Lists That Generate Cash
March 15, 2005 Jeff Jones
Tammy Wagner of the American Breast Cancer Foundation (ABCF) learned about list rental and exchange through the school of hard knocks.
“We learned the hard way,” said Wagner, executive director of ABCF in Baltimore. Three years ago the foundation had roughly 100,000 names stored in an Access database. The file wasn’t the “cleanest” it could be.
“We had multiple information in the same data field,” Wagner said. “We had ‘do not mail’ or ‘do not call’ in the same field. We had pledges and gifts in the same field. We had folks on the list who hadn’t given in quite a bit of time.”
Foundation employees understood the system. But putting multiple information in the same field made it difficult to send clean information for converting the file for an exchange program which would have brought in new prospect names, she said.
The foundation spent a lot of time cleaning the list with the help of a list manager, Wagner said. It was during the cleaning process that “we got an education that we should have been more diligent in creating the list in the first place,” Wagner said.
A nonprofit’s house file is a valuable asset. Whether you’ve considered renting it for cash or doing a net-name exchange with another organization to find new donors, you don’t need to have 100,000 names or be a national organization to benefit from marketing your house file.
“First and foremost, nonprofits want to maintain that house file asset so it produces revenue for their organization,” said Lisa Greene, president and chief executive officer of Specialized Fundraising Services, a Spartanburg, S.C., list management and direct marketing consulting company.
A nonprofit needs to have good record keeping, a clean list that is identifiable by recency, frequency, and monetary amount of the last gift, at minimum, Greene said.
Paul Martin, vice president, sales and marketing for Atlantic List Company in Arlington, Va., said a good place to start is looking at similar nonprofits. Generally, the best thing to do is talk to list managers or big information providers, such as NextMark and mIn.
The house file also creates a possible cost savings. Instead of renting a list for $85 per thousand names, an organization could exchange with either another nonprofit or a commercial vendor such as a magazine, and avoid spending that money, according to Greene.
Since many nonprofit lists are available for exchange only, having a valuable list can give a nonprofit access to lists it couldn’t get otherwise, she said.
Generating revenue from out-of-market offers “requires a unique understanding of who and what the donor might be inclined to do besides give to the organization,” explained Rita O’Neill, president of O’Neill Marketing Company, a list brokerage and management firm in Fairfax, Va. “With or without an overlay, one of the best ways to offset acquisition costs is to understand that the donor base could also be a good target for a catalog, newsletter or product offer,” O’Neill explained.
“The idea is that the donor is already giving to an organization with a mission that enhances their lives or the lives of others. It is not a stretch that they might be responsive to a health newsletter or catalog. This non-competitive form of rental revenue not only offsets acquisition, but would have much less impact on the list owner/mailers own efforts to raise money,” O’Neill said.
Pricing your data
Nonprofits should view their lists as a commodity, said Ed Bezursik, account manager, list management division, in Millard Group’s Darien, Conn. office. Developing that commodity into a useable asset that is priced appropriately in the list rental/exchange market can take some work.
Nonprofits should consider several issues before they shop their list.
You should have at least 20,000 names on the house file, list industry experts said. The file probably is not that valuable in the marketplace with fewer than that, Bezursik explained, unless they are very high-end donors.
List rental prices are market driven and depend on quality, segments, and what mailers are willing to pay, Bezursik said. Knowing as much as you can about your donors allows for better segmentation, thus a list that is worth more.
On average, a nonprofit’s house file would rent for $75 per thousand names, Bezursik said. By comparison, a commercial catalogue or publisher list would sell for $100 per thousand, and pure business names go for $125-$130 per thousand, Bezursik said. Creating selects within your file can bolster the price.
“Look at what’s going to differentiate your list,” Bezursik said. Keep in mind your specialty, he said.
For example, certain types of nonprofits could receive a better price.
“Right now religious nonprofits are doing well,” Bezursik said.
If mailers are interested in religious donors, and are paying $75 base for a generic list and then $15 to identify religious donors, that’s $90, Bezursik explained. If you’re a religious nonprofit, price your list at $80-$85 per thousand and position it as a more valuable list at a better price, he said. The more information you have, the more you can charge to a specialized audience.
Regarding exchanges, there’s also the issue of protecting your mail dates so that it limits the amount of mail your donors get when you’re scheduled to hit. List managers and brokers said that the best thing to do is monitor to whom your names are released. Even that is
difficult because if it is the maximum amount of money you are wishing to derive from this resource, list managers are releasing names with their nonprofits clients blessing to out-of-market mailers and don’t really care how much mail they are being sent.
With everyone mailing, date protection is next to impossible anyway, the experts said. In the beginning, the ABCF had discussions about whom it would like to exchange with, Wagner said.
“When we first came into it, we were coming from a consumer point of view,” Wagner said. “We didn’t want to abuse people and have them get a bunch of mail. We definitely don’t ever want to exchange our list with a bank or credit card company or someone doing a lot of aggressive marketing. We tried to stick mostly with exchanging with other organizations.”
To convince board members to do this, you must prove out the financials, the new list opportunity for the betterment of the mail program and convince them their donors will be protected.
Respecting donor privacy is important. Nonprofits have to give donors the opportunity to opt out of having their names exchanged, Greene said. Placing a privacy question in an annual or bi-annual mailing to your house file could accomplish this, she said.
Nonprofit managers should have a discussion about how they want to use the list and their expectations. Talking to a list manager could be helpful. Generally, list managers won’t charge a fee until they’re chosen to manage a list.
“The fees come when they’re actually maintaining your list,” Wagner said. “Up front they’re coming in to let you know what they can do for you. They know that organizations they’re seeing for the first time have a limited budget. From our experience, they helped us understand the industry.”
If board members are concerned about exchanging or renting the list, remember that names typically aren’t as unique you think, Greene said.
If trustees are still hesitant, options exist. An organization could do a test and hold back names, and then look at renewal rates of rented or not rented names in a year, Greene said.
“You definitely want to make sure you’re not cutting into your own renewal rate,” Greene added.
Also keep in mind that list rental revenue makes a donor more valuable than just the occasional check. If a nonprofit has 10,000 members and can generate $10,000 in rental revenue, the nonprofit has gained a dollar for each member, Bezursik said.
The $6 million budget ABCF doesn’t count on list rental revenue, but treats revenue or credit as a pleasant surprise when it arrives, according to Wagner.
At this point, the foundation has some 300,000 names in its database and recently upgraded its system. “Three years ago I came into this and had no knowledge of direct mail,” Wagner said. “It’s a matter of keeping at it and constantly asking questions. The advice I would give is to make sure you have things in-house very in order so it’s easier to work with outside folks. Ask every question you can think of.” attraction.”