- Canada
Malcolm Netburn, Chairman and CEO, CDS Global
As nonprofits continue to seek new donors and maintain relationships with existing ones, many organizations are finding it increasingly difficult to break through the clutter of today’s direct marketing campaigns. These campaigns, which continue to serve as the foundation of many nonprofits’ fundraising efforts, have left all too many donors feeling overwhelmed – or worse – apathetic. Although the Direct Marketing Association has reported that roughly one-third of all U.S. Postal Service mailings come from nonprofits, unfortunately, many donors are simply skimming, or altogether ignoring the campaigns. However, according to a study conducted by Roper GfK and commissioned by Custom Solutions from SmartMoney, consumers are considerably more likely to open mailed communications that match their specific interests.
Those with the responsibility of securing donations for their nonprofit organization are faced with the realization that in order to remain financially stable, they must find cost-effective ways to drive revenue and increase donor loyalty. When it comes to direct marketing, times have changed – your methods must change, too. Although acquiring new donors is key to your organization’s success, retaining existing donors is equally important.
Today’s on-demand applications and custom communications allow organizations to produce everything from a simple mailer with a unique donor’s name to fully customized and truly personalized pieces that utilize 100 percent variable data and four-color digital print production. These applications offer tailored messaging driven by technology workflows that bring your data into personalized print, Web and e-mail content.
Utilizing these on-demand applications during the campaign creation process will help you acquire new donors and increase the level of loyalty among those who currently contribute to your organization.
Today’s nonprofit climate, with thousands of organizations competing for donor contributions, has caused an influx of marketing messages to appear in the average donor’s mailbox and inbox. With the now mainstream nature of the Web and technologies like e-mail and SMS giving organizations the ability to reach donors in a variety of formats, the problem of donor dispersion has become an all-too-familiar reality for nonprofits. The challenge becomes how to use these methods in relevant, targeted ways that will bring in more dollars to help an organization’s cause. Also, traditional methods such as direct marketing – which remain effective when properly deployed – are also being utilized to reach potential and current donors. With all this communication competing for donors’ attention, nonprofits must carefully evaluate the effectiveness of their acquisition and retention strategies.
As donors receive an increased amount of communication requesting contributions, they seek out those organizations that they feel will best match their personal and philanthropic values. Donors want to give to an organization that they know well, and that they feel knows them well. Most mid-level donors, who serve as the primary donor base for most nonprofits, contribute to those organizations with whom they feel a personal relationship.
Although many nonprofits realize the need for targeted, personalized campaigns, they are hesitant to utilize this approach due to the perceived high costs associated with on-demand technologies. While these technologies can have high in-house implementation costs associated with them, the outsourcing of this function to third-party providers requires no investment on the part of the nonprofit. Also, while some nonprofits are concerned with the extra time it may take to personalize their pieces, the reality is that the time to create the pieces is comparable to that required for generic ones because the personalization occurs through a data-driven digital workflow.
The challenge, then, for today’s nonprofit organizations is how to increase revenue and drive donations through targeted campaigns in a cost-effective, timely manner. With tightened budgets an all-too-common reality, nonprofits cannot afford to waste precious financial resources. And, as nonprofits seek to remain good stewards of what has been entrusted to them, doing less with more just makes sense. Today’s industry-savvy nonprofits realize that this is done through effective acquisition and retention strategies. However, the question remains – how can this be done most effectively?
The rising costs of campaign creation have caused many nonprofits to question how best to retain existing donors, as well as increase response rates on new acquisitions. Not only do unsuccessful campaigns not add new revenue streams, but they also cut into profits gained from donations because of wasted postage and paper. As traditional direct marketing costs continue to rise, and with increased pressure for organizations to exercise environmentally friendly practices, this use of paper must be diminished. However, the effectiveness of print cannot be disputed. According to the 2007 Direct Marketing Facts & Figures in the Nonprofit Industry report, every dollar that Direct Marketing Association membership organizations spent on direct marketing yielded a return investment of $14.47, with the figure expected to rise through 2012. The key, then, is to make these efforts more cost-effective while maintaining or increasing ROI through better targeting and enhanced personalization.
