Is It Better or Worse to Send More Appeals?

Part of me is definitely a fan of conventional wisdom. Come on. What’s not to like about wisdom?

On the other hand, part of me hates the notion that we should continue doing things because that’s the way they’ve always been done. All too often, conventional is code for mediocre.

In other words, I think it’s wise to regularly challenge conventional wisdom, so long as we do so thoughtfully and preferably with good data.

So, being a good fundraising nerd, I enjoyed reading a number of articles this week that explore how often charities should send appeals to donors.

Let’s start with the conventional wisdom:

The more appeals you send, the more money you will raise.

Change in Hands by Randy Willis via FlickrAndrew Olsen, CFRE, Vice President of Client Services at the Russ Reid Agency, tested the conventional wisdom. In his blog post “Fundraising Myth Busters: Solicitation Frequency,” Olsen concludes, “Don’t be afraid to add a solicitation or two to your annual line up. As this case shows, you stand to make a lot more money for your cause if you do!”

In his post, Olsen shared testing that was done for two nonprofit organizations:

  • In the first case, the organization went from five to 10 solicitations, and year-over-year revenue increased 123 percent.
  • The second organization increased from three to six solicitations, and year-over-year revenue increased 110 percent.

Given that the highly respected Russ Reid Agency conducted the tests, I had to take notice. However, Olsen’s post raised more questions for me than it answered:

  • While gross revenue increased in both test cases, did net revenue increase significantly?
  • What impact does increasing the number of appeals have on long-term donor retention?
  • How does increasing the number of appeals impact donor Lifetime Value (LTV).
  • If revenue went up, why stop at six or even 10 appeals? Why not send an appeal out monthly, weekly, daily, hourly? When should we stop?

With these questions nagging at me, I was relieved to see that direct-response guru Roger Craver wrote a four-part series on the subject for The Agitator blog (Note: The Agitator is now a paid subscription site.).

Craver looked at solicitation frequency a bit more closely than Olsen did. For example, he reported that the net income from successive appeals goes down after a point. He also showed evidence that some donors on a file are more receptive than others to multiple appeals. While not surprising, it is nice to see the data on this and have a chance to reflect on how screening for solicitation-frequency preference can affect net revenue. Craver shows that sending fewer appeals, particularly to certain individuals, can lead to greater net income.

Unfortunately, neither Olsen nor Craver looked at the long-term effect of different numbers of appeals. Also, neither looked at the future behavior of those who chose not to respond to multiple appeals. Did they renew their support the following year? Did they give the same, more, or less in the following year? Were they more or less likely to make a major or planned gift?

Based on the data, I can accept that sending multiple appeals can yield greater net revenue for a charity, at least in terms of current giving. For my clients interested in increasing current giving, I’ve long counseled that they make multiple appeals as long as they have a strong case for support and a valid reason for asking again.

The reality is that most grassroots donors do not ask themselves, “How much do I want to give to this charity this calendar year?” Instead, the internal voice says something more like, “I like what this charity is doing. How much can I afford to give this month after I pay all of my bills?” Well, guess what? Next month, the cycle begins again. So, why not ask again? In fact, Olsen tells me that monthly solicitations might be optimal. This is something that each charity can test for itself.

The problem is that we still do not understand how multiple appeals affect Lifetime Value. In other words, a small group of donors might respond to multiple appeals and, therefore, make them cost-effective. However, many other donors might be ticked off at receiving multiple appeals. As a result, people in that latter group might be less inclined to make a major or planned gift; many might decide to stop giving altogether.

We know that multiple appeals can generate more current net revenue. However, we need more data to understand the impact that multiple appeals have on donor retention and Lifetime Value. Gaining several thousand dollars of additional net revenue from an additional appeal might not be worthwhile if you lose the chance to secure a $100,000 charitable bequest or two.

I agree with Craver when he says that current donor retention rates are terrible and that business as usual is not going to turn that around. We need to look at what we can do differently to increase donor Lifetime Value. To guide us in the search for a better way, we need more data.

