Estimate for Direct Mail Campaign

Sahsa
My instinct would be to use the agency that best understands us as a charity. The only way I know of to gauge that is to get a number of agencies to pitch to you. Once you have found someone to work with you need to invest in the ongoing relationship!

Kind Regards

What a very interesting thread!

What I wonder is how a charity would evaluate a DM company when choosing among the ones out there? Simply going with the market leader is not always the best option. You pay for the 'market leader' name, as well as the service. Referrals are good, but are there particular points to look for to recognize if it is a good match between the DM company and a given charity?

Thanks,

[quote] So on second thoughts, amend my 'never, ever' rarer than hen's teeth. Even so, the DM may have opened the door, but I'd lay money on the fact that it had to be followed up with a more detailed/specific proposal before a grant was made.[/quote]
Ah, dear Sandre: What is that I see? Your fingers moving to loosen, though ever so slightly, the philanthropic purse strings to favor Direct Marketing campaigns? From, “never, ever,” to a possible drink---though maybe just a sip for starters---from the philanthropic trust “well” to fund a DM campaign? I’m speaking in general now, not targeting your particular trust, so please push that “bin” under your desk.

Thanks for the opening though. We’ll start by not referring to such a program as simply “DM.” That sounds crass, is perfunctory, and does evoke the scattershot assault of yet another tiresome and annoying, “Dear Friend” appeal to the uninterested and uncaring masses.

What is considered to be the traditional Direct Mail effort, looks to bulk mailing, mostly to unknown and uncaring cold prospects, and sitting around waiting for the money to roll in. Not a good strategy to attract any sort of sponsorship or underwriting funding from a discerning grantor. Not a good strategy, period.

So, let’s work with an experienced and capable Direct Mail company to together fashion the program to be, and do, much more---as you recommended.

As you said, such a program seeking funding from a trust or corporation must be accompanied by “... a more detailed/specific proposal before a grant (for the DM program) was made.” The key to any such success is appropriately expressed when you said, “DM needs to be part of the strategy, not the entire strategy.”

Exactly: To “package” the Direct Mail Program as the beginning, and as an integral part of a “capacity building” fund-raising effort, and submitting how the Direct Mail donation returns, the planned cultivation of some individuals not responding to the mailing, will be part of a more comprehensive and personal solicitation effort moving into the next year. This is a way to obtain entry gifts and to broaden the base of support upon which to build for future and larger gifts.

In other words, the Direct Mail plan is to be followed by an aggressive and expanded Annual Fund Campaign, complete with provisions to recruit volunteer fund-raising leaders and committee, rating and evaluating donors who gave to the Direct Mail Campaign for renewed and increased gifts, identifying and rating new prospects, establishing a Memberships Program, and the production of the many other strategies and tools to implement the campaign. All of the latter to be truthfully and convincingly proposed for the building of a solid and repeatable base of future support, and which could be made possible---making our case to the trust---with the help of the impetus, results and practice gained from the funded Direct Mail program.

Without the follow-up/companion future sustainability plan springing from a Direct Mail program, there is no chance for any funding from any source, and so we have nothing but “bin” material.

In any event, when it comes to Direct Mail programs, chances for their funding or not, companion subsequent fund-raising campaigns or not, we nevertheless must get away from the siren’s song of, “Gee, just think, we sent 100,000 fund-raising appeals out today, and we can hardly wait to begin counting the money.” We know such lures can be attractive to non-profits unable to fathom how to face the hard and frustrating work of recruiting volunteers, identifying prospects, managing campaigns, and asking for money. Just sending letters to strangers can seem easier. It may seem more comfortable to have an impersonal letter do the job, rather than working to ask as many as possible of our major prospects in person, or at the least on the telephone, for their money. We all have the responsibility to keep telling ourselves that successful fund-raising is not based on a favorable comfort level.

Faulty attitudes and willy nilly practices of that sort makes the name, Direct Mail, a pejorative. Once we stop thinking in that way, become more properly selective with our mailing lists, carefully craft and create our solicitation package, meld the Direct Mail potential base-building program with other of our fund-raising efforts, etc., and otherwise work to give Direct Mail a “better name,” we can have a better chance to attract trust or corporate underwriting and sponsorship funding.