Many nonprofits have realized that during times of economic uncertainty, donors tend to respond to campaigns on a more emotional level than when economic conditions remain solid. Generic campaigns, with their cookie-cutter approach, do not elicit the level of emotional response needed for a successful call to action. When a donor receives a message that looks like every other direct marketing piece, the chances for an emotional connection to the piece are slim to none.
This tendency toward quick, emotional responses also makes the timeliness of campaign creation all the more important. When events such as a budget shortfall or a natural disaster strike, the most successful campaigns reach their donors quickly. Traditional campaigns that require much time for design, printing and execution often reach donors after the window of opportunity for maximum donations has passed.
Clearly, increased pressure to practice good financial stewardship, the rising costs of postage and paper, the need to reach donors on an emotional level, and the need for quick campaign creation are putting stress on today’s nonprofit organizations. However, many nonprofits are utilizing personalization and custom communications to immediately increase revenue and build lasting relationships with donors that ensure contributions will continue well into the future. And, by using the latest on-demand technology, these organizations are actually decreasing their overall costs and producing campaigns more quickly than ever.
If personalized campaigns are effective in reaching new donors and retaining existing ones, how does one effectively create these targeted marketing pieces? The first step is to start with the recipient’s name. Simply adding a name to your donor interactions can help your organization stand out from the rest. In a study conducted for the Digital Printing Council by Frank Romano of the Rochester Institute of Technology and David Broudy, a Southern California designer and production consultant, adding a recipient’s name on a black-and-white piece garnered a 44 percent increase in response rates, and a color, name-only piece increased response rates by 135 percent over the comparable static black-and-white piece. By adding the name of a potential donor, you create an unobtrusive personal connection that makes your piece resonate in the recipient’s mind. Adding the names of your existing donors makes them feel that you know and understand them. And, with technologies that allow you to place the donor’s name in a unique format, you can really grab the recipient’s attention.
Another aspect of personalization is the use of demographic information to craft messages related to particular groups within your donor lists. This use of donor segmentation allows your organization to target particular groups of donors by gender, age, region, income level and numerous other lifestyle factors. This information can be used either in the text of your campaign copy or through the use of images that appeal to your donors’ interests and backgrounds.
Although adding a donor’s name to your direct marketing pieces and segmenting your data into demographic groups can increase response rates, these practices are only the tip of the personalization iceberg. In the Romano and Broudy study, a full-color piece that made use of a recipient’s name and unique database information increased response rates by over 500 percent compared to the piece that used generic, black-and-white text and photos. Also, a February 2009 study by GI Direct reported that over 70 percent of U.K. adults feel they are between five and 10 times more likely to respond to properly personalized marketing offers, compared to standardized or superficially personalized communications.
As these studies suggest, a truly data-driven, fully personalized campaign is the most effective in reaching your new and existing donors. Personalization, at its core, is the art of forming deep relationships and establishing loyalty with your donors. Although segmenting donors into groups can give your campaigns some level of effectiveness, the most successful campaigns are those that offer your donors truly personalized, one-to-one marketing catered to information such as a donor’s values, interests and contribution history – information that can easily be stored within today’s robust relational databases. These forms of communication are also what most recipients prefer. In a study commissioned by Custom Solutions from SmartMoney, 71 percent of respondents favored personalized communication.
However, when using personalization, it is important to consider the privacy of your donors. Using too much personal information on a direct marketing piece, especially with your cold donors, may make donors feel as if “Big Brother” is watching them. In order to find a happy medium, many of today’s nonprofits are utilizing opt-in approaches to track the comfort level of their unique donors. Once you have this data on your active donors, you can better determine the appropriate level of personalization for the pieces you send to them.
