Direct mail remains a discipline committed to experimentation.
I was fascinated by a newsletter article from Mal Warwick Associates about an attempt to resuscitate the direct mail results of a charity that still relies heavily on direct mail. Chicago's Mercy Home for Boys and Girls (Mission of Our Lady of Mercy, EIN 36-2171726, but no Form 990 as a church group) relies on public support for 83% of its income according to its annual report (an additional 9% comes from an endowment and the rest from earned income including a tiny amount of government contracting). It has a budget of about $30 million and spends about $7 million a year on fund raising.
Amazingly, with a long history of direct marketing going back to 1900, over 75% of the organization's donations come from outside the Chicago area.
The newsletter article provides a glimpse into the number-crunching world of direct mail marketing in much greater detail than typically seen on the Internet. The problem arose when a greeting card premium package that worked well for the organization in the 1990s stopped working—because the average gift fell under eight dollars, not enough to justify the cost of acquiring new donors.
The marketing made the observation that donors who did not rely on premiums ended up giving much more. So they tried soliciting funds without the premium, a revolutionary idea. Ultimately, it didn't work, because with a lower response rate they quickly exhausted all the available mailing lists. Eventually, they had to adopt an approach that used a variety of premium and non-premium appeals that resulted in a higher average gift and lower net cost to acquire a donor.
Lurking at the edges of this story is the question of how much longer can this traditional direct mail process continue. What is the future for direct mail premiums? After all, you don't need address labels for e-mail.
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