Acquisition Challenges

October 15, 2009       Roger Hiyama      

The search for solutions to acquisition programs often leads to thinking of innovative creative approaches. After all, the manner in which you engage this audience must change to reverse the double-digit response rate declines that many have experienced during the past two or three years. While offer and creative testing are important, some of your easiest and most immediate gains will result from modifications to your audience strategies.

For starters, evaluate which house file names you’re mailing in the acquisition program. Or maybe more precisely, examine which house names you aren’t mailing in your acquisition program.

Traditionally, industry best practices have stipulated that you not mail your "active" names in acquisition campaigns. The definition of an "active" donor, however, varies across the industry. Some organizations define an "active" as any donor who gave a direct mail gift within the past 36 months, while others define it as any donor who has given a direct mail gift during just the past 18 months. And, shockingly, some organizations define an "active" as any donor with a direct mail gift during the prior 60 months or more. Far too often, the definition of "active" leads to the unnecessary omission or suppression of some of the best prospects for mailing. Here’s a new strategy for handling "active" donor suppressions.

First, consider "active" donors as those you’re "actively" mailing within your renewal program and consider all other donors as legitimate prospect names. Therefore, if your 0-36 month file is 250,000 names but your standard renewal appeal was mailed to only 150,000 names, then the file you should be suppressing from acquisition is only the 150,000 names you "actively" solicit in your renewal appeal mailings. The other 100,000 names are not "active" but are legitimate prospects.

However, a common mistake is using a larger than "active" suppression file, which results in some of the best prospects being dropped when matches occur against outside (cold) lists. In the example above, if the suppression file were 250,000 names, any match against the 100,000-name segment would result in the suppression of arguably the very best prospect names.

The best strategy in this example is to suppress only the 150,000 "actively mailed" names and arguably mail many of the remaining 100,000 names in the 0-36 month segments.

Skewing List Results

One of the greatest challenges facing the industry is the shrinking size and number of traditional fundraising lists. Nearly every marketer (fundraiser and non-fundraiser alike) has experienced a 7-percent to 10-percent drop in their active file size in the past 12 months. Since you depend on other lists to drive your acquisition program, the size of your marketable acquisition universe has also shrunk by that same 7 to 10 percent.

In more stark terms, if you mailed 5 million acquisition names last year, you’re now going to have to find between 350,000 and 500,000 names to replace those that just aren’t there. To make up that significant gap, you’ll be forced to mail into new list sources.

Unfortunately, there are a number of organizations that have inadvertently created an uneven playing field within their acquisition processing and have made it very difficult for list tests to win. When a match between two lists occurs, many mailers give a higher priority for exchange lists compared to rental lists. Others give a higher priority to lists rented from a cooperative database because they don’t offer a net name arrangement. Others routinely give a higher priority to rollout and continuation lists, assigning the worst priority to a test list.

In some cases, fundraisers established these priorities to minimize costs. In other cases, it was an attempt to make each list provide proof of "incremental value." While in many cases, it’s done that way because that’s the way they have always done it.

You wouldn’t purposely skew a creative or an offer test — and, you shouldn’t purposely skew a list test. Once you’ve placed one outside list at a different list priority than a test list, you’ve skewed the test’s results.

For example, if you’ve assigned a higher priority to continuation lists, the continuation lists have a much better chance of being successful because they get assigned all multi-buyers when matches against test lists occur. The test lists unfortunately only have unique names credited to their list. And, because the best performing names, the multi-buyers, are loaded into the continuation lists, you’ve skewed the list test.

If you’ve chosen to keep different list priorities for outside lists, then you must really compare list results based on only the "unique" names from each list in your mail plan, comparing results of the multi-buyer names separately. And, if you’re unable to break out results for unique names, then you must apply a different review scale and know that a 1-percent response rate for a skewed list test is likely comparable to a 1.3-percent response rate if comparing to a continuation list that was given a higher priority.

The easiest solution is to assign an equal priority to all outside lists so that the multi-buyers are equitably distributed to each list. In so doing, a test list has an equal chance of performing in the mailing.

Leveraging Your House Data

It is still a common practice to give your house names, both lapsed and warm names, a higher priority than outside, cold lists. This enables you to leverage your house data in ways that wouldn’t otherwise be possible. You should retain as much data as possible from your house names in your acquisition processing.

By retaining prior giving history, you can leverage the donor history and tailor an appropriate giving ask. If the donor was a prior $50 donor, there’s no need to immediately downgrade the donor using the default acquisition ask string with a much lower ask array. Try testing the use of "most recent contribution ($MRC)" and $ ____other.

By retaining the source of origin, especially for warm names like inquiries, event donors and participants, advocacy names, and online newsletter subscribers, you can provide more relevant messaging to reactivate or convert a warm name to an ongoing donor relationship. Finally, just because you weave in a lapsed file or warm file into acquisition processing doesn’t mean you have to mail the entire file.

Instead, leverage the "match data" against outside cold lists, potentially mailing only those lapsed or warm names that have matched to an outside list. By knowing which names have recently contributed to other organizations, you can target those names most likely to be responsive to direct mail. These matches are often referred to as "super dupes".

Special Omits, Blackout Periods

Over time, most organizations have created business rules around "special omits" and mailing blackout periods. However, you need to periodically review those business rules to determine whether they still apply.

The most common omit used by many chapter-based organizations is one that prevents the mailing of 0-36 month donors. As mentioned previously, arbitrarily omitting all of these names might keep you from mailing some of your best acquisition prospects.

Another common omit is one that prohibits the mailing of special event names — for example, walk participants and donors — for a specified period of time. Many chapter-based or local organizations have a "cooling off" or "resting" period for warm name audiences that range from a few months to more than a year. The concern has always been that the direct mail program will cannibalize the event revenue.

In reality, analysis has shown just the opposite. In a test conducted over a 12-month period, it was found that special event participants and donors are 50 percent more likely to retain their event participation when included in non-event mailings and solicitations, including standard direct mail acquisition mailings. In addition, recency or the timely mailing of these warm names greatly increases their likelihood of making a direct mail gift to the organization.

To improve your overall acquisition results, you’ll likely have to test new offers, messaging and creative treatments. Before doing so, however, take a few minutes and review your audience strategy to achieve some of your easiest and most immediate gains. NPT

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Roger Hiyama is vice president, strategy and analytics, for Merkle, Inc., in Columbia, Md. His email address is RHiyama@merkleinc.com

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