Cheers,
Tony

[quote]You may want to be alert to the possibility that the entire program could meet the initiatives of foundation or corporate prospects for sponsorship or underwriting. The latter especially, for all of the possible visibility and promotion the solicitation pieces could exhibit to the pubic with tasteful, but effective, corporate logos and other credits.[/quote]

Tony's input is, as ever spot on, with one sole exception, which is related to there being less of a culture of philanthropy in the UK. Never, ever, direct mail charitable trusts/foundations. They go into the bin, unanswered [1].

Sorry if that sounds harsh - but the funding environment is so much smaller here that all trusts and foundations receive many more individually targeted eligible proposals than we could ever hope to fund - we're not going to waste any time and resource on any kind of response to bulk mail - we'd rather spend our money on grants than admin.

To a lesser extent, the same applies with corporates. The larger the ask, the more personal you need to get. As has already been noted, DM needs to be part of a strategy, not the entire strategy.

[1] Someone is now bound to come up with a story of how a mega-trust was attracted to their DM campaign and a huge grant was made. So on second thoughts, amend my 'never, ever' rarer than hen's teeth. Even so, the DM may have opened the door, but I'd lay money on the fact that it had to be followed up with a more detailed/specific proposal before a grant was made.

David, I presume DM is just one of the tools they mean to grow the charity. Whether it is a large or small part of the strategy depends on a whole lot of factors that we are not privy to - and the results of tests would surely be a key one. Yes, for most organisations, (cold) DM may not be the way to grow "big" in the currrent environment, but I don't think you can advise any given organisation definitevely on this without more information.

[quote]Bruce, I understand and appreciate the arguments for Lifetime Value. And I'm not knocking DM as an effective fundraising tool - but my argument still stands: This is not the right tool to use to reach the desired end as stated "to grow the charity big!"

[/quote]

Bruce, I understand and appreciate the arguments for Lifetime Value. And I'm not knocking DM as an effective fundraising tool - but my argument still stands: This is not the right tool to use to reach the desired end as stated "to grow the charity big!"

The cost has to be weighed up against their potential lifetime value - e.g. the proportion of donors who make repeat gifts. If your organisation is new to DM, it will take a while to work out the LTV, which goes back to what I said originally about the need to test. But if it does cost £60 to recruit each new donor, or even £100, then that might be great value say if you get an average of £100 p.a. (plus Gift Aid) out of them for an average of 7 years.

[quote]

500 new donors at a cost of £30K. While it may be possible, it isn't going to help you to "grow big". I'd be looking at other ways of spending the money!

[/quote]

[quote]This is my first post to this forum, and I would like to ask a question please.

I run a small charity that is trying to grow big, and I have made enquiries of a Direct Marketing company for a direct mail campaign.

The company will create a mailing piece, print it, and mail to a number of lists, a mailing total of 50,000. They estimate that we should be able to add 500 new donors to our database as a result of this mailing.

The cost to me will be £30,000, and I am just wondering if members of this forum think that this is a fair cost or if it is too high/low - I have no way of knowing this.

Any advice/suggestions etc. would be more than welcome.

Thank you
jc[/quote]

500 new donors at a cost of £30K. While it may be possible, it isn't going to help you to "grow big". I'd be looking at other ways of spending the money!

If you have doubts about the potential return from a cold mail campaign (and no amount of case studies from other charities and industry averages will dispell all your doubts), then reduce your risk. 10,000 would be a good sized sample to test a range of lists (say 5 lists of 2,000). OK, your units costs will go up (lets say to 80p/pack), but you would be risking a lot less. Say you only get a 0.5% response rate and and average gift of just £50: If you mailed 50,000, that would produce 250 donors and £12,500 at a cost of £30,000, giving you a short-term loss of £17,500. If you mailed 10,000, the same poor response rate would be 50 donors and £2,500 at a cost of £8,000, so a short-term loss of £5,500. OK, your ROI is higher in percentage terms in the larger mailing but the loss would be £12,000 more. Are you prepared to take that risk? I ask this because I remain an enthusiast for direct mail and would not want you to be put off a great technique by getting your fingers burnt badly in the first outing. Even if you did get a disappointing 0.5% overall response, analysis of the list sources could show some lists within that that produced 1%+. If you did a smaller test mailing, you would then still have the budget to use a second mailing to roll out those good-performing lists profitably. Remember that lists are the single most important factor in the success of a mailing - much more so than creative, offer, timing, etc. - and one of the easiest things to test.

