Expanding Your Definition Of The Perfect Donor.

As individuals we go through life wanting to surround ourselves with people who are a good match for us. Once we figure out who these people are, we can identify their characteristics and we end up gravitating toward those types in the future.

None of us really 'think about this while it is subconsciously happening - but it is happening. Of course, this is OK for our personal life, but in business we have to think about it.

Nonprofits are no different. Organizations work very hard to define the perfect donors by combining the elements of charitable giving status, age, gender, interest in the cause, and many more identifiers. Once defined, the task of finding those individuals and keeping them flows through every component of our relationship cultivation 'strategies.

The Arthritis Foundation (AF) has gone through this exact process several times. Through years of testing, the characteristics of our "perfect donor" have been identified. We developed strategies to find them, strategies to talk with them, and strategies to renew them.

But, similar to life, sometimes we don't end up with exactly what we want. In fact, one year AF ended up with more than 100,000 individuals who communicated, reacted, and responded unlike any of our other audience segments and changed the face of the program for several years into the future. This isn't to say these individuals weren't good matches for AF. They were, but they wanted something different, something the organization wasn't prepared to provide and continue to support.

In 1990, the AF launched a membership program as a fundraising strategy. The process of identifying this new strategy involved extensive analysis of the membership concept and the marketplace. Membership was developed as a cultivation methodology to engage more individuals with the organization, provide information in great amounts through various benefits and secure a minimum yearly contribution. To date, this strategy is a success.

The relationship between the foundation 'and members is mutually beneficial. AF benefits by receiving a contribution of $25 or greater from each member. Members benefit because most are (r)personally affected by arthritis and need the most accurate, up-to date information on the more than 100 forms of arthritis and related diseases. The primary benefit of Arthritis Foundation membership is a one-year subscription to the awardwinning 'magazine, Arthritis Today. This benefit is the primary motivator for many members because the information they receive through the magazine is unmatched by any other disease-specific publication.

The concept of cultivating new members and renewing current members has been one of [the primary objectives of the foundation's direct 'mail fundraising program since 1990. However, over the years the percentage of nonmembers was nearly equal to the percentage of members. In 2000, active members represented 52 percent of the active contributor base. The other 48 percent didn't choose membership as their method of supporting AF but did donate through other campaigns.

Because this has been a pattern, the AF continues to focus on member acquisition and member renewal but also spends significant time on optimizing 11 other traditional fundraising campaigns, such as the annual fund, donor drive, matching grant, etc.

These nonmembers are extremely important and in 2000 generated 53 percent of the $20.4 million realized by the program. But when membership was assessed for long-term value and impact, members were quickly identified as being more valuable. They give more money, give more often and stay active longer.

Based on the short-term and long-term impact of cultivating members, heavy emphasis was placed on identifying different ways to introduce membership to prospects and upgrade nonmembers to membership status.

In the acquisition program, the control strategy combined charitable organization donor lists with a traditional fundraising package that focused on membership. With this control strategy, the program had a response rate of 1.34 percent and an average gift of $12.23, and 33 percent of those individuals donating became members. Testing strategies ranged from medically focused lists to health publication modeling, and subscription-focused packages to stamp-sheet/sweepstakes relationships with third parties. Testing was aggressive and strategic.

There were 19 tests against the control acquisition strategy during 1995, including a small test using address labels. Results from this small test showed a nearly 35 percent lift in response, a 2 percent increase in revenue per 1,000 pieces mailed, and a decrease of 6 percent in costs.

Based on this, premium-based acquisition was included in the 1996 testing platform on a larger scale. The long-term goal for this testing concept was to upgrade these individuals to membership within the first 12 to 16 months by providing a higher-end "premium," Arthritis Today Every indication was that these individuals would migrate to membership.

The 1996 test results continued to look promising with response rates much higher and average gifts of nearly $9. As expected, the average gift was 31 percent less than the control package, but at times the response rate for the address label package was twice that of the control package.

Plus, other tests within the address label initiative included special messaging about membership, which increased revenue per 1,000 by 23 percent more than the "standard" address label package. With this success, a rollout was planned for 1997.

As the foundation prepared for extensive use of address labels in 1997, budget priorities were changed and the funding for the 1997 acquisition program was altered. With increased quantities of the address label package, overall costs were reduced that allowed for a larger quantity to be mailed. Additionally, a strategy that yielded a higher response would ensure a consistent growth to our contributor base during the budget reprioritization. As the 1997 program began, the strategy included 3.5 million address label packages, representing 20 percent of the packages mailed by the foundation.

