More than 5,000 new charities were registered last year, diving headlong into a pool that’s already overcrowded with organisations desperate for donors. And although the water may look inviting, there’s not actually much of it – according to research by the Charities Aid Foundation, 50 per cent of all charitable donations come from three per cent of the population.
But competition doesn’t just come from within the charity sector, according to Andy Wood, managing director of database marketing company Total DM. “With charities accounting for just seven per cent of consumer direct mail, which is one of their main means of attracting donors, competition against other sectors is just as fierce. As a result, charities are having to go the extra mile to get a return on investment (ROI) from their direct mail campaigns.”
This means devising ways to get through to an increasingly sophisticated market that’s demanding more from the DM campaigns with which it is constantly bombarded. It’s no surprise that many believe charities are leading the way in DM and that commercial organisations can learn from their humanistic approach.
“Charities use as many sophisticated DM techniques as commercial organisations, if not more, including profiling, recency frequency value, analysis tools, lifetime value and geodemographics,” says Royal National Lifeboat Institute (RNLI) supporter marketing manager Geraldine Cetin. “They have to, to make themselves cost-efficient. Being totally accountable to your donors means risking losing their support if you are seen to be wasteful. The bottom line is income, ROI and average gift.”
Stephen Butler, founding partner of integrated communications agency Domain, which specialises in social causes, agrees: “Charities aim for ongoing repeat transactions from donors, whereas many commercial organisations want to secure a sale based on a one-off financial transaction. It’s true that a lot of companies understand the importance of building a ‘relationship’ with customers, but charities want to create a relationship that asks the donor to give up to 12 or more times a year, with often little or no tangible product or service in return.”
Another difference highlighted by Butler is the returns that charities are expected to achieve. “Very often a minimum of 4:1 or 5:1 is the benchmark for charity direct mail,” he says. “As a result, charities have no option but to cultivate strong relationships with their donors, not least because acquisition exercises are an expensive business. If they don’t say ‘thank you’ quickly or in the right way, the donor will go elsewhere, unless they have a specific emotional tie in.”
In fact, this is the essence of the non-profit sector. As Butler puts it: “Charity brands are emotional brands.” And tapping into the emotions of their prospects is where DM comes in. This need to connect emotionally has taken charities’ campaigns to another level compared with those of many commercial organisations, and valuable lessons can be learned from this approach.
“Charities are cause-driven,” explains Butler, “and causes tend to be emotional responses to a desperate situation. Although you don’t buy a car out of an emotional call for help, the emotions are still very much part of the experience. However, commercial brands are notoriously bad at after-sales gestures, which makes for a cynical brand experience.
“In charity letters, the sign off is very important. If it looks like it has just been written by a junior nobody in a big charity, we can expect to see response fall. But by treating the donor to a more important name and written in a personal manner, you’re going to make an impact. A credit card letter signed off by a junior manager says exactly the same thing. It tells the consumer that they aren’t special to the company.”
Another similar technique used by charities far more than commercial organisations is the handwritten envelope. This gives a DM campaign a very personal feel, but is often very impractical due to the length of time it takes. So with the limited resources available to charities, how can they spare the time to take this approach?
Sweating the small stuff
The answer lies in another direct marketing technique that many in the industry believe is done better in the charity sector than in the commercial world – and that’s audience targeting. The charities that can spare the time to send out mail campaigns in handwritten envelopes have usually honed their donor database to such an extent that they have a small number of hot prospects to which this kind of approach will make all the difference.
“Big brands would do well to emulate the third sector’s reliance on data-driven campaigns,” says Wood. “Profiling, segmentation and tracking techniques are essential. The tone and creativity of a mailing campaign should be adapted to the target audience. For instance, low-value donors are more likely to respond to an emotional pull such as the picture of a puppy with big round eyes, whereas committed donors require a more reasoned approach. Few big brands segment their customers and alter their mailings accordingly”
The RNLI identified a segment of its target supporters who could give more money but were not doing so in great numbers – recreational sea users. “Following research to confirm this, we developed a broad-based marketing campaign using above- and below- the-line techniques to target this audience,” explains RNLI’s Cetin. “Seven years on, 50,000 members have been signed up, giving on average more than &£50 a year, and contributing &£2m a year in additional funds. What’s more, a traditionally difficult audience for charities, that of the ABC1 male, has converted to become regular supporters of the charity.
“The annual retention rate of this audience exceeds 90 per cent, something many companies look upon enviously. While thecommercial world may use similar techniques to identify new customer segments, they can fall down in the retaining of new business.”
Identifying your target audience makes forming the right emotional connection easier and drives a more efficient campaign.
“Some of the most effective and creative DM I’ve seen has not been inspired by the spending muscle of the financial or car companies, but has sprung from the creative ingenuity of the charity marketer on a shoestring budget,” says Jane Relp, marketing manager of e-communication and marketing services company Mailcom.
“I bet everyone who received it remembers the straw sent out by an asthma charity, with instructions to breathe through it for 30 seconds to get an idea of what it was like to have asthma, or the Help the Aged Eyesight Appeal with an opaque piece of plastic enclosed. Recipients were asked to try to read the enclosed leaflet through the plastic to experience the effect of having cataracts. These award-winning campaigns were successful because the enclosures were an integral part of the pack, pertinent to both the message and the charity’s work, yet they cost very little.”
Looking at the work of the charity sector brings home the fact that lavish DM campaigns are worth nothing if they don’t speak the language of their target audience. What’s more, they can actually alienate the people they are supposed to attract.
“Charities frequently agonise over deciding on the lightest suitable weight of paper to use in their mailing, for financial, ecological and political reasons (donors don’t like to think their money is being wasted on non-essentials), while commercial clients are more likely to over-specify, without considering whether their customers might also be put off by over-the-top productions,” says Relp.
With direct marketing being one of the charity sector’s main means of generating funds, encouraging response from campaigns has been turned into a fine art. The key is offering choice and making it easy. “Charities are far more likely than their commercial counterparts to pre-print as much as possible on their reply form – details such as donor name and address, for example,” adds Relp.
No money, no problem
Budgetary restraints mean charities can’t waste money on an ineffective campaign, so they have become very good at tracking and monitoring response, using code numbers on response forms or a code for the media or publication used to generate the response.
Perhaps the commercial sector could also benefit from following charities’ lead in recognising and targeting their best potential donors, rather than the obsession with youth shown by many companies. As far as the charity sector is concerned, its wealthiest audience is the over-50s – a growing section of the population that is much neglected by the commercial world.
“By 2005 more than 21 million people in the UK will be over 50, and they are the best charity prospects,” says Kevin Lacy, executive creative director at leading over-50s marketing agency Millennium. “On an even narrower front, the very best donators to charity will remain women aged 55 and they will grow in number for the next 15 years.”
Clearly there are some methods that don’t lend themselves to the commercial world, such as the shock tactics employed by many charities to draw attention to a particular cause. Similarly, companies would not get away with approaching people directly in the streets to buy their product as charities do.
However, commercial organisations would do well to learn from charities’ skills in hitting the right emotional buttons through effective customer profiling techniques, together with their ability to deliver the appropriate message through creative and innovative direct marketing campaigns.