The results you generate in the first few months of your direct mail acquisition campaign might delight you or they might distress you, but they will almost certainly mislead you. Don’t decide to continue of halt your program based on short-term results. That is reckless.

Here’s the problem. If you mailed two acquisition packages and Package A brought in 140,000 new donors and Package B brought in only 86,600, which package would you consider the winner?

Or if Package A generated a response rate of 1.3% while Package B generated only 0.6%, which package would you consider the winner?

Looking at these short-term results alone, you and I would declare Package A the winner. And we’d both be wrong.

We’d be wrong because we looked at the short-term results and not the lifetime value of the donors acquired by each package. Mercy Home for Boys and Girls in Chicago was making this mistake in the 1990s. They had a control package that consistently outpulled other packages in response rates and cost per donor acquired. Their control package included return address labels as a premium. And, because the package brought in more donors than any other package tested against it, Mercy Home thought they had a winner.

But as postage and list costs went up, Mercy Home did two vital things. They began testing cheaper packages against their control. And they began looking not only at short-term results, but also results that went back seven years.

What they quickly discovered was that donors who responded to Mercy Home’s premium package with one gift rarely gave a second one. During seven years of mailing that control package, they acquired 217,000 donors, but only 69,000 gave a second gift. So Mercy Home actually acquired only 69,000 donors, not 217,000.

Looking back seven years, Mercy Home discovered that Package B, even though it generated a lower response rate and brought in fewer donors initially, eventually outperformed Package A, the premium control package, in cost per donor acquired and lifetime net revenue per donor. The key to this was that a much larger percentage of donors who responded to Package B gave a second gift, and a third gift, and a fourth gift. Over time, these donors proved themselves more valuable than the one-gift-only donors who responded to Package A.

The lesson for Mercy Home, and for you and me, is to take the long-term view in direct mail donor acquisition. Always look beyond your initial numbers to measure the success of your acquisition efforts. Look at lifetime value. A mailing that appears to bomb today might be a winner. Eventually. And a mailing that appears to win today might be a loser. You just have to wait to find out.

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UNICEF outer envelope

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Yes, your goal with offering a back-end premium is to boost net revenue. When your mailing is over, and you have subtracted the cost of the premium and the cost of fulfilling the premium from your gross revenue, you certainly want the net revenue that remains to be higher than it would be without offering the premium.

But offering a book or DVD or other incentive affects more than just your short-term bottom line. So, before you drop that fundraising letter in the mail, offering that tantalizing “free” incentive in return for a gift, ask yourself these two questions.

Q1. Will this premium help me avoid my duty as a fundraiser?
Premiums work because they are attractive to donors. Donors want them, and like to receive them at no cost (other than the “cost” of a donation). If you dangle a sufficiently attractive gift in front of donors, they will respond. But you are in the philanthropic sector, not the retail sector. You are a fundraiser, not a used car salesman. Sorry, salesperson. Your duty as a direct mail fundraiser is to attract charitable contributions, not to hawk trinkets.

Q2. Will this premium strengthen the connection the donor has with my charity?
Books written by your founder, DVDs that showcase your success, and beautiful calendars that your donors actually hang in their kitchens are all effective at increasing your donor’s affinity with your organization. These and other back-end premiums strengthen the bond you have with your donors. Return-address labels, decals and other cheap gimmicks don’t.

Stephen Hitchcock and his colleagues at Mal Warwick & Associates discovered long ago that back-end premiums generally work best at upgrading gifts from current donors, particularly if the premium is tied to donor recognition (a plaque, perhaps).

And…

Handbook Number 15
Increase Your Income and Boost Donor Loyalty with Donor-Centered Newsletter Stories.
Reap the long-term benefits of putting donors first in your donor newsletters.

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A fundraising letter fanatic, of course, is someone who thinks the only thing you can mail a donor is a fundraising letter. But that’s just one of more than 40 things you can mail to make friends and raise funds using paper and postage.

