CharityVillage® Research: Converting your regular donors to EFT

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Converting your regular donors to EFT
By Harvey McKinnon
May 27, 1999; Canadian FundRaiser
If you have donors giving you a monthly cheque, your goal should be to convert them to a pre-authorized program. Promote EFT constantly - in special appeals, in renewal letters, in your prospect program, on the phone, and at special events.
Once you've launched the program, it's important to make your donors understand how cost-effective and convenient it is. A certain segment of your audience doesn't want to be the first to join something. But when they see something is successful and growing, with other people like themselves participating, they're far more willing to consider joining. This will be an important selling point, as your program develops.
Finally, stay in touch with your donors. Survey them periodically to find out what they want and whether they're happy. Discover how you can serve their interests better to keep them giving.

What's worked for me
It's hard to generalize about what works, because every organization's list is unique. Here, though, are some elements I've tested that seem to pay off for most organizations.
Offers with premiums tend to pull in more monthly donors; premiums are cost-effective.
Giving premiums for joining at a higher entry-level increases the average gift per month.
Donors who make several gifts a year are more likely to become monthly donors than those who give once a year, regardless of gift.
Personalization pays off in invitation letters.
Using live stamps on reply envelopes increases response rates and is cost-effective.
A subtle ask for a monthly pledge in a prospect mail package pays off, so long as it isn't the primary focus of the appeal.
People who drop out of a program are highly renewable.

Lapsing donors who mail a monthly cheque need to be contacted soon after their cheques stop coming - preferably by phone. Their re-entry into the program is directly correlated to how long you wait to call them. The sooner, the better.
Lapsing EFT donors are best renewed by paying attention to why they lapsed; they usually volunteer a reason why they quit. If they drop out because they lost a job, go back to them in six or nine or twelve months. The best time to re-approach them depends on why they lapsed, but many tests show this is a very good segment.

An important word of caution about these lessons I've learned from testing:
For some nonprofits, the opposite will be true. For instance, live stamps may decrease the response rate to an invitation package, or they may make the package less cost-effective. Always test, and always be careful to test what's important. Your donors may not react in the same way as supporters of other causes.

Always keep in mind your donors' Long-Term Value
A certain list (or segment) may not do especially well in a specific test mailing, but you may find the monthly donors you recruit from this list give more money for more years than a list that seemed to "win" in an initial mailing. Tracking your donor patterns and giving behavior in the 'back-end' of the marketing effort and over time is the only way to accurately measure Long-Term Value.
Many nonprofits only track their mail results for 65 to 90 days. However, this may not be long enough. This is especially true with large mailings, because results can trickle in for a year and a winning package can lose over that time. Short-term tracking can also disguise Long-Term Value. In fact, the focus on short-term results can ultimately have disastrous consequences. Consider this example:
A charity mailer gets the following results from a 200,000-piece test of two direct mail prospect packages, with each package mailed to 100,000 addresses. Package A pulls in 1,000 donors and gross revenue of $22,000, for an average gift of $22. Package B pulls $18,000 from 900 donors, or $20 each.
Looking at this single mailing, Package A out-pulls B both in the number of new gifts and the average gift size. It earns 22 cents per piece, compared to 18 cents per piece for Package B. This means that A pulled 22 percent more income per piece than B - a significant difference. It's the clear winner, and most nonprofits would re-use it as the control package for future mailings.
However, tracking these donors over time reveals that Package B respondents renew at a higher rate and are more likely to become monthly donors. Over time, their cumulative gifts will far exceed those of Package A.

If certain lists or segments seem to be marginal when you are recruiting monthly donors, try different portions of the list.
For instance, I've succeeded in turning around a money-losing list by selecting certain members from it, such as those living in particular states or provinces, cities, or even areas of a city. Or you can choose prospects that match zip or postal codes with those already in the program or on a particular donor base. You may select males or females depending on the cause, or "hot-line" donors or buyers who have donated within the most recent 30-, 60-, or 90-day period. When possible, I'll often pay more for donors who give larger gifts because this is usually worthwhile.

When you test, be sure to test the big things -- not trivial elements.
Generally, this will mean testing:
your medium (e.g., direct mail, telemarketing, or television) to compare the cost-effectiveness of one against another;
your copy platform or offer;
your format;
the time when you invite donors to join the program (for example, after they make their third gift in a year, only at the beginning of a year, etc.)

Harvey McKinnon & Associates specializes in direct mail, monthly giving programs, and fundraising audits. For more information, contact Harvey McKinnon, 218-2211 West 4th Ave, Vancouver, BC V6K 4S2. Telephone (604) 732-4351. Fax (604) 732-4877. eMail info@harveymckinnon.com. Visit: www.harveymckinnon.com.