Your direct mail fundraising results never lie. But they mislead
you if you let them.
I worked as Director of Development for a national charity that
held a lavish fundraising banquet each year. The staff, from the
executive director down to the receptionist, including the
development staff, thought this banquet was the organization's
most successful fundraiser.
Shortly after being hired, I conducted a comprehensive
development audit that measured the profitability of the
organization's fundraising methods, including this annual
banquet. I added up the cost of the venue, catering, table and
chair rental, lighting, sound, speaker honorarium, invitation
printing, postage and every other related cost and subtracted
this number from the gross income.
What a surprise we got!
What looked like a successful fundraiser was actually the
organization's least-effective fundraiser. In 1999, they spent
89¢ to raise one dollar. They didn't realize that their "best
fundraiser" was a financial flop, year after year. Why? Because
they always published and celebrated the gross income generated
by the event and never looked at the net income.
Two is better than one
You see, the problem with direct mail fundraising arithmetic is
this--you need to understand and use more than just one
measurement. You don't buy a bunch of bananas based on price
alone. You wouldn't choose a lifelong mate based on looks alone
(at least I hope you wouldn't). And you shouldn't measure your
direct mail fundraising success by one ratio or formula alone.
Consider, for example, the most well-known number in direct mail
fundraising--the response rate. Everyone knows that generating a
high response rate is a good thing and that generating a low
response rate is a bad thing. That's why one of the first
questions that prospective clients ask my firm is usually this:
"What kind of response rate will your direct mail fundraising
packages generate for us?"
That's a good question.
But the answer I give, if I simply quote an average response
rate, will mislead. It will mislead because high response rates
do not necessarily mean profitable results. And neither do low
response rates necessarily mean poor results.
* I could craft a direct mail package that generates a 20%
response rate but an average gift of only $2. Not good. You'd
lose money.
* I could craft a package that generates a response rate of
only half of one percent but generates an average gift of
$2,000. That's better. Probably.
Look beyond today's numbers
You need to look beyond each campaign, looking back to previous
results and looking forward to anticipated results. After all,
you could be satisfied today with a direct mail program that
generates an average gift of $35 but never realize that over
half of your donors give you just one gift and never give again.
Your average gift doesn't tell you the whole story any more than
your response rate tells you the whole story.
You can avoid their mistake--and plenty of other mistakes--by
learning the most common ways to measure your success, and then
using as many of them as you require to arrive at an accurate
picture of your accomplishments. The knowledge is in your
numbers. All you need to do is uncover it--and use it to your
advantage in carrying out your mission.
© 2006 Sharpe Copy Inc. You may reprint this article online and
in print provided the links remain live and the content remains
unaltered (including the "About the Author" message).
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