Balancing Act

August 2004 By Alicia Orr Suman

multipage

Acquisition Focus Is on Quality

While long-term donors may be the ultimate goal, Special Olympics knows it first has to bring donors onto its file before it can work on retaining them. Special Olympics has looked to data on the acquisition side to help it zero in on the best prospects.

“Both our list strategy and our creative focus on bringing quality donors through the doors so we can focus on building long-term relationships with them,” Wheatley notes. “Using messaging and stories and by telling our organization’s missions, we make our creative tell a compelling story that will hopefully bring people on board—the right kind of people; people who will believe in the organization’s work and stay with us. That’s why we typically stay away from premiums and that sort of thing in our mailings,” she asserts. “Sure, we sometimes include a decal that people can use to show they’re a Special Olympics supporter, but I think the decal enhances [our message]. Other types of premiums oftentimes become ‘the product’ the prospect is buying [with his or her donation], rather than focusing on the real product, which is of course, the organization.”

For Special Olympics, there is a broad range of prospecting lists that work: from the core nonprofit lists to direct mail buyer and subscriber lists. This really is the result of the different demographic appeal that Special Olympics has in comparison to other organizations, Wheatley believes.

“Typically, our donors are young,” Wheatley explains, “although young is relative when you’re looking at donor demographics. But ours are in the 60- to 65-year-old age range, and they tend to be more male than for many other organizations. Approximately half of our file is male, while direct mail donors overall tend to be more female.”

Smith adds that, “Males are more responsive on the marginal prospecting lists.” As a result, she says, “We’ve been able to successfully use lists we would not even consider, by simply requesting a male select.” To acquire donors with higher long-term value, Smith says Special Olympics includes “financial publications, high-end catalogs and other non-traditional fundraising lists, all of which, we believe, are ‘proxies’ for our target demographic.”

As an integral part of its process to find the best prospecting names, Special Olympics has been successful in using the products and services of two sister companies: Target Analysis Group (TAG) and Target Software Inc. TAG provides modeling services to better qualify long-lapsed names, and supplies modeled, compiled names using its nonprofit cooperative database. Most importantly, says Wheatley, it is the combined efforts of all of the teams involved—the donor development team at Special Olympics, LW Robbins, TAG, Target Software Inc. and list broker Names in the News—that ultimately drives the acquisition list strategy. But, it bears mentioning that all of TAG’s lists have generated positive net income, even when including the cost of developing the models, according to Wheatley.

A like-minded careful analysis has led Special Olympics to understand that when it comes to direct mail creative, a package with fancy bells and whistles isn’t always best. “For acquisition, we find the simpler, the better,” says Wheatley. “It may sound contrary. It would seem more logical that if you employ more involvement techniques that maybe the prospective donors would spend more time with your package. But we have not found that to be the case. And we think that may have something to do with our male-skewed demographics. They don’t want to read a complicated package.”

The official control package for acquisition is what Special Olympics calls the Mini Greeting Card package. It’s a small format—4˝x 6˝ blind window outer envelope—that features a line drawing of a boy with a medal on the “cover” of the greeting card inside; the ask is the traditional Annual Fund messaging. What helps this simple package have impact is extensive personalization (more on this approach later in the story).

Of course, as with all creative, Szendey adds, “In acquisition, we need to keep testing. We’re looking for new ways to encourage prospects to make that first gift—especially as we expand our list universe.” Among the tactics the Special Olympics creative team is testing now:

• more color in acquisition;

• more photos to bring the cause to life; and

• use of a closed-face envelope is being expanded within the acquisition control. “While this may add to costs, we’re seeing lift in response rate,” says Szendey.

New Donor Conversion: Getting a Second Gift

Once you have a first-time donor, “Trying to secure the second gift is the critical point in the direct mail fundraising lifecycle,” says Wheatley.

The challenge is, in the nonprofit field, at best, 40 percent of the donors acquired one year will contribute again the next year, according to industry benchmarks quoted by Szendey (for more benchmarks, visit the “Learning Center” on the LW Robbins Associates Web site at www.LWRA.com). Organizations like Special Olympics want to make sure they have as many donors in that renewal side of the equation as possible that first year. Because once they give again—when you get that critical second gift—then you can build on the relationship and work toward extending the donor’s lifetime value for several years more.

Over the long haul, the value of increasing first-year retention rates is going to be compounded by the fact that once new donors have stayed with you for more than a year, their retention rate will increase that much more.

It’s also important to note that the sooner the donor gives the second gift (within 12 months), the more likely he is to continue to give, says Szendey.

Following are a few of the strategies Special Olympics is using to improve its chances of success in converting new donors in the first year:

• a well-timed thank-you note;

• schedule integration to quickly get new donors into the renewal stream; and

• telemarketing, which will be used beginning this month (August) as a pre-lapsing strategy.

The thank-you note: “New donor conversion is the critical point. They receive a very warm thank you as fast as humanly possible. The file is updated nightly, and typically the thank-you package mails within a week,” says LW Robbins Associates’ Smith.

The thank-you note is personalized with the amount of the gift as well as the local organization. For example: “Dear Mr. Smith, Thank you so much for your generous gift of $10.00! Your support of Special Olympics has made a huge difference in the lives of New Jersey athletes.” The mailing also includes what’s termed an “extra mile reply” for another gift, if the donor would like to give one at this time. An amount is not specified, but rather is left as a blank space.

Schedule integration: “We rearrange the contact strategy for new donors, to try to achieve that new donor conversion,” says Szendey. “So, regardless of where they normally would have fallen in the cycle, they’ll receive the strongest offers first.” According to the team, this consists of the closed-face Partners package filled with member materials. “It has all the accoutrements of membership to make them feel welcome and part of the family,” Szendey explains.