Another tactic when creating fully personalized pieces is to leverage the data you have on your individual donors to create graphics, color schemes and verbiage that will resonate with your donors without using the donor’s name or other specific demographic data in the text of your message. For instance, knowing last year’s contribution amount of your donors can help you suggest appropriate increases to their giving without specifically listing the donation amount on your direct campaigns.
When used wisely, personalized communication helps your organization form a unique relationship with your donors. When it comes to campaign correspondence, relevance is key – you must create and distribute the right message that will reach the right person at the right time. These well-executed campaigns not only cause new donors to feel that your organization sees them as a person and not a number, but also cause your existing donors to feel valued for their loyalty. As your donors feel that their loyalty is noticed and valued, they will be more likely to remain committed to your organization. As reported by InfoTrends, adding personalization to a multi-touch campaign can lift response rates to 50 percent. These results suggest that the use of personalization can increase the connection a donor feels with your organization, and this connection leads to the ability to drive revenue into your organization.
With any relationship, it’s important to keep the spark alive. Your existing donors are more likely to continue their support if they know that you value them. One way that the use of variable data allows you to do this is through the use of personalized content on transactional correspondence. A personalized message added to transactional e-mail or a donor acknowledgement can help you keep the relationship with your donors strong, and since you are already sending out these notices, why not seize the opportunity for another unique connection? Using this data on donor correspondence can also help you show the results of your donors’ contributions, allowing them to see the impact of their donations on a local, regional or global level. This understanding of the importance of their donation makes it more likely that your donors will support your organization in the future.
Although many nonprofits would agree with the above conclusions, they are still hesitant to embrace the idea of fully-integrated, personalized campaigns. Why? The answer is simple: cost. Many organizations, facing the reality of smaller budgets and less resources, feel they just do not have the ability to spend extra dollars on the technology necessary to create these pieces. However, by partnering with organizations that already have these technologies in place, you can save your organization from the costs associated with implementing the hardware and software, as well as hiring the staff needed to maintain these technologies. The increased system flexibility offered by these technologies also reduces IT costs associated with excessive programming and modifications, which provides your organization with further cost savings.
Another area of cost savings comes by needing less stock on hand. Today’s digital, on-demand, variable data printing allows you to keep less material in stock, which decreases your long-term costs associated with print production. The ability to print short runs with the use of digital printing techniques also enables your organization to respond to disaster situations more quickly – and as you know, time is money.
Utilizing short press runs also allows for easier testing. On-demand allows you to create multiple campaigns targeted at diverse demographics, test them and change them quickly if necessary. Traditional approaches simply do not offer this level of flexibility.
Therefore, when researching the use of personalization in your campaigns, it’s important to look at long-term costs and overall ROI – these factors, along with increased response rates and lifetime value of loyal donors, give you greater return on your investment dollars.
When considering the options available to you for managing your campaigns, it’s important to look to a provider who can fit all the pieces of your personalized campaigns together, including strong variable data capabilities, enhanced printing technology and accurate and dependable content distribution systems. Many providers can also serve as an extension of your marketing team and work with your current providers to offer you the best solution for your organization’s unique needs.
When implementing your personalized approach to donor relationship management, it’s important to understand and establish your goal, understand the communication preferences of your donors, understand the capabilities of your provider, work together with your provider to determine a timeline, respond to donors quickly and share information and results. Partnering with an industry leader will allow you to thoughtfully consider these factors and implement them successfully into your campaigns.
Today’s nonprofits face the challenge of doing more with less resources, but by harnessing the power of personalization and custom communications, you can break through the clutter, craft campaigns quickly and easily, drive more donations, form lasting relationships with new and returning donors, and ultimately reduce costs – leaving more resources available to your organization.
Malcolm Netburn
Chairman and CEO
CDS Global
515.246.6802
CDS Global is a leading provider of outsourced business solutions to publishers, nonprofits, financial institutions, municipalities, utilities and direct marketers.
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