Many of the nonprofits we work with at Masterworks were founded before digital marketing transformed the landscape. They’re used to feeding donors a steady diet of direct mail appeals and newsletters. This has been a proven cultivation strategy for decades.
But even as we increasingly focused on acquiring and nurturing digital donors, we started to ask, “How much mail do these digital donors really need?”
That’s an important question to answer — because direct mail is getting more and more expensive. And we send these digital donors a lot of mail.
Additionally, our clients have seen a significant increase in the number of digitally acquired donors. And with a substantial influx during COVID, we now have files of digital donors who are yet to be trained to respond to a diet of direct mail.
So, in July 2021, Masterworks launched an ambitious longitudinal test across eight clients of varying sizes — most of them rescue missions — to see if we could reduce direct mail to digital donors and still meet net revenue and retention goals.
Setting up the test
These eight ministries mailed anywhere from 14 to 29 impacts to their active files every year. For each ministry, we pulled a panel of digitally acquired donors who had never made a gift through direct mail. Donors in the test panel were mailed roughly 60% fewer impacts. These were chosen based on their high response rates and then spread out across the calendar.
Our hypothesis: We could dramatically decrease the amount of mail we send to digital donors, thus reducing costs. The key success measurement was net revenue.
The surprising results
For every one of the eight clients, the panel won based on net revenue. But the real surprise was, seven out of eight also saw the test panel win on gross revenue.
Reducing direct mail to these specific donors ultimately saved our clients money and also increased the value of the test panel.
Three important takeaways…
- The one mission that did not see the test panel win on gross revenue was already mailing a slim schedule (14 appeals compared to the others, which averaged 24). For the test, that dropped to 6 appeals. This may mean that some direct mail is good — that it’s all about optimizing the amount.
- With the exception of one mission, all the test panels saw a reduction in overall donor retention, but mostly in the low-value segments. The good news is that the one mission that did not see a drop in retention had the most robust email cultivation strategy — giving us a new hypothesis: If we reinvest some of these savings into a cultivation strategy tailored to digital donors, we can bring retention back up.
- The savings were substantial. We estimate the combined annual savings for these eight clients we tested on would be over $500,000. Most clients are projected to see savings of $40,000 to $50,000 annually. That’s $50,000 freed up from underperforming direct mail cultivation to be used in either boosting the cultivation of highly responsive digital donors — thus improving long-term donor value and overall net revenue — OR in funding the important work they’re doing.
If you’d like to know more about how your organization can best respond to the rising cost of direct mail cultivation, we’re happy to help. Feel free to reach out here.