I appreciate the analysis from Olsen and Craver, and I encourage you to read their posts for more information. However, I’m reminded of the plea from Oliver Twist, “Please, sir, I want some more.” He was hungry and seeking more gruel. I’m hungry, too. I want more data. “Please, sir, I want some more.”

For now, what we know is that multiple appeals will generate more current net revenue. However, we don’t know how many appeals are optimal. We also do not know the affect multiple appeals have on donor retention and Lifetime Value. If you have data that can address these issues, please share it below. Like I said at the top, I’m a fundraising data nerd.

That’s what Michael Rosen says… What do you say?

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24 Responses to “Is It Better or Worse to Send More Appeals?”

  1. Great analysis, Michael. I have been considering adding one or two additional appeals into my cycle, but I have to balance the work and cost involved. I’m thinking my time may be better spent stewarding our donors with phone calls, open house, donor survey, etc., which could enhance retention rates and Lifetime Value. Certainly many elements to consider!

    Thanks for this thought-provoking post!

    • Sean, thank you for commenting. There’s no doubt that nonprofit organizations universally face the challenge of limited resources. This leads to tension between allocating limited resources to mission fulfillment v. development. In addition, there’s tension within the development arena over which activities should be prioritized and the degree of investment that should be put into long-term development v. short-term. The important thing is to create a comprehensive development plan with buy-in from the organization’s key stakeholders.

      I applaud you for acknowledging that stewardship is a vital part of the development process. Shockingly, that’s something that a great many organizations fail to realize. That’s why we have a serious donor retention problem.

  2. Interesting post, Michael. I’m wondering if these organizations followed the ask, thank,report/engage formula. If they asked more frequently, did they follow those asks with thank yous and updates?

    • Spot on, Ann! Ask, Thank, Report, Repeat closes the communication loop with the donor, gives them the credit for making the world a better place. It increases Lifetime Value and allows for more appeals throughout the year.

      • Jim, thank you for your comment. I agree with you and Ann. Solid stewardship will enhance donor retention and clear the way for successful multiple appeals, both of which will enhance Lifetime Value.

    • Ann, thank you for commenting and underscoring the importance of sound stewardship. I haven’t seen any carefully constructed studies that compare the effectiveness of multiple appeals at organizations with and without proper stewardship. However, there is ample anecdotal evidence and just plain logic that suggest that if an organization effectively thanks, informs, and engages donors, those donors will be more receptive to multiple appeals that are based on a strong case for support.

  3. There are also opportunities to connect with donors by mail without making that direct appeal. Updates on special projects or news about the organization that might be of interest. That way your donors know more about the work that is being done with their gifts so that when you make the ask, they are more knowledgeable and perhaps even more philanthropic as a result. Each touch does not have to be a direct ask.

    • Carolyn, thank you for sharing your thoughts. I agree with you when you say, “Each touch does not have to be a direct ask.” I would even go a step further and say that each touch should definitely not be a direct ask. Donors are not piggybanks, they are our partners. We need to treat them as such. You’re right, we need to promptly and properly thank them, inform them of how their gifts are used, and ask for their opinions. When we strengthen our relationships with donors, they are more likely to continue supporting the organization, more likely to give more, and more likely to give more often.

  4. Michael – Thanks for posting this. Good dialogue going here.

    Quick clarification on the data I shared in my initial post. Those charities that incresed revenue saw not just significant increases in gross, but in net revenue.

    Additionally, in 99% of the cases I’ve seen over the last few years, those organizations that are soliciting monthly not only generate more net revenue, but they have higher retention rates than those that are soliciting less frequently (I do, however, know of one charity that solicits only 6 times per year and has incredibly high retention and LTDV — this is primarily driven by their specific market conditions and the fact that they have dramatically higher average gift than we see in most other orgs).

    As nonprofits improve the way they capture and track data, I believe we will get to a point where we can, with a degree of certainty, identify the optimal contact cadence for each donor. To my knowledge, there isn’t a charity around that has that level of detailed data on their donors (yet). This will be a game changer for nonprofits and agencies when organizations figure it out.