There are a number of specialist DM companies - Target Direct would be one of the market leaders, and their Stephen Pidgeon would give an honest assessment of whether DM is right for you. I have been advised in the past not to encourgae clients down this road, but each case is different.

The key thing with DM is not to expect quick returns on a very significant investment. The quote you have had sounds in no way outrageous, and you have to determine whether, at your stage of evolution, you can afford a long-term investment.

You should also not see this in isolation. I worked for an organisation who tried a one-off campaign which was so poor they never tried again. I could go into details about what was wrong with the specific campaign (though I won't!), but there was no commitment to a longer-term campaign. Investing £30k each year for the next 5 years might produce a worthwhile donor list!

Cheers

Gerry

I work for a company called DBS Data Marketing that was stablished in 1994 as an independent list broker we quickly evolved into a broker, manager and owner of DM lists in 1995 and further still into full service direct marketing by 1999 and today offer a comprehensive range of services including lists, data management, fulfilment and response handling for postal, telephone, SMS and email media channels.

[url]www.dbsdata.co.uk[/url]

We have Charity lists available. If you would like a quote for the data list and fulfilment please let me know.

Regards,

James Neale - [email]james.n@dbsdata.co.uk[/email]

Hi,

After reading your message I would stress that if you have come to the conclusion that direct mail is the format most suitable for your organisation, then you need to address how the campaigns will be measured, in terms of response levels, format, list usage and creative. DM is a useful tool for developing long term relationships with target audiences. It is essential for you to have a system in place to 1. manage the responses any dm campaign will generate 2. Create a reporting sytem that can accuratley measure the effectiveness of the campaign as a whole and also the variable elements in the campaign.

I would also urge you to pay close attention to the distribution costs, and ensure that you get the most applicable postage discounts that are available. Contact your Royal Mail Sales Rep and make sure you are up to speed with formats, pricing, soring options that are available.

John: There are a number of reputable and capable Direct Mail companies doing business to serve non-profit organizations. Thus, I expect that you have/will obtain other evaluations, recommendations, and bids for your DM business. However, while you continue to develop your particular mailing plan, and to further review the assessment and projections made by the present company with which you are dealing, I am going to offer some advice, a good portion of it coming from hard experience.

The first questions I have, from what you were told by the DM company are, “OK, so we do receive 500 new donations, but what will that mean in actual dollars?” “Will the average gift be £60 so as, at the very least, for our organization to break even with the cost of the mailing?”

Of course no one knows, especially at this stage---much less even later in the process. That’s why you should take great care before you commit so much money for results which come from many, many unknown and out-of-your-control variables.

My only criticism thus far of that DM company is that they appear to be far too early telling you to expect 500 new donors from the 50,000 piece mailing. That’s a 1% return---apparently all before you have settled on the most viable mailing lists, and have gone forward with the format for the creation of the mailing piece. That creation and eventual format and “packaging” of the solicitation is crucial to the rate of return. Will the message be simply that you need £X, and that would the prospects please consider giving something toward the goal, or will each and every appeal suggest an exacting amount? Those extremes can make a huge difference in any funds contributed.

I would be wary anyway, as it’s possible that the 1% response rate quoted as being your result, is simply a quoting of the usual “industry standard.”

You are proposing to make the classic Direct Mail “cold” approach to prospects who have no identifiable relationship with the organization.

Such efforts are often worthwhile. It could be a way for you to reach people who are not part of the constituency of your organization.

But, such direct mail campaigns are not for all organizations, so work on with a DM company having a proven track record, being very careful, practical, and realistic about the selection of acquired mailing lists, and to be ready to accept that the rate of return of your first mailing most likely will be low --- even of no consequence --- not to mention the good chance that the donations received will not cover expenses. And this could continue for several mailings.

The mailing campaign being new to your organization and to you, prompts me to suggest that before you go too far in the development of the program, you should step back and ask yourself ----and the organization’s other leadership---several critically important questions.

