Get An Email Address Generate Income

April 15, 2008       Paul Demery      

Each email that sits on your database generated roughly $7.86 from donations and eCommerce between July 2006 and June 2007. If you’re a disease and health services or disaster and international relief organization, it was worth twice that much.

But, getting a donor or advocate to open an email message is getting tougher. Email open rates are declining, down to 14 percent from 22 percent during the July 2005 to July 2006 period. Even if they are opened, the click-through rate is only about 2 percent on appeal messages. Email fatigue and the increasing use of appended files are likely the primary reasons for the decline.

And, don’t feel badly if you don’t have one million email addresses. The median is just 20,385. Those are among the findings of a benchmarking study of online marketing of more than 400 organizations by Convio in Austin, Texas. The study does not evaluate how much it cost to obtain that email or the cost of maintaining it. That $7.86 also does not factor in offline contributions.

“The reality is some come to the Web site specifically to donate so you acquire their email address. It’s not cultivated through offline. The ROI (return on investment) is far more than you generate online,” said Vinay Bhagat, founder and chief strategy officer at Convio.

“By knowing how an organization performs against a benchmark of its peers, it can begin to identify which areas of its online marketing program are performing well or are underperforming,” said Bhagat, a co-author of the study with Quinn Donovan, Convio’s analytics manager and Lynette Perkins, an analyst with the firm.

Some of the benchmarks found in the research include:

  • Nonprofits’ Web site traffic continues to grow. Organizations with fewer than 250,000 email addresses on file are growing Web site traffic at 11 percent per year. However, some verticals are seeing no growth or are losing ground.
  • The registration rate improved slightly. The conversion of unique Web site visitors to subscribers grew from 2.8 percent in Convio’s last report to 3 percent. However, with some organizations converting site visitors at much greater rates, the nonprofit sector as a whole has significant room for improvement with this key metric, according to the study.
  • Email files grew 32 percent. This rate of growth outpaced online revenue growth, suggesting that organizations are succeeding in growing prospect files online, according to the report.
  • Email file growth ran nearly three times that of Web site traffic growth, suggesting that organizations are adding more emails offline in addition to improving Web site registration rates. Some of the offline growth is probably attributed to the increasing use of email appends.
  • Total online revenue, including eCommerce, grew at 26 percent across organizations, and online fundraising excluding eCommerce at 23 percent. However, similar to Web site traffic growth, not all verticals experienced such positive results.
  • The average gift online was $61, up from $56 in the last report. This is much higher than the typical average gift achieved through other direct response channels.
  • There is opportunity to expand cross-promotion between advocacy and fundraising. For organizations engaged in online legislative advocacy, 8 percent of advocates have also supported the organization financially. Conversely, 14 percent of donors have advocated. While illustrative of the fact that donors can be advocates and vice versa, the study indicates a significant upside for cross-marketing remains.

When it came to getting donors and potential donors to click open a message, those with a real communications relationship tended to do better, according to Bhagat. Studying 2,742 separate email fundraising messages from 219 organizations during the time period of July 2006 to June 2007 showed an average open rate of 14 percent. Email communications whose primary objective was clearly not fundraising in design — such as fundraising event reminders, advocacy alerts, general organization communications, and monthly email newsletters — were excluded from this metric, even if their content included a soft ask.

The sector-wide average was pulled down significantly by major emailers. Some verticals, such as higher education, association and membership, disease and health services, faith-based and animal welfare, achieved averages 50 percent or more than the sector-wide benchmark, according to the report.

The open rate is the percentage of recipients who open (view) a message divided by the number of messages delivered. Limited emphasis should be placed on this metric, according to Bhagat, because of known image rendering and preview pane issues in email readers, which can skew open rates.

Bhagat called the open rates “a broader industry phenomena that we are watching.” He explained that “consumers feel heavily marketed to. To get your message through you have to be as relevant as possible. You have to be segmented in your communications and you have to be mindful of the quality of your communications and make sure you take a donor-centric or constituent-centric approach,” he said. “Don’t just communicate because your calendar tells you to send a message. Make sure the message is telling a story that is inspiring and relevant to the donor.”

Whether a person has been driven to a Web site or just wandered in, getting them to register is the key action. Approximately 3 percent of monthly unique visitors provided their email addresses to the organization through registering for email updates or taking some other action online. The remaining 97 percent either have registered during a prior period or represent an opportunity for the organization to convert them to their file, said Bhagat.

Verticals such as faith-based, disease and health services and major emailers, those with 250,000 or more email addresses on file, have programs in place that offer access to additional resources, incentives, or other tangible benefits to constituents in exchange for registering, he said. For example, many faith-based organizations offer “daily devotionals,” inspirational emails that people can receive each day. Disease and health-related organizations offer access to special reports or online communities, only accessible after someone provides their email address. Some major emailers are using low-cost, back-end premiums as registration incentives. An example of such a premium is offering registrants the option to receive a sticker that lets emergency services workers know that the registrant has a pet in the home.

You can still generate income with a relatively small email file, so long as the donors and supporters are active. According to the report, many nonprofits’ online programs still represent only a fraction of their offline direct mail programs. A total of 54 percent of the 419 participants in this study had email files with fewer than 25,000 records. Organizations that have been able to grow email files larger than the median of 20,385 included organizations from the environment and wildlife, higher education and faith-based organizations. These verticals tend to have missions whose appeal is broad, or they have large and constantly growing memberships, such as alumni, to grow their files. The major emailers segment had a median file size of 433,564.

The median amount raised by organizations with email files ranging from 10,001 to 25,000 was $115,685 compared to larger organizations that constantly raised more.

“I think the good news in this report is that numbers in the online world have started to become truly material,” said Bhagat.

For the full report, go to www.convio.com/benchmarks NPT

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