List Summit

December 15, 2004       Paul Clolery      

You have a terrific fundraising direct mail package. But, who will receive it? If you ask a room full of fundraising list experts, that’s the wrong question. To whom you want it to go should have been the first question, then the package should have been developed.

Six veteran fundraising list managers and brokers debated the issues of the day, premiums, privacy, mail date protection and negotiating price during lunch at Emeril’s Restaurant in New Orleans. They were in town for the annual Direct Marketing Association convention.

Feasting on panneed oysters, fried calamari, andouille and creole boudin sausages, pasta and other delights and often talking with their mouths full were: Susan Anstrand, president & CEO, Names in the News; Ed Bezursik, account manager, Millard Group, Inc.; Eilene “Dodee” M. Black, president & chief operating officer, Atlantic List Company; Fran Golub, senior vice president/list management, Walter Karl Inc.; Lisa Greene, senior vice president, specialized fundraising services, The Listworks Corp.; and, Larry May chief executive officer, Direct Media and May Development Services.

The session was moderated by NPT Publishing Group Vice President and Editorial Director Paul Clolery. Questions were contributed by several NPT contributing editors, including Rick Christ of npadvisors in Warrenton, Va.

Paul Clolery: On the record, the prosecution will stipulate to this group that the list is the most important part of any mailing. Without a good, targeted list, fundraising will go nowhere.We don’t need to say that again. It is all stipulated. Here’s the first question. In walking the exhibit floor of the Direct Marketing Association’s annual conference the past couple of days, everybody is talking about this premium or that premium. Is it a foregone conclusion that premiums are the best way to generate results in DM acquisition? If so, isn’t that historically different from the way fundraising lists have been compiled and therefore changing the metric in how fundraising will have to be done?

Larry May: There is no one answer for all situations. For example, the people in this room work on different kinds of fundraising accounts. And much like the difference between a woman’s catalog and a B-to-B offer, there are different things that work for different offers and different nonprofit organizations’ appeals.

In some instances, premiums work very well, in others, they’re not really necessary at all. To say that they’re new and different is, I think, a misnomer — not a misnomer but a mistake — in that mailers have been using premiums since the early part of the 20th century.

For example, since the early part of the 20th century, Christmas Seals has been the main appeal of the American Lung Association. Disabled American Veterans (DAV) has been mailing premiums since just after World War II.

Lisa Greene: We have to allow the bottom lines to drive what package treatment to use, in terms of premium vs. non-premium. The way you do that is to review all of your package options, and all of your list options, in a combined forecast model and review your cost per dollar raised or look at the benchmark most important to the situation. And then, select the appropriate list and package mix to achieve the desired outcome for the mailing.

Dodee Black: You have to look at your long-term value of the donor. If the premiums-to-dollar amounts are right, the response is right, those long-term values hold up if they’re used for the right approach and acquired with the right package. They will hold up.

Fran Golub: I think that it depends on what kind of an audience you’re targeting. If your audience is more up-scale, I don’t think it would respond as well to a low value premium as would people gotten through mid-ticket or low-ticket lists. It will also work better if you are looking for smaller donations, but more volume.

I know, for myself, it just won’t have the same effect. It won’t make me make a contribution just because I am offered a premium. So, I think the audience will ultimately determine whether premiums pay out or not.

Clolery: It makes me think of my local PBS station offering dinner with Peter Yarrow for $750 or $1,500 per couple. I think that a premium could work on a high-end.

Golub: A really targeted premium at the higher end can work. That is what I am saying. It is not going to be, say, a label, or a gizmo, or a gadget. It is going to be something that really gets that person — such as seeing Peter Yarrow. If you’ve got the right premium, I might be more encouraged to respond.

Black: Is that invitation through the mail or as a direct response to TV?

Clolery: It was television, pledge week.

Black: That’s a whole different animal.

Ed Bezursik: Fran mentioned the fact that to make the higher-level premiums work you really have to get the higher echelon of the direct mail responding. That may be the challenge, to generate high-end response.

Greene: I work for a number of public television stations, and we’re doing some premiums. The premiums are tailored to our target audience and then we match lists appropriate for both the audience and the offer.

