Double your income! This post is part of a series on specific steps you can take to meaningfully increase your fundraising revenue. This is part 1.

You’ve heard about spending more to get more.

But you probably don’t have extra budget lying around for you to use. Where are you going find that “more” to spend?

It starts with the Pareto Principle: You know, the 80/20 rule, where 20% of your donors give 80% of the revenue. (For most nonprofits, it’s even more lopsided than that.)

While Pareto usually guides us to pay more attention to the 20%, there’s another truth: You have a lot of donors who donate a lot less. In some cases, nothing at all any more.

That’s where to turn your attention: In order to spend more on the upper end, spend less on the lower end: send a cheaper version of the direct mail to the low donors. Or even, in some cases, don’t send them any direct mail at all.

I’m going to show you a case study of how that worked, but first a warning: While cutting communications to marginal donors can save a lot of money, don’t do it all the time! Hiding among those low-end donors are people with the capacity to give more – and some who may become bequest donors. Not a lot of them, but financially, they are important. Keep in touch with them. This cut-the-low approach is for use now and then – not all the time!

How one organization did it

In early planning for a direct mail campaign, the appeal had a target net Income of $380,000, based on previous experience. Not bad, but not really good enough.

So they took a close look at their donor file, putting donors in segments by gift amounts and recency of their last gifts. It was no surprise that a number of donor segments had projected net revenue ranging from very low to net losses.

These segments were donors at low dollar amounts (mainly less than $25) and/or no donations in more than a year. It was also a lot of donors. Not mailing them would save a lot of money – and result in little loss of net revenue.

They decided to create four versions of the appeal. As you’ll see, the versions ranged from a very high-touch pack with a lot of things in it, down to a more standard pack.

That may be more complex than you want or need to be. Two or three versions would be fine for this strategy.

Here are the versions and what they consisted of:

Pack A+

463 Very High Value Donors

• Hand-addressed Priority Mail outer envelope
• Handwritten, personalized folder (holding the contents on the pack)
• 4-page personalized letter
• Full-page personalized reply device
• 4 x fact sheets about work that needs funding
• 2-page smaller-size lift letter (handwritten font, not personalized)
• One-page technical fact-sheet about the project
• Before and after photographs of parent and child
• Hand drawn picture by brother
• Return envelope handwritten and stamped

Cost per pack: $9.29.

That may be a shockingly high cost-per-pack. But the expected return from those donors was also very high.

Pack A

9,402 High Value Donors

Same as Pack A+ with these differences:

• Large outer envelope was “normal” with normal postage, personalized but not handwritten
• Folder was personalized but not handwritten
• Return envelope was not handwritten and did not include return postage

Cost per pack: $4.36

As you can see, they cut the cost-per-pack in half by removing some of the expensive elements. These are still very valuable donors, with a high projected net revenue.

18,886 Mid Value Donors

Like Pack A, but:

• No folder
• No 4-page lift piece
• Return envelope not personalized

Cost per pack: $2.20

Further savings halved the cost again.

29,631 Medium-Low Value Donors

Like Pack B, but everything scaled back even more.

Cost per pack: $1.54

This is a “normal” direct mail pack, much like what most of us send to most donors most of the time. Expected revenue from this segment was good, not great.

32,221 Low-Value Donors

No mail sent.

Cost: nothing!

In a way, this is where the magic happened in this campaign. These are the donors whose expected net revenue was around zero. If we assume a cost-per-pack the same as that for Pack C, they saved a total of $49,630 by not mailing them, with a minimal drop in net revenue. These savings were then reinvested at the top of the file, bringing in meaningfully higher response and net revenue.

How it all netted out

Remember that projected net revenue from this campaign was $380,000.

Actual net income was $870,000.

Not too shabby!

Response rate was 28.3%. Overall return-on-investment: $6.32 for every dollar spent. There were a handful of extremely high gifts that distorted (in a good way) the overall results.

“Spend more to get more” sometimes also means, “Spend smarter to get more.” Shifting your direct mail budget towards donors who give the most is a powerful way to increase your revenue.

Next week we’ll look at some more ideas for boosting the attention-grabbing and persuasive power of your campaign

Your critical year-end fundraising is just around the corner. How’d you like to DOUBLE your income from that campaign? Find out how at our all-new webinar, Double Your Year-End Donations Without Spending More. Sean Triner will lay out the complete plan that can dramatically boost your income this year!

Please share your experience by leaving your reply below. We’d love to learn from your experience.

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