You heard that — maybe said it — before.

It occurred to me as I was listening to this Ethan Boldt (Direct Marketing IQ) video reviewing a new carrier format he thinks will light up response rates. One example is from Obama for America 2012; the other is from Gettysburg Museum.

Now, Roger grew up in Gettysburg and belongs in the Museum, but I digress.

Ethan draws our attention to the carrier. Cool. But what about the letter … the reply card … the signer … the dollar string … an insert …  a premium … or any other component that one might test?

Roger has been arguing, with our colleague Kevin Schulman at DonorVoice, that package testing as presently carried out is pretty much a crap shoot. Too many variables are tested simultaneously, and on no basis other than somebody’s ‘conventional wisdom’ or a few hunches, with the result that no one can really tell which elements of the package might really have made a positive difference … and which didn’t.

“Oops … we didn’t beat the control.”

Meanwhile, lots of time and money wasted. And we’re still not sure why.

So Roger and Kevin have developed a methodology for pre-testing potential package components and variations in an affordable but empirically reliable way … before anything goes in the mail.

That’s the subject of their free webinar on this Thursday the 9th at 11:30 eastern. You can still get a seat here.

So before you rush off to test an envelope that uses “four-color, full-bleeds to the edge and in-line printing to the max” … you might want to consider what Roger and Kevin will demonstrate on Thursday.

Tom

I’m serious.  Here’s why.

Moneyball, the 2003 iconoclastic bestseller by Michael Lewis  — now  a very popular and acclaimed movie starring Brad Pitt — is an entertaining and effective study in successful and counterproductive behaviors. I recommend it as ‘must reading’ or ‘must viewing’ for all fundraisers, development committees, boards and executive directors.

“It’s the biography of an idea,” says Moneyball author Michael Lewis. It deals not only with wins and losses, but also with the quest of a man who wanted to revolutionize a sport; someone who, in Lewis’ words was willing “to rethink baseball: how it is managed, how it is played, and who is best suited to play it, and why.”

That man was Billy Beane (charmingly played by Brad Pitt) the provocative general manager of the Oakland A’s with unconventional ideas about what a team with limited resources could do to compete with wealthy powerhouses like the New York Yankees. Billy takes on the system by challenging the fundamental tenets of the game. He looks outside the conventions of baseball with its cherished dependence on the intuition of scouts and hires a brainy young number-crunching Harvard-educated economist to help him figure out a better way.

Together they tackle conventional wisdom with a willingness to reexamine everything. Armed with computer-driven statistical analysis long ignored by the baseball establishment, they go after players overlooked and dismissed by the business-as-usual baseball world for being too odd, too old, too injured or too much trouble, but all of whom have key skills that are universally undervalued.

As they forge forward, their new methods and roster of misfits rile the old guard, the media, the fans. Using ‘sabermetrics’ (data analytics) the Oakland A’s found the good players they could afford, while successfully challenging many tenets of baseball’s hallowed conventional wisdom.

And just as in every other specialized field of human endeavor the detractors, the old-guard and the high priest experts argued that this focus on numbers dehumanized the game and ignored the intangibles that only ’trained scouts’ could see.

Although data analytics is an element in the story, that’s not really what Moneyball is about. More broadly it’s a real-life story of innovating to succeed, or as Billy Beane puts it in the movie, “Adapt or die.” Beane the entrepreneur innovating out of necessity.

And so it is in today’s world of nonprofit fundraising, communications and management. More than ever survival depends on innovation, the willingness to challenge old assumptions and, to no small degree, the ability to discover and use better measurements, benchmarks and other metrics that are based on more than myth and convention. Metrics that help us more strategically, accurately and competitively steer a course into a successful future.

It’s more than coincidence that Moneyball begins with a quote from Yankees star Mickey Mantle:  “It’s unbelievable how much you don’t know about the game you’ve been playing all your life.”

Ain’t that the truth. And for this reason over the next few posts in our “Flat Earth Fundraising” series, and with your help and suggestions, I want to focus on challenging some of the conventional wisdom and  fundamental tenants in our craft, while also introducing  you to some innovative approaches that might help us all change the game for the better.

What sacred cows would you like to challenge?

Roger

P.S. Interested in innovation? Then try the webinar I’m moderating that will present a new approach and tool for pre-testing packages, developed by DonorVoice. Seats in the February 9^th  (11:30 EST) Direct Mail Testing Webinar are going fast. Agitator Readers can register here FREE.