Clolery: At what point does a premium evolve into an affinity marketing tool? Anybody can send name labels to a prospect. I remember Max Hart, formerly of DAV, sending me labels with my dog’s name on them. At what point does it evolve to the next level, from just a little premium to affinity marketing?

Black: Even the labels have their affinity people. There are certain lists that we pick out because we know those people love their labels. Larry said it a couple of weeks ago in a presentation, people can’t get enough labels. We don’t know what they use them for, but …

Clolery: I can have a second or third lifetime and I won’t be able to use all the labels I have in my drawer. I almost feel compelled to move.

Susan Anstrand: I finally threw a number away. Maybe it’s bad, but …

Black: Our donors, our responders, are not us.

Anstrand: Right.

Golub: If you’re targeting new movers, obviously a great segment, that is a perfect affinity product to get to them.

Anstrand: I think the problem then — not necessarily your question — is if they’re used to a premium, can you only get an additional gift with a new premium, or are you just developing this problem that you are never going to get away from?

Whereas, if you start by getting donors without a premium it’s easier to talk to them. Are you just creating this vicious cycle where you have to come up with more and more and more expensive items?

Clolery: Let’s move on. Some list owners combine actives and inquiries. For a list-renter this is a terrible practice because invariably the bulk of the list is generally the latter group, the inquiries. How do you protect the list renter from such problem?

Greene: It’s the broker’s job to do the research.

Golub: That is exactly it. It is up to the broker to ask the questions. Deal with a reputable manager who you trust, because you’re supposed to say on a list that these are inquiries, and to segment out the buyers. It is the broker and it is the manager, both.

Black: It probably won’t happen to an unsuspecting renter once they rent a mixed list, because the results would cull them out. If it doesn’t work, it doesn’t work. You didn’t really want to talk about testing, but that’s the reason you test.

May: If it works, it doesn’t matter who it is, as long as they don’t change it at some point during the process.

Golub: That’s correct. I tell brokers that they’re going to get a group that has the same affinity, with the buyers and inquirers. I’ll give them two separate tests. I’ll even throw in the inquiries free as a separate test, and if it works, they get double the universe. But, I’ll tell them right off the bat that is what they’re getting.

Greene: If the affinity is strong enough, the inquirers can work. However, there has to be a strong alliance with the cause.

Clolery: We’ve talked a lot about “affinity.” I didn’t wake up yesterday and say, you know, “I’m a dog-lover, so I am going to give to this organization.” What creates the affinity? Obviously, if somebody in your family died from cancer, you’ve got an affinity. But if there isn’t that direct connection, how do you build that affinity through lists?

Golub: I don’t think you can “build” the affinity. I really think you have to go in knowing that the product, or offer, is something that person can relate to in some way.

Maybe they had an ailment, and you could go into a compiled file, and see for example that the person has diabetes. That person is more likely to respond to an offer for diabetes research.

Clolery: But what about the “gee whiz” factor of getting something in the mail?

May: I’m a great believer that direct mail is almost never the method in which we build the affinity or the positioning of the organization in the donor’s mind. So much of it is the way that we kind of drop it into a pre-defined box in which the potential donor perceives that there are dog organizations, there are health organizations, there are political, religious, et cetera.

They have some feelings about them in which they are inclined to be supportive. They fall into different priorities in their mind. When we give them a piece of direct mail we’re trying to basically say, “Here’s organization A, it fits into this box, it has high priority for you, maybe here’s a premium to get your attention for an extra few seconds, and hopefully get you to make a gift.”

We do this bearing in mind that at any time we do this, the vast majority, or at least the substantial majority, doesn’t respond at all.

Black: We are trying to educate the potential donor. We’re trying to give them an opportunity to do something good and tell them something they may not know about, or they may know about and it’s an invitation to participate.

Every mail piece and direct TV, it’s all invitations, whether it’s assigned a product or a cause.

Clolery: There’s been a lot of talk lately about alternative media, such as card decks, coupons, co-ops, blow-ins, bind-ins. Will certain people not respond to these?

