving arm for the Colonial Williamsburg Foundation, will raise $12.2 million this year, according to fund Director Denise Kellogg. With 105,000 active donors, the CWF accounts for one-quarter of the Colonial Williamsburg Foundation’s donations.

Kellogg says that because Colonial Williamsburg is a destination, it can acquire names from visitors.

“This is the best pool of prospects for us,” she says, asserting that other destinations that are nonprofits should consider collecting names, too. “For some reason, other destinations such as museums, have traditionally been hesitant about using strategies to try to acquire names of visitors. But these names work better than any other buyer or donor file we get; 30 percent to 40 percent of the names we mail are the names of visitors we’ve gathered.”

The rest of CWF’s prospects come from typical channels such as exchanges with like-minded organizations, according to Kellogg.

With all of its new donor-prospecting efforts, CWF has an eye toward long-term donor value.

“We don’t want the donors who’ll bring us an average gift of $10,” Kellogg explains. “We’re thinking long term with our fund. Our annual donors are really the ‘farm team’ for our major gifts down the road, so we want to try to get some higher-dollar value gifts, even if it means sacrificing some volume. We can get in the neighborhood of 25,000 new donors a year, and that’s fine with us.”

Kellogg plans to mail 6.5 million to 7 million pieces this year; 1.5 million of it is renewal, and on those renewal names, the organization invests in modeling with overlays. The three most effective demographic overlays are age, net worth and direct-mail responsiveness.

“For age, we typically want someone who is in their early to mid-60s,” Kellogg explains. “This is a reflection of a person’s place in life, whether their kids are grown, they are at or near retirement, and they have some disposable income and are more likely to be willing and able to give to charity.”

In terms of financial aspects, she says, “You don’t want to look at a straight income select because if they are retired, income may show up as just Social Security income, when in fact, these people may be sitting in a nice home with a fully paid-off mortgage and have a big nest egg, but that Social Security is all they have coming in every month in terms of income. So net worth is a better measure.”

Special Olympics
Special Olympics has an annual donor base of approximately 800,000, and the organization builds and replenishes that base by using a wide variety of prospecting lists, according to Shannon McCracken, manager of direct response marketing.

“Special Olympics is fortunate enough to be able to make many types of lists work well for us — donor, buyer/subscriber and compiled,” she says.

“Although we are fairly conservative with testing and retesting before we roll out with a large quantity from any one list, we are willing and able to test a lot of different list sources,” she adds. “We have had success with boosting the performance of marginal lists by using not only dollar and recency selects but also gender and age. And because the Special Olympics list works well for many other mailers, we have the opportunity to test a wide variety of lists on exchange.”

Special Olympics’ direct mail volume was projected to top 38 million pieces in 2004, with most donors giving an average gift of about $22. The two keys to success in getting a second gift are mailing good names to begin with and getting back out there with an acknowledgement and another ask as quickly as possible — a task that is “easier said than done, as we all know,” McCracken quips.

Despite a lower response rate from buyer/subscriber lists, Special Olympics finds that donors on these lists make initial gifts that are higher than those from donor lists and, therefore, are more readily moved up the giving ladder. In addition, McCracken says, the fact that Special Olympics doesn’t use premiums in its acquisition program means that it is getting a strong average gift and some assurances that there is interest in the cause rather than in just getting the freebie.

As a logical next step, Special Olympics looks to database analysis.

“In our renewal mailings, we are slicing and dicing the data on a number of levels and attempting to maximize when and how to communicate with donors based on their recency, frequency and monetary history,” McCracken explains.

“We also look at giving trends of other donors with similar demographics and giving patterns” and draw some conclusions about how to apply the segmentation, she adds.

Finally, and perhaps most importantly, McCracken says, “When we find solid donors that we do not want to lose, we will do everything we can to make sure they know that, including handwritten notes and First Class mail lots.”

As she points out, “With mail volume and frequency like ours, we cannot afford not to let the data lead the way.” — AOS

When it comes to the question of which list strategies work to build and develop a base of annual giving donors, the obvious answer is to look for more names that are similar to your regular annual donors. Common industry wisdom says to analyze what your best donors are like and then go find more like them.

While that statement certainly is true, the problem with a simplistic approach is that it neglects important discussions of gift size, lifetime value, future giving potential and other key ingredients of a successful annual-giving program.

Success hinges not only on what you bring in during this fiscal year; the consequences of the current year’s annual-fund drive programs and their associated list decisions will carry over for many years to come.