Telemarketing as a pre-lapsing strategy: New donors to the file last September through March who did not give a second time will get a new effort starting this month: telemarketing. For the first time, the Special Olympics national organization will test an effort using telemarketing as a means of getting recently acquired donors to “re-up” and give a second time. “Most of our affiliates do their own telemarketing. There have been no centralized telemarketing efforts until now,” Wheatley explains.

Lifecycle Marketing

Once Special Olympics gets a donor’s second gift, the organization’s lifecycle marketing kicks in, says Wheatley. It includes up to 11 mailings a year per donor. “Our first appeal in January is the Partners appeal. It has a membership feel to it, and it’s sent to the majority of the file,” Wheatley explains.

Another successful offer for Special Olympics of late has been a matching gift appeal. Last fall, Procter & Gamble (P&G) provided a matching gift, so donors had an opportunity to double their gift if they donated through this appeal. “The P&G Match package resonated with the donors. The letter was more business toned, and perhaps that hit home with our male demographic,” suggests Szendey. “It talked more of return on investment and getting that match on their dollars that P&G was offering to make if they’d donate now.”

Both the Partners package and the matching gift now are considered by Special Olympics to be among its current renewal control mailings.

Other renewal mailings include an Event Tickets package, which encourages donors to attend an event. “If they can see the athletes in action, we think people will be that much more in tune with our mission and more likely to support it,” Wheatley says. While tickets aren’t actually required to go to the Special Olympics events, the organization started to include them “to give the package a more real-life appeal.” But it clearly states inside the package that the tickets are not needed to attend.

Of course, the annual mailing rotation also includes reminder mailings for the Annual Fund appeal as well as a variety of special appeals.

Precisely how often a particular donor will be solicited by Special Olympics for a gift depends on the nature of the relationship, the size and history of the prior gifts and other factors. “We’re very protective of these relationships,” says Wheatley. “The best donors will hear from us quite frequently in one way or another. But it’s not always a straight ask. Sometimes it’s a piece that includes information or to say thanks.”

Creative Segmentation

Calling it a “fairly complex segmentation strategy,” Wheatley says most of Special Olympics’ direct mailings are local in nature. “The way we localize the copy on behalf of our 50 affiliates is we recognize which state the donor or prospect is from and make note of that in the copy text.” Personalization in the efforts might include the name of the local organization (i.e., Special Olympics of New Jersey) and its president’s name, signature, etc.

But there’s more to Special Olympics’ relationship marketing than people and places. For donors with whom it already has an existing relationship, Wheatley explains, “We also have the capability to recognize the donor’s particular relationship with the organization.” Using information housed in the database, Special Olympics can recognize whether a donor has ever participated in an event as a coach or volunteer, is a family member of an athlete, etc. “Building multilevel relationships is key to keeping people involved for the long term. They feel a bond to the organization beyond just having given money,” says Wheatley.

Other special groups also are recognized in the creative, such as welcoming back previously lapsed donors who have started giving again.

Higher-dollar donors—those who have given $100 or more—are placed among the Special Olympics group called the Winners Circle and recognized with that distinction. Says Wheatley, “We can note in any given mailing if someone is a Winners Circle member. This type of recognition has been successful in moving them up the giving ladder even more.”

As another possible strategy for getting donors to “move up” their total gifts, Wheatley plans to test whether a monthly giving program might boost annual donations for some groups of donors. “Our data is leading us to investigate whether a monthly giving program might make sense long-term,” Wheatley says. The organization is planning to test if asking for a lower monthly gift would result in better lifetime value and higher overall annual donations. To facilitate this type of program, “We’re looking at paper-free EFT or credit card donation options for this program,” she adds.

On a similar vein, Wheatley says separate data that seems worth some further examination show that, “Younger donors have a lower retention rate, but a higher annual value.” As a result, Special Olympics is working to “craft some special creative to go after this group to try to keep them active longer or to try to go back and reactivate them if they’ve become lapsed donors,” she explains.

Digging Deeper Through Data

From what Wheatley and her team already have seen over the years, the male vs. female demographic is most certainly a difference worth exploring further in its fundraising. At present, working with LW Robbins Associates and TAG, Special Olympics not only is examining those demographic differences in its data, it’s using them in its creative.

“Males and females respond differently to our creative. And they have differences in lifetime value and gift size and other factors,” Smith explains. “That’s what the tools we have in place through Target Analysis Group have pointed to. And now, through TAG’s online data mining software tools, we’ll be able to track every step of the way, from our own desktops, how the program’s going and how different segments are responding to different mailings.” As Smith explains it, instead of having to order a query and wait a day or two to get the results, she or her colleagues simply drag and drop on an Excel spreadsheet to review performance of males vs. females, or virtually any other criteria, for a particular campaign. “It’s really easy to get at the data and sift through what’s there to find the interesting pieces,” Smith notes.

“We’re just beginning to scratch the surface with exploring these differences in response to creative,” says Szendey. “A year or two years from now, we’ll have a much better idea of how the microsegments are performing. The program will be much further along.”

Adds Szendey, “The exciting thing is the possibilities this will open up from a marketing standpoint for us to work collaboratively in expanding Special Olympics’ fundraising programs.”

To that end, Wheatley says she’s looking forward to conducting more creative tests based on donor demographics. “We’re working on doing some segmentation to try different packages to appeal to the males in the donor base. Perhaps the sports aspect of our organization strikes a chord with them. We’re not sure.” With the tools it has in place to help tap into its data, Wheatley says that Special Olympics can “now begin to look at these possibilities more closely.”

Alicia Orr Suman is the former editor in chief of Target Marketing and Catalog Success magazines. Presently, she is a direct marketing writer based in Maple Glen, Pa. Reach her at aorrsuman@aol.com.

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