Greene: I feel that most of them are not very strong vehicles for fundraising. They have their place in the commercial world, but for the most part, they haven’t proven themselves for fundraising efforts.

A package insert might work to bring attention to a special event, a walk, something like that, if you’re targeting the right insert program.

But as a fundraising vehicle, I think they’re weaker. We looked at them for years and years and no one has ever really done, as far as I know, anything really successful with inserts or alternative media.

Clolery: What if it’s just a branding issue, for example, a local organization puts an insert into a local utility bill promoting an event?

Greene: That’s a different story. That could be worthwhile as a PR tool and to get the mission out there, especially in a local community.

Black: You might be able to convert those people who give from other sources into a direct mail donor to the cause by mailing a follow-up. I think you could do a lot with your event people.

Clolery: Do you think that would just work locally, versus regionally, versus nationally?

Greene: That kind of an insert and the way you referred to it may be more successful on a local basis than on a national basis.

May: I’ve never seen an insert of that kind succeed until just recently, and unfortunately I didn’t have anything to do with it. It is a package insert, meaning that it goes into a direct mail shipment that you’re receiving, most frequently from a catalog company. It was for World Vision.

Inserts, to me, are one of the more amazing things. They work like crazy for relatively low-end merchandise in the commercial world. But they also work for Orek vacuum cleaners and Bose wave radios, so, go figure.

Clolery: The mechanics of the industry — mIn, NextMark, other firms, are trying to automate the list datacard business. Will it do to list brokerage what Travelocity and Expedia have done to the travel agency business?

Golub: No. They are a listing and sorting mechanism. Maybe it will spit out what you’re asking for, but there’s no analysis. The broker’s got to look at it and say, “List A has more value. Is the usage better? Are the counts better for roll-outs?”

Black: It makes us more efficient. It takes fewer people. It’s a good tool for up-front research.

Clolery: What about the client?

Black: It’s not like going to the Internet and doing a search. You have to follow through.

Clolery: But can’t the client do that as well? Can’t the client be doing that research?

May: Those of us here, I think, all have the good fortune to work with mailers who are pretty substantial mailers and approach it in a very professional, business-like fashion.

So, it is not so much the local organization that might do a mailing once a year. It is more an ongoing project that’s a serious source of income and mission. For them, a list company is an important partner working with them. We’ve more than earned the small amount of money we get to keep at the end of the day.

Black: As list owners and managers, it makes us keep our lists clean and updated more frequently than maybe we had in the past because there’s such an emphasis on reporting. One of the biggest keys to that is our last update. We’re really very careful about making sure we have furnished good information so the brokers will have good information to work from.

Greene: Brokers now are so much more than vendors providing data to a client. We have to be analysts. We need to be strategists. Most of our clients now look at us almost like they look at a full-service agency.

I do all the analytical work for each client, put together strategic plans, forecast models, and work with the budget from start to finish. They don’t get that online. And, they are getting all that for free, for the cost of renting the lists. So they (nonprofits doing their own work) have to hire someone else to do that at a fee.

Clolery: List companies, for years and years, have been doing analyses, but very quietly. There were always outside companies that did analyses a lot more boisterously. Has the list business changed into a much more high voltage analytics business?

Bezursik: Well, yes. List owners are always expecting more from their list management for less of a return for list managers. To remain competitive, we’ve got to assume more of an analytical role and more of a strategic role. It’s essentially a partnership with the list owner, which in the past, has been almost secondary. I think it is a critical way to both serve the client and maintain the client base.

Clolery: So, you think that the onus is going to be on the list owner versus the list renter? The owner’s going to have to know more about the list?

Bezursik: I don’t know about more, but at least as much. That is going to help in their acquisition efforts, too, because on a time continuum, the makeup of the client is going to change, and this is something, very often, the list manager will recognize first.

May: Can I throw something in on the last point? I think one of the functions that the list industry achieves is to, for better or worse, serve as a something of a gatekeeper, analyzing the quality of the organizations that are having access to these lists.

We do, to a great degree, serve as something of a watchdog to know who the good players and bad players are, and to help our clients determine to whom they should and should not be making their list available.