1. Acquisition package: Designed to attract new donors.
2. Welcome kit: An assortment of informational pieces and a cover letter, mailed to first-time donors, welcoming them to your organization and your cause.
3. Thank-you letter: The most important letter in direct mail fundraising, and it should never ask for a gift.
4. Renewal letter: Designed to persuade last year’s donors to renew their support again this year.
5. Member renewal letter: Mailed by member-based organizations to members whose membership is about to expire and must be renewed.
6. Reminder letter: Mailed a few weeks after your appeal letter, encouraging donors who have not responded to give. Popular at year-end.
7. Lapsed donor recovery letter: Mailed to donors who have not given a gift in 12 months or more, inviting them back on the train.
8. Monthly donor conversion letter: Mailed to annual donors (those who respond to your annual appeals), inviting them to join (convert to) your monthly giving program.
9. Special appeal: Mailed during the year to raise funds for a special cause, often an emergency, such as a natural disaster.
10. Year-end appeal: Letter that capitalizes on the year-end tax advantages and “spirit of the season” of Christmas.
11. Upgrade letter: Appeal inviting donors to increase the dollar amount (and sometimes frequency) of their gifts.
12. Donor club invitation: Letter inviting high-dollar donors to join a President’s Circle or other exclusive donor group.
13. Legacy gift prospecting letter: Mailed to a select group in your house file, asking if they are interested in making a planned gift (bequest, charitable remainder trust, and so on).
14. Special event invitation: A card or letter inviting donors and potential donors to a golf tournament, banquet, concert or other fundraising event.
15. Newsletter: Sent to current donors to inform them of how your organization is using their donations to change the world.
16. Annual report: Usually mailed to major donors, loyal donors and donors with influence.
17. Survey: Designed to solicit the opinions of donors and prospective donors.
18. Petition: Mailed by advocacy organizations (Amnesty International and Mother Against Drunk Driving, for example) to members, inviting them to complete and mail the petitions, usually to a decision-maker in federal government.
19. Member-get-a-member letter: Mailed by member-based organizations, inviting members to recruit new members to the organization.
20. Pledge appeal: Usually sent during capital campaigns, these appeals ask recipients to pledge a larger-than-normal gift (for the donor, that is) towards the campaign, a pledge that is usually honored by the donor by making a number of gifts over a period of a year or two.
21. Congratulatory card: Mailed to donors on the occasion of the donors’ wedding anniversary, birthday or other special event.
22. Testimonial: Written endorsements from clients or donors or others affected by the work of your organization, usually accompanying an appeal letter.
23. Plaque: Sent to faithful or particularly generous donors as a sign of your gratitude for their extraordinary support.
24. Gift catalog: Describes through pictures and text the items that donors can buy from your organization to support your work (a goat for a family in India, for example).
25. Resource catalog: Describes the books, DVDs and other educational materials that donors can order to educate themselves and others about your cause and the people you help.
26. Matching gift appeal: Invites donors to give gifts that, collectively, match a large gift made by another donor.
27. Newspaper clipping: Has your charity received favorable press recently? Mail a copy of the article to your donors (with the newspaper’s permission).
28. Quiz: Do you want to stir the imaginations of your donors, particularly if they are under the age of 12? Mail them a quiz that gets them thinking about a vital subject (climate change, poverty, nuclear war, homelessness, for example).
29. Factsheet: Sometimes you need to give your donors statistics and facts and figures, maybe even a history of your organization. Put these into a factsheet.
30. Special report: Dealing with a hot and timely topic that will galvanize your constituents.
31. Calendar: Special calendar that highlights special events of yours and days during the year that are of interest to you and your donors.
32. Special event teaser: Postcards or other short notices that pique the curiosity of your supporters about upcoming events.
33. Photographs: Mailed to donors to show the before-and-after results of their generosity.
34. Premium: Return address labels, notepads and other incentives designed to persuade the recipients to donate.
35. Freemium: Items enclosed with a direct mail appeal that have no intrinsic value, but help you communicate your appeal in a tangible, memorable way. A hospital, for example, might enclose a facsimile of a patient bracelet once worn by a young cancer survivor.
36. Involvement device: Scratch-off cards, checkboxes and other devices that involve the donor in meaningful ways and encourage a donation.
37. Brochure: Shows in pictures and words what you cannot discuss in the body of your letter.
38. Reprint: Has your CEO just given a speech to the United Nations? Transcribe the speech and mail it to your donors (assuming your CEO is a dynamic speaker, of course!).
39. Progress report: Mailed to donors, usually major donors, who have designated their gifts to a particular project, and who need to be kept informed about your progress with their money.
40. Follow-up note: Mailed after you’ve phoned your donor or made a personal visit, usually to thank the donor.
41. Income tax receipt: The more of these you have to mail each year, the better, right?