“Sixty percent of the success of any direct mail effort is the result of the list, so it’s important to spend the time to find the right lists,” asserts Kerry Fischette, senior account executive of list firm MKTG Services in Newtown, Pa.

A concern is that many nonprofits will send their annual appeal mainly to housefile names, “ … with perhaps a few high-quality outside prospecting lists that have proven themselves in the past, and a few tests thrown in,” says Jerry Gould, president, Conrad Direct Inc., a list brokerage and management firm in Cresskill, N.J.

Gould warns, “If your success rate on list tests is better than 35 percent, you’re probably not testing enough.”

Nonprofits should remain steadfast in testing of new lists, according to Fischette, who warns, “This is an important and ongoing part of their annual campaign strategy. Testing of new lists with different strategies should be worked on together and discussed by the list broker and the creative team.”

Even if every list test doesn’t work out (and it won’t), Fischette stresses that, “In acquisitions, you have to continue to test a variety of lists, including those of other nonprofits, catalog lists and publications lists.”

Find more power in prospecting lists
When it comes to prospecting, the goal is to find mail-responsive names that have both the money and inclination to give to your cause. Gould recommends testing lists of nonprofits whose mission is similar to your own and donors who have given to institutional packages.

“Look with greater skepticism, both in the housefile and prospecting lists, on volunteers, activists, attendees and product buyers who do not have a record of institutional mission giving.

“The average dollar is the most significant quality variable in new donors,” he adds.

A higher-dollar gift is a measure of greater commitment to your cause and a key indicator of upgrade potential, Gould explains, adding “so on test lists, select the highest dollar practical. [You may need to sacrifice some short-term response.]”

Adds Fischette: “Other member/donor files are your bread and butter. To find the best among those, look to find an affinity.”

For example, an environmental nonprofit might be likely to test a camping file such as Campmor or a subscriber file such as Outside Magazine.

“But here, the goal is to find like-minded interests in the outdoors and the environment,” Fischette says. “Similarly, to find more people interested in hiking you might look to rent a catalog list of outdoor gear buyers or go to a magazine for RV owners. There really is a magazine for every interest.”

In list selection, you can also look to mirror your best donors by things such as geography, she explains. Geography can play an important role for some organizations where proximity is important — for example, if it is a local charity, park, museum or smaller nonprofit.

In addition, on prospect lists, Fischette adds that most recent hotlines are always a good bet.

“As they say, it’s good to strike while the iron’s hot. Donors who’ve given recently will usually be more likely to give again,” she says.

Pump up performance
A variety of list strategies, including database modeling and analysis and enhancements, could help to identify targets for repeat gifts or gift upgrades on an annual campaign basis. A careful examination of the data in the existing donor base is the first step.

Says Gould: “Lifetime value analysis of your prospect lists is an excellent strategy. It involves keeping track of original source-code and mailed-quantity information for several years so that you can learn which lists and market segments produce the most profitable donors — and the most repeat donors — over the long term. Many organizations track lists in this way for at least four or five years.”

Also, he says, scrutinize the top 1 percent or 2 percent of your housefile donors, individually, to determine what characterizes them — including what lists produced them.

“Often, such donors come from a small core of distinctive lists,” Gould advises.

John Mastrobattista, vice president of marketing at Target Analysis Group, Cambridge, Mass., agrees.

“Organizations need to think more about their ongoing relationships with donors and doing long-term value analysis,” he says.

In looking at data, Mastrobattista thinks it also makes sense to look at recently lapsed donors who are still on your file.

“More and more organizations are accumulating larger and larger lapsed donor files, and not taking advantage of those names. Mining these lapsed files — and looking at which part can be reactivated — that’s where database modeling can be very efficient,” he suggests.

With names more than 24 months old, he says, predictive modeling can give you the tool you need to mail those names profitably.

“Of course, first you might look for the obvious selects on the lapsed donor file such as RFM,” Mastrobattista says. “The size of the gift in the 12- to 36-month-old [names] can be an effective way of weeding out names that are not worth re-mailing. Larger gifts have a better net return to the organization.”

He adds that the type of offer that brought them in as donors in the first place (for example, whether there was a premium) might also be worth taking a look at. Most organizations are tracking and coding this

information into their databases as a fourth variable after RFM.

Alicia Orr Suman has been covering the direct marketing industry as a writer and editor for 15 years. She can be reached at aorrsuman@aol.com.