The Fine Art of LEVERAGE

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The Fine Art of LEVERAGE

• Leah Eustace, CFRE
• Jérôme St-Denis
• www.theflagroup.com

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Lets Start with Strategy

• According to Mal..
• youve got 5 choices
• Growth
• Involvement
• Visibility
• Efficiency
• 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 mails 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 aint there anymore (for most of you,
  anyway)
• direct mails 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
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Gender
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Employment
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Education
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Household Income
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Marital Status
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Dependent Children
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Attend Religious Services
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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. Phils become rich off of them)
• direct mail is no different!
• if theres no problem, why should I care?

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Step 2 the solution

• Ill care about the problem
• Ill give to the solution
• no solution? no gift..

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Step 3 - Credibility

• I care about the problem
• Ill 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 whats the most common reason that people
  give to charity?
• lets 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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Lets 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
• weve 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
• were recommending branding a giving club and
  soliciting current 500 donors
• our poll tells us that theyll 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 theyve 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
• theyre 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
• Andreas 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
• didnt 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 41
• 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 giving

• In 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 101 (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 (devils 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 101
• net revenue 1.8 million

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Where they are today

• Mid-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 201
• 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
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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 Jérômes 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
• Its 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

• Dont get too many grubby
• fingerprints on your copy!

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Tip 6

• Theres 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

• Dont 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 youll win
• BIG TIME

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For more information visitwww.theflagroup.com