Clolery: Your margins are thin right now. What’s this added service going to do to the cost of a list rental? Obviously, it gets passed on to the consumer, which impacts the renter.

Greene: We’ve worked this way for years and haven’t added anything on. It takes a tre#mendous amount of manpower to actually do all that strategic analysis and to do the forecasting and modeling. It basically means we’re providing an agency’s work at a broker’s commission. That’s a tremendous cost savings for our clients.

Anstrand: I think we can look at the service bureaus, too, because computers are faster and they (service bureaus) are willing to cut deals now. They don’t have to charge more. It takes them the same amount of time to run 5,000 names as 500,000 names, unlike the old model.

So, cut deals with service bureaus so that you can do a gender-selector and age-overlay on the fly, and that money can be passed on to the list owners. You could split it with them for your extra work. The service bureaus don’t need to take as big a cut anymore.

Golub: I think most companies are not going to make much on that. So the object is to offer other services to that client. We just bought Triplex, which has a host of services for fundraisers. Although on the management side we’re still going to make 10 percent, now we can say, “Ok, but wait, we now own Triplex and they have a host of modeling and analytic services you can use.”

Clolery: We started talking about regionalization and what might work in a small market. Let’s talk about regional mail. Not everybody mails 9 million letters every year. What about selecting by ZIP codes? What other techniques are there to help nonprofits that mail only 25,000 or 100,000 names a couple of times a year?

Greene: One strategy I have been able to use to enhance falling response rates for regional mail is looking at results by ZIP code. We drop non-responsive ZIPs, but at the same time select marginal or lower performing lists that have not been “used up” and select only the most responsive 50 percent of ZIPs within their mailing territory.

The volume lost by dropping ZIPs is made up within the most responsive areas, with alternate lists that might have been overlooked because of weaker performance across the full geographic area. With a greater response rate, fewer names need to be mailed to achieve the same result.

May: I actually had a client once who placed orders by ZIP range, working his way across the country so he wouldn’t have to do a merge. I still like the guy very much. He’s a wonderful guy, but I was not terribly unhappy when he stopped working with us.

Anstrand: I had one that did even and odd addresses. I’d rather not do that again.

Black: Regional mailers have a limited amount of, quote, “very good donor files” from which to choose. To try to second guess and do it every other name, and so forth, isn’t practical. What they have to do is test, go in and find the names in their locations, get as many as they can, and just continue to test offers to those names and use them again.

It wouldn’t make sense to try to divvy them up. We just worked with another one of those chapter groups that couldn’t mail into each other’s regions. It’s thankless. The reason they’re ganged together is so they can get more lists and additional larger universes overall and then split them up to benefit the smaller chapters.

Clolery: That brings me to my next question. Are combo databases things of the past or the future? What new data or techniques or market pressures, like postal rates, will finally make these hot, and for what type of nonprofit?

Greene: Well, it’s funny, we worked with a vertical market. We thought it would be a great idea to create a cooperative database, because of non-overlapping territories, and over a dozen clients mailing a couple of times a year. We’re going basically for the same core group of lists, so we approached — it had to be 20 — list owners in the nonprofit sector about doing this, and didn’t get one single positive piece of feedback. No list owner would allow their list to be part of a cooperative database.

So I don’t think the day has come yet where the nonprofit sector is comfortable enough with this commercial market approach.

Clolery: Can the goal of trying to bring together a lot of lists in sort of a pay-as-you-go work?

Greene: If you’re coming in and the chapter in New York is using that list, this time, we would then partition the money and pay a fraction to each participant list owner in the cooperative. But, I don’t think nonprofits are comfortable with this approach yet.

Anstrand: Was your idea to update those lists?

Greene: Right, to get new names into the co-op quarterly. Put them in the pool and then allow the 15 different participants to go in and use the list without sending out 400 orders per quarter.

Anstrand: It seems to be reasonable. It’s just that the lists that we have that are large enough to be in the database are updated every month. We’d rather you had the fresh names even though we would be running 400 orders.

May: Part of what Susan and Lisa are talking about touches on, in my opinion, is that we’re still kind of trapped in the 1960s in the nonprofit list world. We’re still hung up with clearing mail dates. We clear mail dates but we never ask, “Are you mailing out of New York or California or Hawaii.”