So we thought it fitting to give the last word of the year to an Agitator Commentator.

We picked this recent comment from Steve MacLaughlin at Blackbaud, who talks about the imperative for nonprofit fundraisers to embrace multi-channel fundraising. Use of multiple communication channels reflects the real world of donors … if not yet the real world of some nonprofits!

The bottom line: Different strokes for different folks (donors) is not just some ideal … it’s vital to fundraising success. And the chief obstacles to capturing its fundraising benefits are operational and data silos within organizations.

Here’s what Steve has to say:

“Is it channel conflict or cognitive dissonance? It is sometimes very hard to tell.

There is way too much philosophical debate on which channel should get the credit for the gift. This is mostly fueled by organizational silos or incentives that nonprofits have put in place.

Here’s the reality: Donors are multichannel. They receive messages across multiple channels and they give across multiple channels. They don’t care about your org chart or who gets credit for the donation.

The problem is that many nonprofits are still organized around single channels each doing their own thing, with their own strategies, their own data, their own donors, and their own systems. That’s broken and really costly.

Ultimately, you want to use the right number of channels to drive the right people to take the right action using the most effective and satisfying giving mechanism as possible.

If that means a direct mail piece and a check, then great! If that means a phone call and an online donation, then fantastic. If that if a tweet, an email, a QR code, a website, and a donation for, then so be it.

And if you’re looking at donor behavior across channels, then you will begin to see some trends in what channel mix works best for different types of donors. Oh yeah, did I mention that donors don’t all respond the same way to the same channels? One size fits all approaches are as doomed as single channel tactics.

Statistically speaking, online donors are much more likely to switch to become offline donors. About 32% of online donors will become offline donors compared to only about 3% of offline donors switching channels. Your results may very. Always be testing.

No one channel should get all the credit or all the blame. You succeed or fail based on how well you do these things together.”

Amen.

Happy New Year!

Roger and Tom

P.S. And here’s our New Year’s Resolution … Resolved: No Silos!

As we head for 2011’s fundraising finish line The Atlas of Giving on Friday reported that overall giving this year will finish 7.4% ahead of last year.

Key takeaways from the Atlas of Giving November report:

• In terms of sectors, ‘Education’ was the biggest gainer (up 9.3%) and ‘Religion’ posted the greatest decline (but still 6.5% greater than 2010). All other sectors remained posted gains in the 7% range.

• Corporate and foundation giving up 6.2% and 6.1% are forecast to account for the least growth, while individual giving will increase 7.7% and bequests +7.4%.

• There are some signs of weakening. Giving in November (+0.4%)  and the December forecast (+0.2%) are worrisome portends for 2012.

• We’ll know more when The Atlas of Giving releases its 2012 Forecast in mid-January.

Much like the CIA once monitored the wheat harvest in the old Soviet Union, Ethan Boldt over at DirectMarketingIQ reports the top 5 fundraising direct mail trends in 2011.

Using the remarkable database of direct mail contained in the Who’s Mailing What Archive  that includes 14 different types of fundraising mail, ranging from social action, through international relief, culture, health, politics, religion, sports, animal welfare and wildlife, Ethan summarizes the key trends as follows:

• Controls showed a slight uptick in 2011. This year 45% of all fundraising mail was with a control package (by his definition a package that appeared in the Archive for at least 1 year); that’s an increase of 1.8%.  This means that 55% of all packages were ‘new’—a hopeful sign that there’s considerable testing going on. [Or, asks Tom cynically, does this merely reflect desperation?!]

• Personalization and Variable Data Printing Hit Record Levels.  Today, according to Ethan, 60.3% of all fundraising mail is personalized either by copy or imagery—the highest point since the Archive began.  And, it increased by a full 8% over 2010, the previous record high.

• Surprising Increase in Larger Formats. Ethan examined all direct mail in the Archive and reports that the usage of envelopes smaller than 6″ x 9″s stayed constant over the past two years. “The only change was an increase in larger-sized formats (bigger than 6″ x 9″s), by 9 percent, with larger formats taking up a quarter of the mailstream with a big contribution from the fundraising industry.”

• The Self-Mailer is (probably) Out! In 2010 self-mailers accounted for only 4% of fundraising mail, but that represented a 12 percent increase over 2009. Bad economy? Bad thinking? Whatever the reason Ethan reports that the use of self-mailers declined by 21% in 2011, a trend also reflected in the commercial sector.

