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1
The Fine Art of
LEVERAGELeah Eustace, CFRE
Jérôme St-Deniswww.theflagroup.com
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Let’s Start with Strategy
According to Mal..
you’ve got 5 choices
1. Growth
2. Involvement
3. Visibility
4. Efficiency
5. Stability
You can only choose one!
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Food chain exercise(rank these on efficiency)
Special events
Monthly giving
Product sales
Legacy gifts
Major gifts
Telemarketing
Direct mail
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The Efficiency Food Chain
Planned giving
Major gifts
Monthly gifts
Direct mail
Telemarketing
Events
Product sales
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So if direct mail’s in the middle of the pack, why does it matter?
• Judith Nichols has been telling us for years….
• GO DEEP MORE THAN WIDE
• cuz wide ain’t there anymore (for most of you, anyway)
• direct mail’s your best bet for going deep
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Who Gives?
• we polled 500 Canadian direct mail donors
• results accurate +/- 4.1% 19/20
• for the first time (in 30 years) we found out exactly who gives through the mail
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Meet Jacqueline
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Age
0
10
20
30
40
50
60
70
< 45 45-54 55-64 65+
Canada
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Gender
0
10
20
30
40
50
60
70
Male Female
Canada
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Employment
0
10
20
30
40
50
60
70
Full-time Part-time Homemaker Retired
Canada
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Education
0
5
10
15
20
25
30
35
HS or less College Undergrad Grad/Prof
Canada
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Household Income
0
5
10
15
20
25
30
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< $25K $25-50K $50-75K $75-100K $100K+
Canada
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Marital Status
0
5
10
15
20
25
30
35
40
45
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Married Never Married PreviouslyMarried
Canada
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Dependent Children
0
10
20
30
40
50
60
70
80
90
Dependent Children No Dependent Children
Canada
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Attend Religious Services
0
5
10
15
20
25
30
35
40
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Regular Occasional SpecialOccasions
Never
Canada
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The Formula
Four simple steps
to direct mail success.
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Step 1 – the problem
• we all love to talk about our problems
• (Dr. Phil’s become rich off of them)
• direct mail is no different!
• if there’s no problem, why should I care?
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Step 2 – the solution
• I’ll care about the problem
• I’ll give to the solution
• no solution? no gift..
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Step 3 - Credibility
• I care about the problem• I’ll give to the solution• but why should I give to YOU?• does your letter have credibility?• does your organization have credibility?• then use it!
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Step 4
• in fundraising, what does the letter “A” stand for?
• Clue: what’s the most common reason that people give to charity?
• let’s go to your letters again• have you: asked? asked directly?
asked specifically?
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What is leverage?
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Leverage
Market research can help a charity
upgrade single gift DM donors
to higher orders of giving.
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Integration = Leverage = More Revenue
Who can name three
types of ‘higher order’
gifts that can eventually
come from direct mail donors?
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Let’s compare ‘lifetime value’
• average direct mail donor is worth about $250
• monthly donor is worth ($13 x 12 x 6) = $936
• ‘mid-level’ donor is worth ($500 x 6) = $3,000
• ‘legacy’ donor is worth $20,000 (in ten years or so)
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our big hairy idea!
• leveraged giving comes from a small minority of your donor file
• yet, leveraged giving can more than double revenue from direct mail giving alone
• fundraising is not democratic!
• Pareto principle 80/20 90/10 95/5
• wanna make a name for yourself? Go Pareto!
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And how does
leverage work?
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Leverage – Monthly Giving
• lifetime value of monthly donors is a multiple of single gift donors
• lower cost to maintain• good legacy prospects• we’ve proposed a mail/phone/mail & phone
test – with the potential to roll out• our research shows 60% give on the phone• you should target 5% to 10%
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Monthly Giving
• according to our poll, 95% of donors are aware of monthly giving
• 34% have given monthly
• 37% say monthly giving is a good idea
• the phone is more effective than mail – best approach is mail/phone together
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Leverage – Major Gifts
• our poll indicates potential among direct mail donors for major gifts
• despite modest income/education, civics are generous & loyal
• 27% have made single gifts $500+• we’re recommending branding a giving
club and soliciting current $500+ donors• our poll tells us that they’ll give to the offer
– not for the recognition
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Leverage– Legacy Gifts• 97% are aware of legacy giving• 92% of donors have a will• 18% say they’ve already named a charity• 17% likely to do so within five years• these donors are older empty nesters – kids are
grown and gone• long on assets, short on income• majority have never been asked• they’re also civics (will boomers die broke?)
