Direct Mail Fundraising

Key No. 3: The right price
I personally believe that donations are amongst the most highly price-sensitive spending decisions any person makes. This is because donations to charity are a discretionary spending item, following after food, clothing, housing and other practical needs. Donations probably also fall fairly well down the league table of discretionary spending too. While some donors no doubt actually do tithe their income in the literal and biblical sense and others make donations a priority spend before leisure and pleasure, I doubt if many donors consciously forgo spending on leisure or ‘treats’ so that they can respond to that heart-pulling proposition leaping off the pages of an appeal that’s just arrived.

So donations come not just from discretionary income, but from what’s left after other discretionary wants have been met.

This means that appeals (and especially direct mail appeals with all the opportunities they offer to “ put me down and deal with me later”) are competing fiercely for the last of the donor’s available funds before wallet cramp sets in. This naturally creates a market limit to the typical range of donations and creates a highly price sensitive environment into which direct mail appeals are pitched.

In practice this means that, as a rule of thumb, you can expect response to drop by between one third and a half for each £5 increment in the amount requested.

Sometimes the drop can be much more dramatic. In a recent test against another agency’s pack with a £25 ask, which produced a response of 0.5%, our appeal which asked for £5, £6 or £8 produced a response of 5%. Now, even if some of the difference is explained by other factors such as targeting and proposition, there is no doubt that the price was also pitched at a level that matched the target market’s ‘comfort zone’ for this kind of discretionary spend.

And there’s another aspect of price that exerts an influence on response rates. This is to do with direct mail itself and the way it performs as a fundraising medium. Basically, its sits within a hierarchy of methods of solicitation. At the top of the hierarchy in terms of “persuasion power” is one-on-one personal solicitation of a gift by one peer to another. Next is telephone contact (and possibly street face to face). After this comes direct mail, followed by street and static collections in a collecting tin. The plain fact is that, however wealthy the donor is, he or she is only likely to put £1 or £2 into the street collecting tin, between £5 and £25  into a direct mail response envelope, agree to a regular donation of £5 to £10 a month by phone and give  between £1000 and £5000 to a personal solicitation.  And it takes an awful lot of effort and cultivation to land a higher gift than £10,000.

Every method of solicitation has its own limits that are intrinsic to the method itself.

So the medium of direct mail itself has built-in limits to how much money it can raise on an individual basis. This is simply to do with its perception by donors. Most see it as a medium for sending modest gifts. But, by the same token, many also see it as a medium for sending modest gifts on a fairly frequent basis.