• Mailings with Premiums showed a 14% increase. In the commercial sector the use of premiums increased by 7% in 2011. Is the fact that premium use doubled in the fundraising sector significant? We’ll explore premiums in future Agitator posts, but the reality is that today 1 in 5 mail pieces contain a premium. [Again, Tom asks, a sign of pure desperation? He'd be more comfortable if he thought fundraisers were serious about measuring and evaluating the lifetime value of these premium responders.]

Your ‘premium’ for tomorrow?  Agitator posts that rang our readers’ chimes in 2011.

Meanwhile, what giving or technical trends caught your attention in 2011?

Roger

Today I notice this report from comScore saying that 183 million American internet users watched online video content in November for an average of 20.5 hours per viewer.  Within that, 7.2 billion video ads were viewed. Wow!

Then simultaneously, I received an email alerting me to VOA Chesapeake’s online video campaign for this year. It turns out that last year’s 15 day campaign raised $75,000 in one month. This year’s effort has been expanded to five weeks and will include a heavy dose of social media (here’s the Facebook link).

Here’s a description:

“Each week consists of two videos aired through social media and the organization’s website on “Make A Difference Monday” and “Watch it Wednesday,” where (Courtney) Shirley, a former NBC reporter and anchor, takes viewers behind-the-scenes  at the organization providing information and ways individuals can get involved. This year the campaign also features new videos sharing stories of those being helped. “Tell Us Tuesday” encourages social media engagement through current events and questions aimed at engaging the non-profit’s online audience. “Thank You Thursday” spotlights a story of thanks on the Courtney’s Quest blog, created and written by Shirley or other featured bloggers such as the non-profit’s CEO/President and clients. “Fund Friday” targets financial and in-kind donations by fundraising through social media.”

Once again I applaud this effort. It shows that a smaller nonprofit can be just as inventive as the big guys.

And there’s something else to note about the campaign as described. I think it’s going to provide plenty of opportunity for human connections to be made between VOA Chesapeake’s client-beneficiaries, their staffers, and their donors … even though it’s a digital campaign. That’s the contribution of video.

And that, in turn, reminded me of this blurb, from of all places Supermarket News, about the the craving consumers have for human interaction, citing this Harvard Business Review article, The Future of Retail? Look To Its Past. Says author Peter Merholz:

“In our increasingly connected world, people crave authentic human interaction, and the future of retail is going to look a lot more like it did in the more distant past (or still does in markets and bazaars), and a lot less like the bureaucratically-driven mass consumerism we grew to expect in the twentieth century.”

There’s no escaping “mass” fundraising, but campaigns like that of VOA Chesapeake show us how to bring a human dimension into our efforts … and online video has a huge role to play in that.

Courtney Shirley, you deserve a raise!

Tom Belford

Done by Epsilon, the Consumer Channel Preference Study (registration required) focuses particularly on consumer preferences with respect to direct mail and email. But it also looks at social media and mobile. (One disappointment … nothing on telemarketing.)

Some findings:

• 50% of U.S. consumers and 48% of Canadians said they pay more attention to postal mail than email;
• 60% of U.S. consumers and 64% of Canadians said they enjoy checking the mailbox for postal mail, highlighting an emotional connection;
• The least trustworthy channels are social media and blogs, achieving only 6% trust among U.S. consumers and 5% among Canadians.

And specifically, as between direct mail and email, 30% of consumers prefer receiving solicitations for donations in the mail, versus 9% via email.

The reasons for preferring direct mail are (in rank order):

• More private if sent through through the mail
• Already get too much email
• Would prefer not to have to print the info
• A lot of online info can’t be trusted

The reasons for preferring email are (in rank order):

• I can print the info to keep if I want
• Can choose which info I want sent to me
• Can read the info when it is convenient for me
• To save on paper
• Can more easily share the info with others

Epsilon makes this recommendation (among others):

“Use personally addressed direct mail to provide information as well as an emotional lift for consumers. Recognize that more targeted communications are becoming the norm for consumers as they are engaging media on terms they prefer. Every opportunity to express more knowledge of the consumer in the channels they prefer is essential to building a relationship and driving action.”

Amen.

Tom

It seems he tried to innovate once and failed. But now he’s made a second mistake, he’s broadly generalized from that experience and concludes: “If you want your fundraising to work, stick to the conventions.”

Wow … is that bad advice!

Most fundraising is not working these days precisely because folks are blindly sticking to conventions.

