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

Neither will ordering your copywriters, no matter how talented, to “beat the control” be of any help.

After 40+ years as a copywriter, I’m certain the only way to systematically “beat the control” is to stop searching for silver bullets and start addressing the THREE BIG PROBLEMS that plague almost all nonprofit testing. Problems that contribute to the same poor results year after year.

These problem — and more importantly the solutions to them — will be addressed in a Webinar on February 9^th, where we explore and explain a ground-breaking process undertaken by, among others, The American Heart Association, Production Solutions and DonorVoice. I hope you’ll join us. Registration is free for Agitator readers and you can sign up here.

First a confession. For years I’ve been as guilty as everyone else for not facing and addressing THE THREE BIG TESTING PROBLEMS.

PROBLEM #1: Incrementalism to Nowhere. Whether because of aversion to risk or simply out of habit, most testing involves tiny changes (color of envelope, one type of label vs another type, different ask strings, etc). While it’s true that small changes in response can yield meaningful changes on the top or bottom revenue line, it’s equally true that even with these, the vast majority of tests do not beat the control.

PROBLEM #2: The A/B Path to Infinity. The traditional bread and butter testing methodology is the A/B split test. Problem is that neither you nor I will live long enough, nor have enough testing budget, to find a winning combination of elements among countless possibilities. As an oversimplified example, take a direct mail package with 3 components —outer envelope, letter, reply form — and 6 variations for each component.  That’s 729 possible combinations. If an organization does 15 tests a year it will take 48 years to test all the possibilities!

And when you consider a more realistic and complex example that also includes a front or back-end premium (or both), and additional inserts or involvement devices, the possible combinations, for all practical purposes, are infinite. With A/B testing it’s the equivalent of looking for the proverbial needle in a haystack.

PROBLEM #3: Lack of Wisdom in Conventional Wisdom. Almost every direct response fundraiser I’ve met will acknowledge that the process of determining what components and variations get tested is anything but empirical, rigorous or efficient. Typically, the process borders on the haphazard, with an abundance of caution and conventional wisdom thrown in.

It doesn’t have to be this way. As you’ll see in the Webinar, there is a proven, math-based methodology nonprofits can use to pre-identify solid test ideas — those most likely to compete with and beat the control — and greatly reduce time and cost by not mailing test packages likely to perform poorly, and at the same time increase net revenue by increasing volume on likely winners.

The sophisticated direct mail fundraisers at The American Heart Association have been testing this methodology and have uncovered a solution to one of the most aggravating and wasteful practices in direct mail — the mailing of a test package with not one, but numerous test elements.

The practice of giving thumbs up or thumbs down to the entire package, with zero guidance as to whether individual components were well received, happens all the time. Mea culpa!

Certainly some groups may try to read the tea leaves and infer or guess — based on years of experience and past testing — why a package did poorly and what might be salvageable. But clearly, this is a flawed process fraught with layers of personal bias.

If you’re concerned with direct mail — whether in acquisition or on your house file — I hope you’ll join us for an hour in understanding more about the process, while hearing case studies from The American Heart Association and others.

Roger

P.S.  Registration in the Testing Webinar is free to Agitator Readers.  Sign up here.

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.

But whether you’re new or a relative ‘old-timer’ with respect to social media, here from The Nonprofit Quarterly is an intelligent article that will help you think through what you’re doing — Four Reasons NOT to Use Social Media … and Why to Use It Anyway, by Christine Durand and Kristen Cici.

Their four reasons not to use …

1. It’s a fad — it’s going away soon anyway
2. What’s the ROI? I can’t see that it’s worth it
3. People will say bad things about us
4. Our supporters don’t use social media

Christine and Kristen examine the ‘truth’ behind each of these concerns, but then deliver the case — and sound advice — for doing it right. Hint: very explicit goals and metrics to measure progress against them are critical.

Nice job guys.

Tom

P.S. Thanks to Debra Richmond for the heads-up.

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

One was a short blog post by Jeff Brooks, Why it’s hard to raise funds online. Citing Smart Insights Digital Marketing blog, Jeff says it takes:

• 3 seconds to get their attention with your subject line and the from line
• 5 seconds, once they’ve opened your message, to draw them in.
• 7 seconds to get them involved, on the way to taking action

Jeff’s comment: ” If you thought the mailbox was a cutthroat place, it’s nothing like the inbox.”

