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Pledging by phone rings up dollars!
by Patrick Perdue
July 16, 1997; Canadian FundRaiser
As competition for limited charitable dollars heats up, charities are increasingly turning to the telephone as both a major revenue source and as a method of maintaining donor loyalty. By opting to talk to their donors instead of, or in addition to, mailing to them, many charities not only succeed in increasing their gift amounts, but also develop a keen understanding of who their donors are and why they are giving (or not giving). Without the in-house expertise to conduct a telefundraising campaign, the only option for many charities is to outsource. For those charities with an understanding of the basics of telefundraising, outsourcing can be a profitable solution both to generate revenue and maintain contact with donors. Be wary though-without sufficient knowledge of telefundraising principles, many charities are left at the mercy of telefundraising service bureaus. Following is a brief overview of what to watch for when outsourcing.
While outsourcing your telefundraising is convenient, it can also come with the price of less program control. Designing scripts, monitoring calls, and training telephone representatives are all essential elements of a campaign and you must fully understand each component. Ideally, these elements should be managed in a complete partnership between the charity and the service bureau. It is important to remember that your charity's name and message will be going out to tens of thousands of people. You must be comfortable with the message being delivered.
Program costs help monitor success
To monitor your program's success, you need a thorough understanding of the costs involved. If you raised $500,000 but your costs were $600,000, your program-obviously-was not a success. This may seem basic, but understanding call centre costs can be complicated. There have been organizations that thought they were making money when in fact they weren't even breaking even. Organizations that successfully telefundraise keep a careful eye on their costs in order to maximize their results. It's always advisable to get a line-by-line breakdown of the program cost from your service bureau.
Regardless of whether you're paying on a per hour or per contact basis, you need to understand your "back end" costs - the costs of fulfillment - to really understand your level of success. "Back end" costs include the cost for designing, printing, and mailing a pledge package to donors who make a pledge, as well as one or more reminder letters to donors who pledge but don't fulfill within a timely period.
Back end costs can vary, and some service bureaus will offer to take care of this part of your program for you. While such solutions can be more cost effective than designing your materials yourself, it is important to make sure that, just as in the preparation of scripts and training, you have a role to play in the development of the materials that are sent out under your letterhead after the initial call has been made. Remember, it's your charity's name going out there, not the service bureau's. Direct mail pieces need to be prepared and ready to go either four to five weeks before the calling date or as soon as the calling begins.
Keep an eye on KPIs
The true determiner for a success in a telefundraising program are not costs alone, but results against those costs. Therefore, you need to understand the results of your program to effectively determine what adjustments you may want to make - whether to increase the program, or terminate it. Your service bureau should provide you with detailed reporting of a variety of "key performance indicators" (KPIs) - essentially guide posts to show results in various areas - so you can evaluate your program on a day-to-day basis. With terms like talk time, wrap time, RPC rate, penetration rate, and conversion rate, KPIs can be confusing and a bit intimidating. However, developing an understanding of them is not only good business, it is critical if your program is to succeed.
If you are paying on a per hour basis, you must keep careful watch on several performance indicators: • pledges per hour - the number of calls that resulted in a pledge for every production hour; • right party contacts (RPCs) per hour - the number of calls to individuals who were eligible to make a pledge for each production hour (this could exclude businesses, wrong numbers, etc.); • conversion rate -number of pledges per RPC); and • total dollars pledged per production hour. Constantly monitoring your KPIs can mean the difference between limited success and overwhelming success.
For example, if you are paying $50.00 per hour (including fulfillment), your dollars pledged per production hour totals $100.00, and your estimated fulfillment rate is 50%, then you are not making any money. Some would argue that you're not losing money either and since you're renewing donors, the net result is positive. A look at the KPIs, however, might indicate areas where these results could be improved.
Increasing your right party contact rate, for example, would improve your results. In other words, if contacting 10 people per hour leads to 4 pledges of $25.00 each, contacting 20 people per hour could lead to 8 pledges of $25.00 each, or $200.00 per production hour. While this example is simplistic, it does illustrate how fine tuning key performance indicators can affect your results.
If you notice any of the indicators dropping below budgeted levels, it may be time to re-evaluate your approach (adjusting your key performance indicators to where they need to be). If for some reason that is not possible, it may be time to re-think your goals based on better information, or closely examine the performance of your service bureau.
Balancing call numbers and contact time
If you are paying on a per contact basis, the most important indicators are RPCs and average total pledges per hour. For example, if you are paying a service bureau $4.00 for every right party contact, the service bureau will make more money if it can increase its right party contact rate, and this can be at the expense of quality calls. In other words, if the service bureau calls 20 people per production hour (at a cost to the charity of $80.00 per hour - $4.00 x 20), and spends only a minimum amount of time with each contact, the bureau is making huge profits while "burning" your calling list. If the total pledges per hour is averaging $60.00, your charity is losing $20.00 for every hour of production ($80.00 - $60.00).
Conversely, if the service bureau calls 10 people per production hour (which equals $40.00) and spends more time with each contact discussing the valuable role of your organization within the community, this will likely increase the conversion rate. Again, if the total pledges per hour is $60.00, but this time on only 10 RPCs, the charity is gaining $20.00 for every hour of production ($60.00 - $40.00)!
Monitor calls to assess presentation
The only way to determine if your KPIs are where they need to be is to spend time regularly monitoring calls to hear exactly what is being said. If upon monitoring calls you hear that too much time is being spent on each contact (and you're paying by the hour), make sure your presentation is shortened. If you hear that not enough time is being spent on each contact (and you're paying per contact), lengthen your presentation. In other words, if the key performance indicators aren't where they need to be, listening to live calls is an effective way to find out why.
The opportunity to regularly monitor your calls for call quality is essential if your campaign is to meet your objectives. Are your calls too aggressive? Are they assertive enough? Is the right message being communicated? Is the information provided accurate? There is no way to determine answers to these questions other than by plugging in and listening to the calls made on your behalf. Many service bureaus will allow you to have your number included in the call list under a variety of names to act as "seed calls." Seed calls provide you with an opportunity to randomly assess the quality of the message with neither the service bureau's knowledge or the caller's. This method of quality assurance enables you to develop a true idea of the impact of your calls as well as the perception your calls are creating with your donors.
In short, when outsourcing a telefundraising campaign, make sure you have a complete understanding of all of the elements, from cost (both calling cost and "back end") to quality, to revenue targets and key performance indicators.
While telefundraising can be confusing to the uninitiated, developing an understanding of the basics is the only way to ensure long term success. It is essential that any charity using or considering using telefundraising develop an understanding of the medium before embarking on a costly and extensive campaign. The more you understand about telefundraising, the better the chances for overwhelming, ongoing success.
Patrick Perdue is the manager of The Canadian Liver Foundation's national call centre and regularly provides information to charities using or considering using telefundraising to generate revenue. He can be reached at (416) 964-1953