Animal, mineral or vegetable? The dehumanization of direct mail fundraising.

During the past decade, nonprofits have invested millions of dollars and person-hours making their direct marketing more personal and relevant. From costly data collection techniques to deep dive analytics to state-of-the-art imaging capabilities, everyone has worked overtime to be equipped with the tools to make today's letters truly look like personal correspondence, from one person to another.

But while the industry has collectively spent all this time and money investing in the tools to "be more personal," something strange has been happening before our eyes--we've somehow lost the human touch. In fact, today's direct mail sounds and looks and feels less personal (indeed, less human) than ever before. What used to be an interaction between a mission and a friend, has all too often become a transaction between a premium-provider and a buyer.

And this dehumanization of our communications--in the way our mailings sound, connect, and feel-has had a devastating impact on today's fundraising.

DEATH BY A THOUSAND CUTS

You remember those classic Ginsu knife commercials on TV? Just when you thought the deep voiced announcer couldn't possibly want to sell you anything else, he told you "but wait, there's more!" I hear his voice every time I go to a mailbox these days. Chances are good that for every piece of fundraising communication that really wraps a donor into the mission, you'll find five other packages that seek to "finalize a transaction."

Whereas once upon a time our industry's tried and true control packages consisted of long stories which truly sold the mission, or truly one-to-one correspondence which educated and informed, our mailboxes have become overrun with product and perfunctory billing statements. Name labels. Bigger labels. Calendars. Pads. Bigger pads. Coffee mugs. Labels, pads and Calendars, with an order of mugs on the side. And if your mailbox isn't filled with these giveaways it's likely overwhelmed with one-panel collection slips (annual funds, donor drives, good neighbor drives) which tell nothing about the mission other than the fact we're hoping you'll send us a gift at this time.

I'm not saying all this mail is bad--in fact, in terms of grabbing attention and eliciting an impulse gift--much of it is brilliant in execution. And many organizations have been very smart in creating premium-based appeals which also carefully sell the virtues of the mission.

But very often--too often--we have all fallen prey to the allure of generating a quick transaction, at the expense of building a long-term relationship. Passion has taken a backseat to purchase. And we are all reaping what we've sown: Despite the millions invested in trying to personalize direct marketing, donors are actually less connected than ever before. This explains, perhaps better than any macro-psychographic trend analysis, why renewal rates are in a dangerous decline and why revenue is flattening. The result: donor files which are a mile wide, but only an inch deep.

ONE ORGANIZATION'S BRAVE EXPERIMENT

Consider for a moment, this scenario. You run a well-known organization with a good, reputable brand. You've got a healthy-sized donor file, but some of your most important metrics--average gift, retention rate, overall donor loyalty--are increasingly troublesome. And while you're happy you've been able to maintain a fairly sizeable donor file, everything else is making you question whether the heavily premium-centric mailing approach you adopted a few years ago is actually in the best long-term interest of your program. Does this sound familiar?

Recently, a nonprofit faced with these questions began digging deeper than ever before to see if there was a better way. The questions were both simple and complex: Are our premium-acquired donors truly engaged in our mission for the long term? And if we stop mailing premiums in acquisition, what will be the impact, knowing that we're going to generate far fewer supporters (in reality, far fewer transactions) in the short term?

The answer to the first question came back a resounding--maybe.

A careful analysis of the file found that many of the newly-acquired donors (through premiums) were indeed sticking around, but not nearly as often, or as loyally, as core donors acquired through more mission-based appeals. Specifically, the file analysis revealed that most of the net revenue was being generated by donors with a vastly different profile from the thousands of new donors being acquired. And in some cases, it was taking forever (if ever) for these newly-acquired donors to begin generating net revenue for the mission.

Armed with this information, a rigorous testing program was undertaken. The objective was to develop several new control packages (some premium, some not) and then measure each one's effectiveness based purely on long-term impact. In short, not just on the cost to acquire a new donor, but upon the long-term value of the donor acquired by that package.

After five years of rigorous testing, the organization has now evolved to the point where it has turned its previous program, and assumptions, upside down. Whereas once they mailed 100 percent premiums, premium-centric packages now comprise barely 50 percent of the mix. Whereas once they concentrated on one or two "control" packages aimed at distinct audiences, they now mail five different controls.

The result? The number of new donors acquired each year is roughly 80 percent of the number five years before, but the average new donor value had more than doubled in that period. Today, revenue growth is steady, and while premiums are still part of the organization's strategic plan, they no longer dominate the program.

Best of all, the organization managers know that they are once again building long-term relationships with donors who are engaged with the mission.

PASSION-BASED SEGMENTATION AND MESSAGING

In simplest terms, most of today's files consist of two basic kinds of constituents: Those who are deeply passionate about your mission and what you do; and those who care on a surface level (they feel a sense of obligation or guilt, or they simply like your premium "products"), but are not truly passionate about your cause. And because you occupy a very different place in each segment's heads and hearts, you need an entirely different strategy for both. The first group wants a hug. The second is very happy with an arms-length relationship.

In the decade to come, the biggest winners in fundraising will be those who nurture and cultivate their passionate base, while they economically manage their peripheral supporters.

So, how do you identify those most passionate donors? Obviously, financial support (and basic recency/frequency/amount) is a critical part of it, but only one part. You can also study key data such as a donor's history of volunteering and participating in special events. Another important factor to look for is whether or not the donor contributes via multiple channels. Research shows that the more ways people give, the deeper their commitment. Has the donor ever responded to a survey? If so, this is one more indicator of the person's passion for your organization. Naturally, you should also analyze a donor's frequency of giving, the length of time he or she has been on your file, and whether or not giving levels have increased over time.

A word of caution: a sudden decrease in the size and/or frequency of gift amounts from a long-term donor might not signify a loss of passion. It could mean that the person is now on a fixed income, has fallen ill, or has moved into a long-term care facility. Rather than ignoring this shift in giving behavior, you could tactfully begin cultivating the donor for a planned gift.

By segmenting donors based upon these characteristics and behaviors, you will find the people who have a passion for your cause. Once these donors are segmented, you can cultivate and enhance their commitment through the use of mission-specific appeals. These are packages that recognize and educate the donors and enrich their relationship with your organization.

Long copy is often very effective with this audience because they are interested and they care about your cause, your work and your achievements. Your messaging strategy for this segment can speak to their aspirations about making a difference in the neighborhood or in the world. You can give examples of successes, use testimonials from people who have been served and from donors who support your work.

Passion-based segmentation is also useful in identifying donors who should receive a "thank you" telephone call. The information gleaned during a brief call can be extremely revealing and should be appended to the donor's record if possible. It's surprising how effective a simple "thank you" can be. Donors are usually delighted to be thanked and recognized when the call is short and sweet.

For the segments that thrive on "purchase" or transaction-based fundraising, you can continue to mail smaller, shorter package formats that rely on campaign headlines and premiums such as name and address labels, calendars, and note cards. And, you can test a mix of appeals to this audience. Through careful testing, you will find those donors who are interested in your work and who can be converted to the more passionate segment.

By adopting passion-based segmentation, you can then create a marketing/communications/fundraising strategy which optimizes income and the donor experience--creating a more mission-based relationship with those who have demonstrated a desire to do more, while keeping a transaction-based relationship with those who care somewhat.

Tom Gaffny is executive vice president of the direct response fundraising and database agency Epsilon in Wakefield, Mass.