We have this illusion that we can control what the person on the list is receiving at any given moment, and it is purely an illusion. It is what still hangs up a lot of the people in the nonprofit list arena.

Clolery: Why is it an illusion?

May: Because you can’t control what happens. I’ll tell you that everyone here has used the DAV list for someone or another. DAV is a wonderful organization, thank goodness they’re my client. They’re the most protective of their list mail dates of any organization in the world. And believe me, you get more than one decoy from the DAV list on the same day quite often.

It’s not because people are doing something wrong, it is because you can’t control from the time the mail goes in the mail stream when it actually gets to someone’s home.

Clolery: What is a solution?

May: Give it up and move on.

Anstrand: You’re preaching to the choir.

Clolery: Are you saying just mail, mail, mail ‘til her daddy takes the T-bird away? It doesn’t matter what the dates are?

Anstrand: What’s the duplication rate between lists? I mean, how can you protect your list when it is on nine or 10 other lists? Why are you protecting your house dates when you built your lists on everybody else who’s selling their lists all the time?

Black: I believe in semi-protection. I believe in trying to protect both donors and list owners. That might come out of my political background, when every committee was mailing the same thing, the same lists. It’s the same thing as with large organizations mailing similar packages, slips, labels or whatever. I just feel like we have to try to protect a bit, and a little protection is better than no protection.

May: I really, honestly think that Dodee’s point is well taken. I think it is a great idea. It would be nice if we could do that but we can’t. We’re fooling ourselves that we’re doing any good.

Clolery: What are some of the pros and cons of list swapping? Is it done too much? Should there be a prohibition on the number of times a list can be swapped?

Bezursik: I think you are looking at the exchange notion a little differently with a nonprofit, than a catalog. I think affinity of a donor for a particular health cause does not necessarily predispose the person to want to give to another health cause. Whereas in apparel, why shouldn’t they buy a competitive shirt from another company?

Black: Nonprofits built their files from exchange. I think that if the brokers and managers are working in the right direction, they can monitor exchanges to be a win-win situation. Where it gets out of hand is when a smaller organization wants to use a larger organization’s list. They are constantly getting new names, but the smaller organization isn’t aggressively mailing or adding new names so the large organization does not have the benefit of new names. Nonprofits depend on exchanges. I mean 70 percent of our list transactions are exchanges.

Golub: Doesn’t it tire out the consumer? If I make a donation to a cause, I absolutely know that within one month or two months I’m going to get at least 10 other offers in the mail.

Greene: While their mailbox is full every day, donors don’t think back to know that they donated to ABC nonprofit and now they’re getting more offers. I don’t think the general public really thinks in terms of those specifics.

Anstrand: Thankfully, they don’t. Those who do, the nonprofits really have to have their people opt-out — once a year, twice a year. So if you’re savvy, and you know you’re getting too much mail and there’s an opportunity to opt-out, then you do, and that, hopefully protects the list a little bit more.

Greene: There’s a large segment of the population that enjoys getting mail. They want to see what is out there and want the catalogs. They want fundraising offers.

Anstrand: They could throw it out if they need to. It’s not invasive. It’s not like an email that’s cluttering up your spam filters.

Clolery: Privacy is a big issue. I would be really annoyed if I started getting email just because I accidently downloaded something.

May: People are using the list too much. People say they’re getting too much mail. These are things that everybody has been talking about my entire career. They are ideas that sound like they make sense but there’s no actual proof of anything except that the opposite is true.

I’ve never seen anyone show any evidence that their own success with their list, or that other renter’s success with their list, has been diminished because of how frequently or infrequently they make it available to others.

How many mailing labels do people need? Apparently it’s an infinite number. It’s limitless.

Greene: I bet we all have clients who get calls requesting more.

Golub: They do, or the cards.

Greene: A large nonprofit mailer rested part of its list. They wanted to test whether or not they should exchange or rent. They found the part that was rested from outside rentals did not perform as well on renewal.