(1) Are we ready to accept the strong possibility that the making-a-profit point will not be reached with the first direct mail appeal---and that it might even take four or five such mailings to make a net profit? (In other words---that a sound direct mail program is a long-term investment, and is not a quick and easy way to raise money.)

(2) What are the chances that this venture---even in the long term---will produce a number of donors and raise an amount of money to make the effort worthwhile? (Those projections must make a meaningful impact on what our organization needs to help balance their budget.)

(3) Will we be certain that our direct mail campaign will not be so time-consuming and resource draining that we allow other productive fund-raising activities to be deferred or abandoned---or not established at all? (It is easy to become enamored with such a labor intensive and impersonal program, rather than engage in the slogging process of identifying prospects, recruiting volunteer solicitors, and personally asking for money.) We believe that’s the only, and best, way to “grow big” and to stay that way.

(4) Will there be steps planned to maximize the chances that the first-time direct mail donors’ gifts will be repeated the following year and that we we will work to obtain increased gifts from them --- and that those donors possessing higher giving potential will be identified for future personal contacts? (It simply does little good to have these entry-level donors solicited in the same way year after year as they were in the first place. One human being speaking to another who has a relationship with our organization will bring in far more money than a brochure, letter, and return envelope.)

John: Depending on the responses to those questions, you should be far better able to determine if a direct mail campaign for your organization is really the thing to do at this time, if at all. Not all non-profits are able to reap the proven benefits of a well-planned direct mail program. Your good judgment is required to understand the real value and position of direct mail fund-raising in the development plans of the organization.

Let’s say that you plan to proceed with your proposed direct mail campaign. To better develop your program, you should look at what other similar organizations have done and learn from them.

From others who have experience with direct mail, you can work to answer the most basic of questions:

(a) What track record do the lists have?
(b) What are the demographics?
(c) How many names will be finally required?
(d) How much will it cost for certain, with no surprises coming later as is common in such programs?

Comparisons with others who have made similar direct mailings will allow you to rate and evaluate their solicitation materials before you go too far with your own concept. I believe this to be extremely important, as a great deal of the money spent in direct mail is for the “packaging” of the solicitation material.

You can also use other organizations’ examples to learn:

-- rates of return gifts to what they mailed;
-- when the “break even” points were achieved;
-- total expense budgets

As an essential part of your plan, I suggest there be a provision for a solid program in place for effective management and servicing of the program: Receiving donation, prompt acknowledgment of them, their internal posting, data reporting, etc. of all gifts.

You may want to be alert to the possibility that the entire program could meet the initiatives of foundation or corporate prospects for sponsorship or underwriting. The latter especially, for all of the possible visibility and promotion the solicitation pieces could exhibit to the pubic with tasteful, but effective, corporate logos and other credits.

Of course, you will ensure that the direct mail program will maintain and support the image of tradition and decorum your organization has built, or is intending to project.

Lots to think about, to be sure. So much indeed, regarding mail rates, stamps or metered postage, length of letters, copy content and message, personal or "Dear Friend" salutations, suggested contribution amount, possible donation membership levels and related benefits, enclosures, best mailing months, etc.

Sincerely, with all due respect, I urge that you do not enter into such an expensive and high-risk venture unless you work with a proven and capable DM company---one which will put your interests first, even to possibly suggest that a DM campaign is not the thing for you to do at this time.

Perhaps taken out of context---if so, I apologize---but, if the DM campaign is born of simply, and only, “trying to grow big,” then I suggest that is not reason enough. Any growing big must not be arbitrary, and would stem from the initiatives of a sound Strategic Plan. When such a plan is produced, from it comes the traditional, mostly personal approaches, fund-raising campaigns seeking major gifts. And you don’t get those from direct mail to unknown and mostly uncaring and distant prospects.

Best wishes,
Tony

I strongly suggest you get about 5 different quotes from direct marketing companies. Many direct marketing companies make their money by outsourcing the printing and adding on a mark up. You can save lots of money by getting separate print quotes from printing companies and then forwarding the job onto the direct marketing company. One company you could call is Creation Publicity....visit their website at [url]www.creationpublicity.com[/url] and ask for Alex