AMMC 2011 - Acquisition 101

1Avalon Consulting Group, Inc.

All rights reserved, 2011

ACQUISITION 1012011 AMMC Conference

Avalon Consulting Group

October 24, 2011

www.avalonconsulting.net



Philanthropic Trends

Chronicle of Philanthropy reported that the “nation's 400 biggest charities suffered an 11-percent drop in giving in 2010, the worst decline in two decades…”

Target Analytics Index Report (2011 Q2): During the recent recession, arts and culture organizations particularly struggled with new donor acquisition and first-yeardonor retention. In the first half of 2011, however, large increases in revenue, donors, and new donor acquisition indicate that the sector may be experiencing at least a stabilization, if not the beginning of a recovery.• New arts and culture donors increased by 6.8% from Q2 YTD 2010 to Q2 YTD 2011. This

was one of the largest new donor increases in the index but is likely at least in part a rebound from 11.5% declines over the same period the previous year.

Consumer Confidence Index® continues to fluctuate. There has been a downward trend over the last 7 months (though September was flat with August).



Membership as a pipeline to higher level giving

Membership plays

a vital role in the

overall fundraising

continuum.

Planned GiftsMajor

Donors

Renewed Donors

New Donors

Prospects/Visitors

General Public

To get major and

planned gifts, you

must build up the

donor pyramid.

Acquisition



Importance of Acquisition

Despite our best efforts, file retention is never 100% – people move, pass

away, and change their minds about their support.

Serves an important role in organization’s revenue plan – is the

organization’s goal stability or growth? If growth, how much growth is

desired?

Acquisition serves many purposes beyond just reinvigorating the

membership program – it’s a great source of $1,000+ donors, planned giving

notifications, and marketing/PR exposure.

Most organizations invest in acquisition – which means they are losing

money to acquire a new member with the expectation that the investment is

returned in 2 to 4 years.

Why Acquisition?



Direct Marketing Acquisition Campaigns

Direct marketing acquisition can be executed through multiple channels:

• Direct mail• Telemarketing• Email• Web• On-site

VALUE OF INTEGRATION



Why should multiple channels be used?

Data based on Avalon client performance.

It’s best to reach out to members through multiple channels, allowing the member to give

through their preferred channel rather than yours.

Members who give through all available channels are the most valuable when measuring

income generated per member.

Benefits of Multi-Channel Integration

DM, TM & Web

Web Only DM & Web DM & TM DM Only$0

$20

$40

$60

$80

Income/Member Average Gift

EXAMPLE



Benefits of using Direct Mail (DM)

Most cost-effective way to reach the largest prospect audience possible

List market allows organizations to obtain names that aren’t otherwise accessible

Using existing data and the latest techniques, DM can be personalized

Data segmentation allows results to be tracked in great detail so that each successive mailing is more

effective than the last

Volumes are larger, so statistically valid overall results (and test results) are possible

Still the largest source of individual giving revenue

Collateral PR benefit and marketing/sales outreach

Challenges of using DM

High initial investment, especially for acquisition

Postage and printing costs go up each year

Once it’s in the mail, there’s nothing you can do about it – no way to adjust strategy until the next

mailing

Isn’t Direct Mail junk mail? Only of the cause does not interest you. Otherwise, it’s an invitation to learn

more and make an impact on an issue that’s important to you.

Why Use Direct Mail for Acquisition?



Benefits of using Telemarketing (TM)

Personal outreach to members is hard to achieve – TM offers a way to reach out directly to your members and

have a real conversation with them

TM offers real-time results – strategy can be changed from day to day

Higher response rate and average gift compared to DM and email

Most effective way to reinstate recently lapsed members (up to 5 years lapsed)

TM enables your organization to respond to members’ objection responses directly and attempt to overcome

them –provides critical feedback on how members are feeling about their membership and your organization

Members who are contacted by phone and say “no” have a higher donor value than members who are never

contacted by phone

Challenges of using TM

Expensive if done out-of-house – pay $5-6 per contact

Have to give up some degree of control – telemarketers are human beings and do make mistakes

Even productive campaigns only ever reach about 60% of the file

Doesn’t everyone hate telemarketing? For organizations with large donor programs, telemarketing can produce

10-30% of the organization’s overall revenue. You would be surprised by how much people like to talk!

