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.
Andrew 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?