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Legacy Gift Potential
• average Canadian estate is $350,000
• average charitable bequest is $20,000
• modest $35 direct mail donors are capable of large legacy gifts because of their assets
• Andrea’s story - $75, twice a year
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Once upon a time…
A client success story
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Where they started in 1999
• thought they had 80,000 donors
• database mess
• no strategy
• no reporting/analysis
• didn’t know what worked or why
• no donor focus – or donor choice
• off the rails
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Setting Goals - Direct Mail
• grow file to 100,000 actives
• average gift $37
• gift frequency 1.2
• gross annual revenue $3.33 million
• revenue to cost ratio of 4:1
• net revenue $2.5 million
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Where they are today
• donor base has doubled
• net revenues have doubled
• they know what works and why
• put donor first – lots of choice!
• segmentation, analysis, precision, efficiency
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Where they started – monthly givingIn short, nowhere!
• but got serious and started working monthly giving throughout the program- segmented mail - web
- segmented phone - email
- door to door - newsletters
- back end - staff
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Setting Goals -Monthly Giving
• 7.5% file conversion
• average gift $13 per month
• gross revenue $1.17 million
• revenue to cost 10:1 (or better)
• net revenue $1.05 million
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Where they are today - monthly giving
• 4,200 active monthly donors
• recruited from a variety of tactics
• putting program in place (devil’s in the details – like expiring credit cards)
• program today is worth $655,000/year
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Setting Goals – Major Gifts
• 3% of the file leverages up
• 2/3 at $500, 1/3 at $1,000
• gross revenue $2 million
• revenue to cost ratio is 10:1
• net revenue $1.8 million
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Where they are todayMid-level
• active program to 1,500 donors, 5,000 prospects
• branded program, segmented appeals
Major gift
• also campaigning face to face
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Legacy gifts – where they started
• no program at all
• no staff or resources
• one brochure and nothing to do with it
• receiving bequests by surprise
• and yet, this HUGE potential
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Setting Goals - Legacy Gifts
• 100 bequests per year (1/1000th of file)
• average bequest $20,000
• gross income is $2 million
• revenue to cost is 20:1
• net revenue $1.9 million
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Where they are today
• created a staff position
• committed to a legacy marketing plan
• Integrated legacy marketing into direct mail program & other media
• early stages – 53 expectancies
• $1.06 million
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5 Years Out – Adding It Up
Direct Mail $2,500,000
Monthly Giving $1,050,000
Major Gifts $1,800,000
Legacy Gifts $1,900,000
Total Net Revenue $7,250,000
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Guess what?
Leverage works
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Wanna be a star?
Employ a leverage strategy by following a few simple steps
• run a kickass direct mail program • keep the base strong• use market research to target segments and tailor
messages• stick to the strategy • give it five years to work
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Remember…
“Deep more than wide”
Call us in 2010
and name your price!
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Leah and Jérôme’s ten tipsto successful direct mail
“Demographics is two-thirds
of everything.”
(never forget Jacqueline)
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Tip 2
Mail is a program – not a
project. You must build on
previous experience.
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Tip 3
“Fancy-schmancy”
It’s okay to keep it simple!
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Tip 4
Everybody – and I mean
everybody – loves a good story.
So tell one!
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Tip 5
Don’t get too many grubby
fingerprints on your copy!
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Tip 6
There’s no substitute
for research and analysis.
(invest a little money)
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Tip 7
Always remember the formula
• Problem
• Solution
• Credibility
• Ask
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Tip 8
Don’t do direct mail in a silo..
Integrate with monthly, major, legacy
stewardship, events etc.
(seamless, baby)
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Tip 9
Test something
every time.
(sloth is a deadly sin)
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Tip 10
Marry art and science..
…and you’ll win
BIG TIME