If an organization is truly worried about that, and they mail monthly or in large volume, they can go ahead and build a chronic non-responder model and test it out. A particular contact might show up on 10 different lists over the years and the organizational contact might be from multiple lists. So you’re not purging them out during the merge/purge, and you want to see how many times you are capturing Paul Clolery. The model will tell you. Mail the five times hits, six time hits and seven time hits, and decide on when it becomes inefficient to mail these folks.

Clolery: Are we seeing any consistent trend that more mailers are targeting creative and lists by gender?

Greene: It depends on the cause. Breast cancer, we’re focussing 100 percent on women, even though probably we could expand that because you would be reaching a high percentage of married men anyway with no gender select.

May: Donor files — it is an almost universal truth — are not only dominantly female names, the male names are almost all married. There are very few single male donor files. You’re almost always reaching a household with a woman present. So, when in doubt, the female approach will always work better.

Black: On a political, advocacy donor file you might see a little different skew on that.

May: Men are more likely to give to political interests and causes.

Clolery: Quick responses — What’s the one mistake that you’ve seen and one smart thing that you have seen somebody else do this year? It’s something that you said, “Geez, I wish I had done that,” or “I can’t believe they did that?”

Greene: We did something this year, and, fortunately it went well. For a large national nonprofit that went through some fiscal problems in the last year, we had to reduce the mail volume in acquisition greatly.

So we took our time to do a lot of cross-matching. We took every list across every package, took all the variables and put them together. And instead of allowing the creative to drive the mail plan, we’re mailing x-number of premiums, x-number of traditional, x-number of cards. We let the list-to-package mix drive the entire program.

We have an 18 percent lift-to-response rate at this point and our cost-per-dollar ended up lower.

Black: We do that quite a bit with our larger mailers. With smaller mailers and their exchange situation, sometimes you can’t let that happen because you can’t get access to the lists that you need to let the program work that way. So, sometimes lists can’t drive the program. The creative has to hold it. But as Lisa said, the way it should be is let the list-package mix drive the program insofar as possible.

May: One of our clients developed a thank you package that includes a small panel of name labels which I thought was so great that I ripped it off for another client and it’s working very well.

I think the big mistake people make every year is not mailing as much acquisition as they could be.

Black: Or they cut back because there is not enough money in the budget. The first thing to go is acquisition instead of putting it in another renewal, or something that will boost income. They all at once stop dead-in-the-water until they can afford to go back to acquisition because it’s usually done at a loss.

Clolery: Is the industry ever going to get back to a time when mailers really roll the dice with some tests?

Greene: What you want to do is create multiple mail tracks so that you can work backwards and say this universe of fundraising list works, how do I get the catalog list to work?” Well, if I want to bring in that universe I’d have to create an entirely new creative process aimed at these folks.

Anstrand: It gets back to Dodee’s point about the long-term value of donors. And, you know, if you really have to make money up front or nearly break even on your acquisition you’re never going to roll the dice because you’re just not going to be able to afford testing.

You could go to up-scale lists, such as a magazine, that’s very expensive. You might get a low response rate, but a $50 or $60 average gift, and you find out that you’re keeping every single one of those donors. People who give a larger gift to begin with tend to stay with your organization and return your investment much more quickly.

If your organization can buy into that, it’s much easier to get them to roll the dice and try all sorts of things. They know that donor’s worth and they know they’d rather have a handful of higher dollar donors than a million tippers who come in because they feel guilty about the labels.

Black: A few years ago, mailers would come to us wanting to attract up-scale donors. They didn’t care about response rate. They wanted a high-dollar response. They wanted to build this where they could move these people into up-scale giving clubs, the sustaining donor clubs, or find that million dollar bequest.

Anstrand: We had that go the wrong way, too, where they’d go, “Let’s skip the middle people.”

Bezursik: Even within the organizations, some large organizations, there is an entirely different mechanism and constituency to deal with planned giving. There’s not even a nexus of a particular direct mail respondent and your upper echelon giver, your life-time giver. So, that model breaks down.

May: I always wanted to publish a magazine, Paul, maybe we could do this as a joint venture, called “Wealthy Widows With No Heirs Gazette.”