The Agitator has nothing against conventions. We’ve often ranted that fundraisers, especially newbies, insist on either re-inventing the wheel or ignoring practices that have heaps of current empirical evidence to support them.

But we would never elevate our reverence for the ‘true and tested’ to a cardinal rule like “stick to the conventions.”

Firstly, because even old ‘best practices’ need to be re-tested and re-examined. If only from a “Is this the best tactic given my nonprofit’s circumstances?” standpoint.

But secondly, as Roger has been cautioning, because a hell of a lot of nonprofits are going down the tubes if they don’t innovate … at least trialing more up-to-date tools and concepts. That’s what his Flat Earth Fundraising series of posts is all about. Just search ‘Flat Earth Fundraising’ on our site … here’s the first in the series.

C’mon Jeff, you don’t really think there’s a case against innovation, do you?

Tom

Kevin’s infographic (click image to enlarge) distills the essence of the landmark National Donor Commitment Study conducted this fall. It identifies the seven key steps an organization (not the donor, but the organization itself) can take to improve donor commitment/loyalty and thus increase its bottom-line dramatically.

In short, it is the actions an organization takes that affects a donor’s attitude; and it is the donor’s attitude that affects – positively or negatively – the donor’s behavior.

On the surface this all seems simple enough. And, in fact it really is, EXCEPT our old, bad habits keep getting in the way. One of those bad habits, of which I’m as guilty as the next fundraiser, is mistaking myth for truth.

Myth:  If a donor give us their email address they’re a more loyal/committed donor.

Fact:  There’s absolutely no proof of this.

Myth:  The more online activity donors participate in, the greater the likelihood that they’ll be better, more committed donors.

Fact:  There’s absolutely no proof of this.

Myth:  If a donor makes the effort to send in a change of address, they’re a more committed donor than someone who doesn’t.

Fact:  There’s absolutely no proof of this.

BUT….REGARDLESS of facts and reality, countless fundraisers continue to segment donor files based solely on donor behavior, hoping to somehow improve the bottom-line. Sadly, it’s not gonna happen, at least not in a reliable consistent manner.

Why? Because of an immutable law of science, statistics and logic:  “Correlation does not imply causation.”  This ‘law’ emphasizes that correlation between two variables (for example, sending in a change of address and being a more loyal donor) does not automatically imply that one causes the other.

Stick with me please, and I’ll treat you to ice cream – and murder. Only as an example, of course.

Historically the murder rate has always trended positively with an increase in ice cream sales. In Poli-Sci 101 this is known as a “false causation” — i.e., correlation does not imply causation.

It is known that throughout the year murder rates and ice cream sales are highly correlated. That is, as murder rates rise, so does the sale of ice cream. There are three possible explanations for this correlation:

Possibility #1: Murders cause people to purchase ice cream. One could imagine a world where this is true. Perhaps when one is murdered, they are resurrected as zombies who feed on ice cream.  (Or go online, or send in their changes of address.)

Possibility #2. Purchasing ice cream causes people to murder or be murdered. Again, one could imagine a world where this is true. Perhaps when one eats ice cream those without ice cream become jealous and murder those with ice cream. (Or frequently fill out petitions and take other online actions.)

Possibility #3. There is a third variable — what statisticians call a “confounding variable” — that causes the increase in BOTH ice cream sales AND murder rates. For instance, the weather.

When it’s cold and wintry, people stay at home rather than go outside and murder people. They also probably don’t eat a lot of ice cream. When it’s hot and summery people spend more time outside interacting with each other, and are more likely to get into the kinds of situations that lead to murder. They are also probably buying ice cream, because nothing beats the sound of an ice cream truck on a blazing summer day.

In this example, the weather is a variable that confounds the relationship between ice cream sales and murder rates. Sometimes this is also called the “third variable problem”, which refers to the fact that anytime we observe the relationship among two variables there’s always the possibility that some third variable which we don’t know about is responsible for ‘confounding’ the relationship.

Setting the ice cream and murder example aside, the confounding variable in behavior-based fundraising correlations — e.g., providing change of address and giving more — is usually donor commitment … how donors feel about your organization that causes them to care enough to alert you to their new address in the first place. And unlike the extremely limiting tactic one might employ in a “correlation only” world — in this case, making it easier for people to tell you about their new address — you should instead focus on the cause and, more specifically, actions your organization can take that directly impact commitment levels, to get the corresponding behavior-based benefit, whether donors move or not!