    A few of your readers have touched on the issue of stewardship. This is another huge contributor to retention and LTDV. It also plays a part, I believe, in how donors react to more frequent solicitation. If a charity is only ever asking, and never providing additional value to donors, then soliciting 4 times a year is probably too much. However, if the charity is timely and authentic with thank you letters, calls, etc., and if they make a point throughout the year to share updates on the impact that donor giving makes, they will have higher retention, etc. And donors are less likely to express concern over solicitation frequency if they feel they’re getting value in these other areas.

    • Andrew, thank you for the additional insight. I appreciate your willingness to share your research results. I also appreciate your willingness to share your view that solid stewardship will help make donors more receptive to multiple appeals. It’s just one reason why stewardship is a vital part of the development process.

  5. Thank you for the article, Michael. You ask good questions.

  6. If you add an extra appeal to your schedule, and it generates a net profit, then the Lifetime Value of that donor automatically rises. It does not fall, ever. That is a fear many have, but the facts are obvious, when net income rises, Lifetime Value rises too. It is a simple function of the maths involved in calculating LTV. The formula is response rate times average gift minus cost per contact multiplied by frequency of contact. The first three numbers calculate profit and then you multiply that profit by the frequency of contacts. If profit gies up and frequency of contact goes up, the resulting Lifetime Value also goes up.

    Most fundraisers who worry or fear that LTV might go down usually have not actually calculated their LTV in the first place. If they do, it immediately becomes apparent that the school of thought that fears LTV will go down is just that, a school of thought based on fear and ignorance of how the LTV formula actually works.

    It is also helpful to keep in mind that various intangible qualities, like “being donor centered” are not functions of the LTV formula. LTV is an actual number. And your “donor centered-ness” is not one of the numbers in that equation. Beware of people who claim that Lifetime Value rises automatically when “you become donor-centered”, or when practice “relationship fundraising”. Those philosophies are poorly defined, widely misinterpreted and often inaccurate and misleading.

    • Derek, thank you for commenting. Unfortunately, I could not possible disagree with you more. You are horribly off-base when it comes to the discussion of both Lifetime Value and donor-centered fundraising. Allow me to explain:

      Lifetime Value: Your thinking about LTV is way to narrow. You have failed to take into account major gift giving, planned giving, special event giving, special project giving, capital campaign giving, and referrals that lead to other gifts. While giving to a current-giving appeal is one component of LTV, it is ONLY one component. While it is possible for current giving revenue to go up in a given year by sending an additional appeal, that move might also cost a planned gift. If an additional appeal nets an extra $50,000, that’s great. But, if that same appeal also alienates a handful of donors, one of whom would otherwise have made a $150,000 bequest commitment, then the extra appeal would have produced a net negative result for organization. When calculating LTV, one needs to look at total giving over a period of years and not just giving from one revenue stream in one year.

      Donor-Centered Fundraising. While you might not understand what is meant by “donor-centered fundraising,” don’t assume that no one knows. Penelope Burk, in her book Donor Centered Fundraising, shares a clear definition of the term as well as examples of research-based donor-centered best practices. I do the same in my book, Donor-Centered Planned Gift Marketing, for which I won the AFP-Skystone Prize for Research in Fundraising and Philanthropy. While some in the nonprofit sector pay lip-service to donor centered-ness or simply don’t understand what is meant by it, those who do understand and who are willing to take the steps to practice it do indeed see superior results. For example, when organizations practice donor-centered stewardship, they are more likely to have donors who are more receptive to receiving multiple appeals. So, while donor centered-ness does not directly factor into the LTV calculation, it most certainly influences it.

  7. Well this is getting interesting…

    While I’m not 100% sold on Burk’s methodology and assertions, I think there is a level of legitimacy to it. When it comes down to it, donor experience does play a pivotal role in retention, long-term engagement, ongoing giving and upgrading (whether by making larger gifts or simply giving more gifts over their lifetime).