What Jeff is talking about I would indeed term online fundraising. You initiate the pitch online and you close the contribution online. That’s the real deal.

On the other hand, I saw these survey results reported in the Chronicle of Philanthropy saying that ‘online giving’ was higher than most expect amongst older donors, with 51% of recent donors age 60 and over in this survey saying they had made ‘online donations’.

I wonder what was actually being said by these donors … Did they respond to an appeal delivered (one way or the other) digitally? Or did they merely use the convenience of going online to complete a giving transaction initiated via some other channel … most likely direct mail? I suspect what’s being reported as ‘online fundraising’ is more of the latter, and this I consider ‘online fund capture’, not online fundraising.

If you think this is just a semantic difference, I urge you to go back and read my recent post, Are Online Fundraisers Stealing Credit?

I note that the Chron item also reported that a quarter of donors said that at least once they had started to make a gift online but not finished the process. That’s leaving a lot of money on the table, however you regard the lost transaction!

If your direct mail team delivers 100 prospective donors to your website, but 25 fail to complete the online transaction, I hope the accountability for that disappointing performance is being placed on the right shoulders! Or should I say silo?

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

Whatever. I don’t think I’ve ever seen numbers like these …

Way back in September 2010 a donor survey was conducted by Campbell Rinker for Dunham + Company, a US fundraising consulting firm.

The remarkable findings I’ve just noticed (brought to my attention by a recent Queer Ideas post) relate to the interaction between direct mail appeals and online giving.

Take note:

• 14% of respondents (who were online givers) said that a direct mail letter prompted them to give online versus only 6% who said an email prompted their online gift;
• 1 in 3 donors (37%) who give online say that when they receive a direct mail appeal from a charity they use the charity’s website to give their donation;
• One in two (50%) of generation X or Y donors say they give online in response to a direct mail appeal with 1 in 4 (26%) of boomers turning to online giving when they want to give as a result of receiving a direct mail appeal.  Only 14% of those over 65 will do the same, as 3 out of 4 of this demographic prefer to give by mail.
• 20% say their online giving was prompted by someone asking them to give in person. (WOW … that still happens?!)

Now, I grant that this is survey data, as opposed to hard transaction data, but even so the implications are startling …

As much as one-third of the response to any given direct mail appeal could come in via the nonprofit’s website. And only if your mail appeal directed respondents to a dedicated response page would you possibly know that with any certainty.

So think about that …

Are your direct mail returns being ‘under-counted’, making your mail program look weaker than it actually is?

Are those geeks running your online fundraising getting a bit of a free ride?

Are you integrating your mail appeals and online capture such that you can find out?

Whatever your answer to these questions, the bottomline is that your online ‘donation’ pages had better reflect all known best practice, or you’re killing yourself.

Tom

Our colleagues at DonorVoice are going to replicate in the UK their recent US study of donor commitment.

The call is out for UK charities who would like to participate in the study, which will be conducted in association with Ken Burnett and SOFII. Here is what Ken said about the US study, as well as an Executive Summary describing what that well-received work revealed.

There are two elements to this project. The first will study a representative sample of recent, frequent UK cause donors. This work will provides a national benchmark, computing Donor Commitment ratings for fifty top UK charities and NGOs across the health, human services, international aid & development, youth & children, environment & conservation, animal welfare, and armed services sectors (see full list here).

The second element looks at the same issues using samples (with transaction histories) from house files provided by participating UK organizations. To ensure adequate sample sizes, the study is best suited to larger charities operating on a national scale.

So far, five major groups from the child sponsorship, international relief, higher education, homelessness and environment sectors have signed up. The study can accept up to fifteen participants. UK participants will be charged a £1,000 fee each to cover direct costs of the work.

If you would like to consider participating, the DonorVoice information and sign-up page is here. Participants must sign-up and provide the required donor sample files by the end of December. The study will be undertaken in January, with results released at a in-person briefing in London in February.

From Ken Burnett:

“To have a ‘top 50’ of nonprofits ranked by the commitment of their donors is a breakthrough. You now know what to do to nudge your nonprofit up that list. To be able to delve into your organisation’s donor files and identify where you’re doing well and where you’re falling short, well, that strikes me as near priceless information that should underpin everything for you and your fundraising colleagues.”

Amen!

Tom