For example, perhaps you thanked the donor in a timely manner, or told a great story about someone you helped, or otherwise reinforced the notion that your organization is right on top of its mission.

I use ice cream and murder to illustrate why it’s important to always be on the lookout for confounding variables. They can make us reach conclusions that are wrong. Confounding variables can make us miss enormous opportunity. Or, to use slightly more technical language: Confounding variables = BAD.

So, how does this apply to what we fundraisers see and what we do? Sure, we see that we get better performance from people who spend a lot of time online, but that’s probably not what’s spiking their performance. The question we need to be asking and answering is “what did we do (what actions did we take) that created a positive attitude on the part of the donor to participate more?

It is the actions we take, not the donor, that cause or create the confounding variable called commitment. 

‘Donor commitment’ is the equivalent of ‘the weather’ in our ice cream/murder example. But unlike the weather, your organization can create and destroy Donor Commitment. Just don’t try to measure or determine true Commitment by behavior, because, like love, it’s an attitudinal construct. 

The problem with simply relying on donor behavior is that it points to no causal path. That’s one of the problems with the conventional segmentation that most fundraisers use. Traditional segmentation generally leads to identification of a false causation pattern.

If you take a look at Kevin’s Infographic and go to the section that summarizes online behavior it is easy to draw the conclusion that the more folks are online, the more likely they are to be more financially valuable. But, as Kevin points out, this is a false or confounding variable.

And therein lies our mistake. We look at our behavioral segmentation patterns and draw faulty conclusions. E.g. we should try to get more e-mail addresses or we should encourage people who are good donors to also provide e-mail addresses. Or, since many good donors provide change of addresses we should mount a change of address campaign. NOT!

Don’t get me wrong, it is important to look for patterns and it’s not outrageous to assume that people who are providing e-mail addresses are likely to be better and more committed donors. But unfortunately, one doesn’t follow the other. On its face this pattern may not seem as outrageous as the ice cream/murder scenario; but at the end of the day, both have confounding variables.

What is so wonderful is that in the case of fundraising – unlike murder and ice cream and the weather– you can control this one.

Why?  Because you can measure and manage commitment and determine what you do that impacts it. Behavior matters – yours! It causes commitment (or kills it) and the resultant donor commitment causes their behavior.

The fact that you send people 10 or 12 direct mail pieces as opposed to four in a year may lead to more money, but that’s not why the response is better. The response is better for attitudinal reasons––you may be providing more information, you may be informing the donor more frequently, etc.  Your actions are affecting their attitude and that, in turn, determines and drives their behavior toward you.

To paraphrase: the question we all need to ask and answer is not what our donors’ behavior can do for us, but what we can do to improve our donors’ attitudes.  When we do this, the good behavior of a committed donor will follow.

Roger

His recent post, with the dry-as-toast title, Five things we learned at the IFC, is a treasure chest of little pearls (he calls them “juicy nuggets”) that he mined from various presentations.

For example, from Blackbaud’s datameister Chuck Longfeld:

• If someone calls you to change their address they are TEN times more likely to leave you a legacy (or upgrade, or set up a regular gift or anything else you might ask them to do).
• Calling a donor to thank them (whether you speak to them or just leave a message on the answer phone) can increase their next year’s gift value by up to 40%.
• Misspelling someone’s last name can decrease gift size by up to 12%.

Notice we’re not talking here about some super-duper-CRM-donor-value-modeling software, or a whiz-bang Facebook widget, or a slick mobile app.

We’re talking about the fundamental chemistry of human interaction … sometimes known crassly as … customer service. If you don’t get something this basic right, or even appreciate its importance, get out of the fundraising business, now … you don’t belong! [See yesterday's First, Make Rice]

Phillips has extracted more great takeaways from the International Fundraising Conference, often with links to support, and what catches his eye tells me he has superb instincts.

Do yourself a favor and read his post.

Tom

But how to do it?

My colleagues Roger Craver and Kevin Schulman (at DonorVoice) will give you their recommendations at a free DonorVoice/Agitator webinar on Tuesday September 20th, 10:30am – Noon eastern.

They’ve been digging deep into donor research we’ve conducted over the summer to empirically demonstrate the predictive power of what we call ‘Donor Commitment’ and how you can measure, track and build it.

They’ll show you the seven ‘drivers’ of Donor Commitment … the activities and actions you can take to increase Commitment.

Limited virtual seats are available for the free webinar. You can register here, but you better hurry.

Tom