    But I do think that the concept lends itself to being used frequently as a blunt instrument to attack sound fundraising practices simply because of personal biases and preferences of people who aren’t professionally trained fundraisers.

    When it comes to the LTV calculation, it’s not nearly as cut and dry as you’ve made it sound, Derek. As much as I think we’d all love for it to be that simple, it’s not. Unfortunately.

  8. Thanks for the interesting post and conversations. Even though I have been in the industry for some time now, I am a fairly young fundraiser(Unfortunately only in experience and not age…)

    One thing that sticks out to me with some of the smaller organizations I have worked with is they either forget, or don’t pay attention to, the external view of their internal organization; staff turnover, understaffed, which leads to becoming overwhelmed and going to the same donor “because it is easy,” And they forget about the cultivation and relationship aspect, which in my opinion is one of the most important components of the process. Many, don’t take the time to truly understand what benefits their donor and it becomes a one-sided ask and relationship and that will never lead to any type of lifetime value. Thanks again, and I am interested in reading your book and also Penelope Burk’s book.

    • Mick, thank you for your comment. In development, before we send anything to a donor, we should ask ourselves, “What’s in it for the donor?” The better the answer, the better the result will be for the communication.

  9. Good commentary and thank you for sharing. Optimal frequency of appeals is such a difficult question to answer. There are so many variables – some of which have been outlined in this post and the comments. Another that comes to mind is the lifecycle stage of the donor. Is higher frequency suited to established donors only? Do new donors prefer a lower ‘ask / inform or thank’ ratio of communication? Honestly, I think the best way to determine this, given the lack of data, is to ask donors directly what their preference is.

    • Mike, thank you for commenting. Asking donors their solicitation preferences (i.e.: how often, through what medium, for which projects, etc.) can be helpful. However, I urge caution. Donors don’t necessarily know what they will want, when they will want it, and how often they will want it. Predictive surveys are always risky. Of course, if a donor contacts you with his preference, for example, to be solicited only once per year, it’s wise to honor the donor’s wishes by acting accordingly.

      Another way to get around the issue of ask-frequency, is to more seriously promote the opportunity for monthly giving. Enrolling donors in a monthly giving program generates on-going support without the need for monthly appeals. Monthly donors have an LTV 600-800 times greater than regular donors and are seven times more likely to make a bequest gift. Just a thought.

  10. Do you have any thoughts on figuring out the appropriate appeal frequency when your letters are losing money? My nonprofit has been sending out 3-4 letters per year, and only the Year End appeal ever makes enough to cover the cost of printing & postage, much less the weeks of staff time writing, designing, editing, printing, stuffing envelopes, etc.

    This year we’re cutting down to two letters. We’ve been cutting dead wood off the list and focusing on the likeliest donors, but it’s frustrating to see no results. I’ve been looking for advice and literature on this topic, but everything I find starts with the assumption that appeals are at least slightly profitable.

    • Sydney, thank you for commenting and sharing your challenging situation. While I have too little information to be able to give you a good answer to your question, I will share some thoughts.

      First, let me address the issue of the cost-effectiveness of direct mail. For donor acquisition efforts, direct mail appeals will typically cost 70 cents to $1.20 for every dollar raised. In other words, acquisition efforts can frequently result in a loss. The idea is that subsequent appeals will generate additional revenue that will produce a justifiable Return On Investment. That means that renewal and lapsed donor appeals are expected to produce a positive net. If they’re not, something is very wrong.

      Second, let’s look at the issue of weak donor renewal and lapsed donor appeals. When a direct mail appeal (non-acquisition) loses money, it could be for any number of reasons. The organization needs to understand the problem before it can fix it. Is the problem the case for support? The language used in the appeal? Stewardship of donors?

      Third, once you know what the problem is, you can begin to seek a solution. Meantime, stop sending appeals that don’t work. Your situation reminds me of the old aphorism: When you find yourself in a hole, stop digging.

      Let’s talk off-line. After I learn more, I can offer some more suggestions.

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