You might be interested in…

Mail Superiority. Learn the proven, step-by-step process for raising funds and friends cost effectively, year after year.

And don’t pass up…

Handbook Number 10 Six Insider Secrets of Running a Profitable Annual Fundraising Letter Program. Proven techniques from the professionals for building long-term relationships with your donors and members.

Handbook Number 12 How to Write Effective Direct Mail Fundraising Reply Devices. Attract the gifts you need by making the donation process quick and painless for your donors (and you).

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You must do the same with your direct mail fundraising program. Here are the five vital signs to watch for to make sure your program is healthy, and remains healthy.

Vital Sign #1: Your donor file. It’s growing.
Death is unavoidable, even in fundraising. Friends die. A healthy direct mail program includes multiple donor acquisition mailings each year to replace donors who die or otherwise “lapse,” and to grow the donor file even further so there is a net gain in new supporters yearly.

Vital Sign #2: Your friends. They are loyal.
Experienced annual giving officers know that the main goal of fundraising letters is not to raise money but to retain donors. Make friends for life and they will donate. A robust direct response fundraising program aims to keep as many donors as possible, and avoids methods (sweepstakes and premiums, for example) that attract too many short-term donors. A well-run program mails original, personal, heart-felt thank-you letters for every gift within 24 hours, and mails newsletters to keep donors informed about how their gifts are changing the world.

Vital Sign #3: Your numbers. You know them.
Successful directors of development know that you can only manage what you can measure. And the beauty of direct mail is that you can measure just about everything. What is your attrition rate? What is your cost to raise a dollar? What is your cost per piece? If you’re watching your numbers, you know the answers.

Vital Sign #4: Your testing. It’s thorough.
Arrive at the emergency department with a high temperature and the nurse will likely give you something for it, such as Tylenol. Medical staff don’t simply measure your vital signs and chart them. They take remedial action. If you’re running a healthy direct mail program, you are doing the same, through testing.

Which of those 11 lists generated the highest response and highest average gift at the lowest cost? Which package generated the highest response, the package with the brochure or the one without? Which ask generated the highest average gift, the one for the new kitchen or the one for the new mothers? If you are testing your lists, your creative and your cases for support, you aren’t going with your gut anymore. And your program is healthier for it.

Vital Sign #5: Your donors. You treat them differently.
Arrive at the hospital pregnant, they take you to obstetrics. Arrive broken, they take you to orthopedics. A hospital treats its patients according to the patients’ needs, not the hospital’s. A healthy direct mail fundraising program does likewise. It solicits and respects the goals, desires and wishes of its donors.

Those who want to give monthly, can. Those who want an annual receipt, get it. Those who want to receive updates on your work in Darfur by email, not by mail, get them. Those who supported your new initiative with a $2,000 gift are delighted that your subsequent appeals cover the same need, acknowledge their support of that need, and speak to them as a partner and not as a paycheck.

One advantage to raising money through the mail is that you don’t have to wait until you see signs of sickness before you seek treatment and watch your health improve. Because direct mail is testable, and because others have gone before you, you can avoid plenty of the maladies that have felled perfectly worthy causes. Watch these five vital signs and you should avoid the emergency department.

Handbook Number 9 31 Questions to Ask Yourself Before You Ask Anyone for a Donation with a Fundraising Letter. Increase your chances of success by answering the vital questions that leading fundraisers ask themselves before writing a single word.

Handbook Number 10 Six Insider Secrets of Running a Profitable Annual Fundraising Letter Program. Proven techniques from the professionals for building long-term relationships with your donors and members.

Handbook Number 22 How to Recover Your Lapsed Direct Mail Donors. Discover the financial rewards, savings and long-term benefits of wooing and winning your donors all over again using direct mail.

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I know a Christian church in the United States that uses all sorts of tricks to attract neighbourhood children to its evangelistic Sunday School programs. One trick is to attach a ten-dollar bill to the underside of a chair in the classroom. The child who happens to pick that chair gets to keep the $10 Cool. Naturally, this trick leads to plenty of free word-of-mouth advertising in the neighbourhood on Monday.

Another trick is to give a toy to every child who brings a friend to Sunday School. Naturally, this means the church receives a steady influx of new students each Sunday.

But this church has a problem. And so do you, if you use similar tricks to attract new donors or members. Simply put, this church attracts children who care more about mammon than they care about God. Which is to be expected. A carnal incentive attracts a carnal student.

