When it comes to fundraising, direct mail is a hard marketing channel to beat. With a response rate of 5.1 percent, direct mail far outperforms email (.6 percent), paid search (.6 percent), online display (.2 percent), and social media (.4 percent), according to the Data and Marketing Association (DMA).
What’s more, direct mail generally delivers “between 60 and 80 percent of total revenue,” while email yields “between 5 and 15 percent.”
When you consider that donations from individual donors account for $264.5 billion — more than double the amount of foundations, charitable bequests, and corporations combined — direct mail makes even more sense. Individual donors need to be directly targeted, and mail, especially oversized mail, has a big impact because of the more personal, tangible experience it provides.
It’s also important to note that personalization boosts direct mail response rates even further, according to Compu-Mail.
- Adding a person’s name and full color can increase response by 135%.
- Adding a person’s name, full color, and more sophisticated database information can increase the response rate by up to 500%.
- Targeting customers on a 1:1 level increases response rates up to 50% or more.
Naturally, nonprofits dedicate a large portion of their budgets to targeting individual donors with direct mail. But all that paper, printing, and postage adds up, making it one of the most expensive marketing channels.
And because it can take up to 20 touchpoints to reach potential donors, nonprofits have to invest in digital channels such as their website, paid search ads, and social media, which of course, increases the amount of employee hours and marketing budget expenses. Thankfully, advanced analytics can help you offset these costs.
Streamline Costs with Better Targeting and Segmentation
While direct mail is a highly effective channel, all direct mail isn’t created equal. The secret to results? Segmentation, or splitting your subscriber list, so you can target your donor messaging more effectively. After all, you need to get the right message in front of the right audience for maximum results.
Today’s advanced analytics approaches allow you to use models to segment your list quickly and easily. Some of these approaches are better than others. It’s possible that your organization is using in-house manual methods right now, which can be inaccurate and time-consuming. Or, you might be using an outsourced company who takes months to build models and by the time they are built, they are irrelevant. The advanced analytics approaches that work best are those that work to solve your organization’s specific needs, quickly, and flexibly.
For example, Lityx was recently asked to improve the time to market and reduce modeling costs for a client’s direct mail program. This particular client executes marketing campaigns to approximately 5,000,000 individuals about 24 times a year. Random mailings across the database performed at a 1.25% response rate with an average value of about $13.50 per responder, and a mailing cost of $0.40 per piece.
The Lityx team automated the client’s modeling process to significantly speed up the amount of time it took to deploy the campaigns and make them more effective. Previously, the client spent 40 hours on each of the 25 models used for the direct mail campaigns. But with Lityx’ help, the client now spends just 2.5 hours on each model.
The new advanced analytics approach helped this nonprofit achieve:
- 90% savings in development costs for aseries of 25 predictive models
- Improved model lift in less than 10% of the time
- Projected incremental 76,000 responses and $1.72 million customer value
Tips for More Effective Segmentation
In addition to saving time and money with effective analytic models, the marketing behemoth firm, HubSpot, recommends paying attention to the following criteria when creating your segmentation strategy:
1) Communication Frequency
How often does the donor want to receive communications from your organization?
2) Communication Method
Through which channels does the donor want you to communicate with them?
3) Types of Communication
What types of communication does the donor like to receive from your organization?
4) Program Interests
Which programs, efforts, and causes of your mission is the donor most interested in?
5) Generation Demographic
What generation demographic does the donor fall into?
How is this donor affiliated with our organization?
7) Entity Type
What type of entity is this donor?
8) Annual Giving Level
How much does this donor donate to your organization on an annual basis?
9) Year-Over-Year Giving Status
What is the year-over-year giving status of the donor?
10) Preferred Giving Channel
Through which channel does a donor prefer to give to your organization?
If you’ve made it this far, it’s probably pretty obvious how donor personalization, strategic segmentation, and advanced analytics can positively impact your direct mail outcomes and make them more cost effective.
Now, it’s a matter of looking at your own donor data to see how your organization can leverage demographic and behavior information to improve your direct mail outcomes. Your donor data is your most powerful asset as a nonprofit. You can read more about how to get started using your data and advanced analytics here.