The Future of Direct Response Cultivation
The landscape of direct response fundraising is evolving, rendering traditional tactics less effective. Shifting market dynamics have resulted in smaller donor files comprised of higher-value donors, while direct mail acquisition and cultivation costs have surged. As fundraisers, we must rethink our strategies to navigate this critical juncture.
As we entered 2023, numerous challenges became apparent, prompting us to develop a comprehensive testing strategy to tackle them holistically.
Digital donors and direct mail cultivation
Over the past decade, Masterworks has focused on digital fundraising for faith-based nonprofits. We recognized that digital donors possess a higher lifetime value (LTV) and tend to make more substantial gifts. As a result, we gradually shifted budgets away from direct mail acquisition, anticipating rising costs and a diminishing direct mail universe.
However, we encountered an obstacle when digital donors proved less responsive (at least directly) to traditional direct mail cultivation. To address this challenge, we embarked on digital cadence testing. Through this testing, we discovered that digital donors do not require as much direct mail to maintain their donor value, although some direct mail is still necessary. We found that larger prospectus packages, handwritten cards, and catalogs had a more significant impact on their overall donor value than traditional appeal-style letters.
Retention, volume, and costs
Another pressing issue was the decline in retention and volume of low-value donors. It became clear that we needed a new strategy for smaller donors because it’s too expensive to send them all the appeal letters.
Introducing Cultivation 2.0
To confront these challenges head-on, we launched a groundbreaking in-market test called Cultivation 2.0. The test aimed to address the following shifts:
Unified direct mail cultivation: Creating a unified direct mail cultivation program catering to digital and direct mail donors.
Enhancing donor value: Improve donor value by encouraging larger gifts and fostering monthly giving relationships.
Cost-effective approach: We kept the costs down despite using more expensive kits by reducing mail frequency.
Cultivation 2.0 replaced numerous “low-cost” mail appeals with fewer — but more impactful — mailings, mirroring the successful strategies with digital donors. Simultaneously, we introduced an “Up or Out” strategy for lower-value donors, urging them to upgrade to a monthly giving relationship with a $5 monthly contribution. We hypothesized that higher-level offers and packages would motivate donors to increase their support, while more monthly-donor asks would boost sustainer conversion and decrease long-term cultivation costs.
Promising results
After six months of testing, the results have been promising. The test group demonstrated higher net revenue and donor retention. Notably, we achieved our goals with a 13% increase in monthly-donor sign-ups thus far and a 15% increase in the number of donors upgrading their giving year over year.
Embracing new approaches
Initiatives like Cultivation 2.0 pave the way to unlock even more extraordinary generosity from donors. While the journey may present challenges, embracing change allows us to build new bridges toward success. Overall, we learned two key things:
Higher cost, nicer looking direct mail with fewer impacts worked for both direct mail and digital donors (digital donors require even fewer impacts).
For lower-value donors, we attempt to upgrade them to sustainers, and if they don’t upgrade, we stop mailing them until the next acquisition season.
It worked! Donors gave more, and the overall cost remained the same.
Our clients loved the classier look and feel of the direct mail and also that they were mailing donors fewer appeals without sacrificing revenue. What’s next? More testing to push these ideas further to see if we can do even better.