In direct mail donor acquisition, the equivalent of the ten-dollar note taped to the underside of the chair is the lottery or sweepstakes. The equivalent of the free toy is the free sheet of address labels.

The problem with lotteries and premiums, of course, is that they attract many donors. Of the wrong kind. Premiums boost response rates, even triple them on occasion, but usually at the expense of reducing the size of the average gift. And usually by attracting donors who will not renew their support and mail another gift unless they receive another lottery ticket or premium in return.

In the evangelical church circle that I run in, we say, “What you win them with is what you win them to.” In other words, if you use weight-loss classes or rock concerts or pizza parties to attract new people to your church, those are the things that the people come to receive. They come for the pizza, not the preaching. The music, not the message. The singing, not the Saviour. Churches and Sunday School programs that use these devices increase their numbers, but only for a season. When the incentives stop coming, the people stop coming.

Which is why I always encourage my clients to ask for the second gift first, in their mind at least. Before they mail the acquisition package with its expensive premium, they need to know what they are going to mail next to donors who respond. And what they will mail after that. You can’t mail bribes forever. You have to offer donors a better reason to respond than bundles of free greeting cards.

Your case for support must aim for donor aspirations, not greed. You want donors who are sympathetic with your cause, inspired by your goals, and motivated by altruism, not selfishness. As Kay Sprinkel Grace says in her book, Over Goal! What You Must Know to Excel at Fundraising Today, “You cannot motivate people; they are already motivated, and your job is to find out what motivates them and construct the right environment in which their motivation will flourish.”

So, when you plan your next donor acquisition mailing, aim to reach the hearts and minds of your potential donors, not just their wallets. And avoid incentives that attract one-time donors and guilt offerings. What you win them with is what you win them to.

If you need help with your donor acquisition or donor renewal program, give us a call, at 1 877 742-7732, or take a look at the following resources:

You might be interested in…

Breakthrough Fundraising Letters. How to write direct mail donation request appeals that attract more donors, raise more money, and build stronger relationships. Available in paperback and as an e-book.

Handbook Number 17 How to Convert Your Once-Only Direct Mail Donors into Repeat Givers. Proven direct mail fundraising techniques for renewing your new members and first-time donors—year after year.

Handbook Number 11 Attract New Donors and Members with a Magnetic Direct Mail Donor Acquisition Package. Discover over 75 tips, insider secrets and proven tactics by analyzing a superb donor acquisition package from a national charity.

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Q. What’s the difference between front-end and back-end premiums?
A. Premiums that are included in the mail package are called front-end premiums. Premiums that the donor must request are called back-end premiums.

Q. What are some examples of front-end premiums?
A. Labels, note pads, greeting cards, calendars and decals.

Q. What are some examples of back-end premiums?
A. Books, DVDs, tote bags. 

Q. Which kind of premium is the most popular among mailers?
A. Front-end premium.

Q. Why do non-profit organizations mail premiums?
A. To boost response rates.

Q. What are some advantages of premiums?
A. Premiums tend to attract more gifts when mailed to current donors, and attract more first-time donors when mailed to prospective donors. Also, because of their bulk, they tend to encourage more people to open, rather than pitch, fundraising letter envelopes.

Q. What are some disadvantages of premiums?
A. Premiums tend to attract gifts that are smaller than those generated by packages that contain no premium, and they attract donors who are less likely to give again. Some donors who are acquired with premiums can only be renewed with premiums. Premiums also attract gifts from donors who are motivated by guilt or obligation rather than by philanthropy.

Q. How do I know if premiums are right for my organization?
A. Test and find out.

Q. What kind of premium should I offer?
A. The most important factor in choosing a premium is that it complements your mission. Greenpeace offers a cotton tote bag that is an environmentally friendly alternative to plastic shopping bags. The Billy Graham Evangelistic Association offers books written by Billy Graham. Avoid premiums that appear to be nothing more than subtle bribes.

You might be interested in…

Mail Superiority. Learn the proven, step-by-step process for raising funds and friends cost effectively, year after year.

Handbook Number 1 53 Simple Ways to Raise More Money with Your Donor Newsletter. Learn how to strike the profitable balance between informing and asking.

Handbook Number 2 Twelve Creative Ways to Ask for Gifts Using Fundraising Letters. Learn how to say what is on your mind in a fresh way.

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