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Do I Still Love Premiums!?

Are premium direct mails still pulling their weight in donor acquisition?

A couple of years ago, I wrote an article on my blog and a similar one on 101 Fundraising about premium direct mail.

Direct mail, and in particular, premium direct mail, provides the largest source of new ‘one-off’ donors in Australia and New Zealand.  Also, direct mail is also the largest single source of known bequestors and donors giving over $1000.

Premium direct mail is when charities send a gift, like greetings cards or a tote bag to their potential donors. Like the one below.

Assistance Dogs Keyring 2010

But are these one-off donors ‘real donors’, or just people responding out of guilt, or even ‘bribed’ by their gifts?

The data below shows how Assistance Dogs Australia has fared since they started mailing large volumes of premiums from 2013.

PFBM17 Assistance Dogs massive growth

They also invested in monthly (regular) giving – calling new direct mail donors and asking for monthly gifts, and later on, investing in face to face.

Top Dog at Assistance Dogs, Richard Lord told me “We trialled premium direct mail and the results were unprecedented. This spurred us on to invest in the acquisition of cash donors who have been motivated to become regular givers and to leave bequests.”

(Yes, Top Dog really is his title.)

Focusing on the cash scale (green), you can see the huge growth they had.

After taking into account the original cost of acquisition, the net effect has been transformational for this charity, their brand awareness has skyrocketed, and their future ability to provide services secured.

Richard said, “The increased funds have added stability to our organisation allowing us to diversify our programs and to increase the numbers of clients we serve.”

Basically, those extra funds helped them get more dogs trained and placed.

The problem with premium direct mail compared to non-premium is the second gift rate: It is much lower.  It ranges from 20% to 40%, with most now just below 30%.  This compares to non-premium direct mail getting second gifts from 35% to 45% of new donors, with most around 40%.

Jason Smith, the boss of fundraising at the Burnet Institute in Melbourne told me the results of this big premium pack below that he produced with Pareto Fundraising. (Note to North American readers: the response numbers you’re about to see will make you green with envy! For a number of reasons, direct mail response rates are much higher in Australia than you are used to.)

Burnet Institute premium pack

He got 12% response rate across the 2015 and 2016 mailings.  That is 12% from acquisition!

But just 24% of these new people donated again.  So, of all the people he mailed, 9% gave once, and about 3% gave again.

If he had mailed a non-premium he’d have been lucky to get 2% in the first place.  AND he wouldn’t have had that income from the 9% of donors who effectively subsidised the costs.

In addition, he is tracking bequests and has had a couple of these new donors confirm they have put Burnet Institute in their will and is following up a load of other bequest leads.

Premium direct mail is not for all charities, and responses are lower now than in olden days (like five years ago) but it remains the biggest source of donors and retained monthly givers.

Should you consider premium direct mail acquisition for your cause now, in 2017?

For many charities – probably not.  It is hard work, expensive at first and needs specialist skills, a good quality donor database, and project management.

The decision will also depend on your country or state laws, regulations, costs and list access.

But generally, I would say that it is worth looking into if you know what you are doing in this area, have qualified staff or suppliers and you know how to follow up these new donors for bequests and mid-value donations.

What do you think? Do you have good or bad experiences from premium direct mail? Or have you any questions as to whether you should get into it or get out of it!? And please ask questions / share your experience by leaving comments below!

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