It didn't work

It was early in the year and a surprise to everyone when the results began faltering. Instead of following previous patterns of beating the control package in all segments, the address labels began to lose in specific segments. The response rates seen in 1995 (2.01 percent) and 1996 (3.5 percent) didn't compare to the 1997 response rates of 1.5 percent and 1.8 percent in some segments.

While we were able to immediately see the change in performance, it was challenging to redesign the entire acquisition strategy mid-year. Fortunately, using the resources of our primary direct response agency and list broker, the address label strategy was abandoned and replaced with our traditional, nonpremium acquisition strategy.

While the impact of this package rollout was contained quickly, the long-term impact of this 30-month testing strategy stayed with the foundation for years. The larger testing in 1996 and early 1997 had generated more than 100,000 new donors who were responsive to premiums. These individuals were valuable, but the goal of converting these individuals to members was not achieved.

In the history of the foundation's direct response fundraising program, this test is considered one of the most challenging -- yet one of the most rewarding. Address labels and other premiums have been and continue to be extremely successful fundraising strategies for many organizations. The foundation's challenge was rooted in the fact that our goal was to generate a member. A relationship cultivated through membership and providing Arthritis Today was the optimal relationship for AF Not only was the organization unable to upgrade this pool of nonmembers to membership status, these individuals didn't respond to any of the 28 other communication tracks and campaigns that made up the overall strategy of our fundraising program.

Even though we reacted quickly and abandoned the strategy mid-year, the fact remained, we had a premium-based audience, representing 20 percent of the entire active contributor base in 1997. To ensure we weren't abandoning these contributors who had chosen to support us in a different way, a specific track had to be developed to renew these special donors in early 1998.

The addition of another communication track made the program more complex, yet it turned this near-tragedy into a winning situation. While the foundation steers away from strategies that might grow our premium-based audience on a large scale, the premium renewal track was a successful strategy for this specific situation. In its first year it generated nearly $500,000 and has grown to $650,000.

Looking back, the revenue impact of the 1996 and 1997 large-scale tests was minimal; however, the impact in other areas is still with us five years later. This test is forever footnoted in the program's file audits, contributor base growth measurements, average gift tracking, and renewal rate comparisons. Specifically, the file growth from 1996 to 1997, an increase of 11 percent, was higher than ever previously recorded for the full program with nationwide participation. This was a direct result of the higher response rates achieved with the address label strategy. Yet, to the unaided eye in 1998, the file growth for the foundation appeared to be taking a negative turn with only a 1.5 percent growth, the lowest in history. The 1998 program was extremely successful, but the comparison to 1997 was like comparing apples to oranges. The 1997 strategy produced more people with smaller gifts. When comparing this to the 1998 program (that returned to the former strategy and generated fewer people but with larger gi fts) the head-to-head comparison was lost for the year.

We experienced the same challenge when comparing average gift data from one year to the next. The average acquisition gift in 1996 was $14.50 and $14.23 in 1997. While these were lower than prior years, it was representative of a healthy address label strategy. The challenge came when conducting a year-to-year comparison in 1998. The average gift in 1998 was $15.84, representing an increase of more than 11 percent. While the increase in 1998 was representative of the program's success and confirmed our decision to return to traditional strategies, it set false expectations for the yearly comparison between 1998 and 1999.

Back in 1995, we started our testing initiative with a specific goal -- to generate a large pool of premium-motivated donors and upgrade them to membership with our premium, Arthritis Today The immediate impact of that testing initiative has long since passed, but the long-term measurements of the program are-still impacted. The footnotes still exist and our four-year retention studies and long-term value reports continue to show the impact.

We thought we were different from other organizations. We thought we could upgrade a premium-responsive, address label donor to our organization's premium - Arthritis Today magazine. With membership as our ultimate relationship, we knew we weren't willing to use more substantial premiums (calendars, greeting cards, etc.) to move these individuals from address labels to membership.

We also knew this was not the standard upgrading process and that we were doing something different. In our pursuit of the "perfect donors" we cultivated more than 100,000 individuals who wanted something different from us than we expected - and something we weren't originally prepared to provide.

Looking back, we should have rolled out much more slowly while waiting for more substantial long-term value data and more substantial data on upgrading within this new donor group.

It was an important learning experience for everyone. In fact, our later tests have been measured differently and long-term value measurements are identified up front. We learned important information about our donors and their characteristics - we better defined what is and is not our match.

Angie Moore is group vice president, direct marketing at the Arthritis Foundation in Atlanta.