Why Use Telemarketing for Acquisition?



Benefits of using eFundraising/Email (EFR/EM)

Results are immediate and can be used to inform DM and TM strategy

Higher average gift than DM

Costs are lower than DM and TM – allows for more frequent contacts throughout the year

Provides convenience to members (“click here and join today!”)

Reaches a younger donor base

Provides collateral lift in results when used in conjunction with DM and TM campaigns and higher donor value

Challenges of using EFR/EM

Hard to capture email addresses, so universes are small

Response rates are still weak compared to DM and TM

Data segmentation can be challenging due to the small universe, so statistically valid results are often not possible

Perception that it is free – and it’s not!

Online-only donors can have lower retention rates

Can get caught in spam filters and never reach recipients

Isn’t EFR/EM the next big thing in fundraising? Not yet. Industry studies have shown that while EFR/EM

revenues are growing, they still represent only 5-20% of overall organizational revenue.

Why Use eFundraising/Email for Acquisition?



Benefits of using your website for acquisition

At least 50% of online traffic is driven to the web by some other marketing material (direct mail, word of mouth, ad in the paper), so it serves as a great counterpart to other fundraising efforts

• Want to make sure you’re prepared to capture this traffic as it comes to your website!

Easy to add dynamic content such as videos, surveys, petitions, donor testimonials, recent press coverage

Challenges to using your website for acquisition

Often competing goals for the same homepage space

Not always managed by the Development staff

To be effective, forms must be simple and clear – often a challenge given existing organizational software and competing interests

Not always kept up to date!

Don’t overlook your website traffic as valuable prospects! Even if people are not giving a gift, are you still trying to capture their information in order to engage them later? (Easily visible newsletter or exhibition alert sign-up, engagement tools like quizzes, etc.)

Why Use Your Website for Acquisition?



Benefits of using onsite visits for acquisition

Capturing people while they are engaged with your organization

No cost to ask!

Like TM, able to overcome objection responses and have a dialogue

Challenges to using onsite visits for acquisition

Human element – can’t control what your representative will say – or if they’ll even ask!

Why Use Onsite Visits for Acquisition?



Importance of Source Codes

Direct marketing is only effective if you can learn from it and improve upon your next campaign.

All campaigns should include source codes – a code that allows you to track the results by segment as they come in.

Determine the source code logic that works for you, and then USE IT and make sure it is captured in your database at gift entry!

Variables to track with source codes:• campaign type (renewal vs. appeal vs. acquisition)• List type (lapsed, rental list A, rental list B)• package A vs. package B



How much acquisition should I mail?

Answer: As much as needed to reach your goals!

Acquisition should be positioned to achieve organizational goals – file stability? File growth? If growth, how much?

Need to understand your current file retention rates. On average, how many donors do you lose each year? To keep your membership counts stable, you must replace at least as many people as you lose.



Acquisition Program – Benchmarking Across Industries

While arts groups get high average gifts in acquisition, the response rates are usually low. As a result, the net loss per donor is the highest in the industry.

Source: Avalon Client Stats

Arts and Culture – Includes both Performing Arts and Museums.

Note: This data represents only a small sample of organizations from each market and is not a comprehensive reflection of each market; however, the trends reflected here are consistent with Avalon’s industry experience.



Renewal Program – Benchmarking Across Industries

Renewals are where arts organizations recoup the acquisition investment. Average gifts remain high, and response rates are also strong -- as a result, the net per donor is the highest in the industry.

Source: Avalon Client Stats

Arts and Culture – Includes both Performing Arts and Museums.

Note: This data represents only a small sample of organizations from each market and is not a comprehensive reflection of each market; however, the trends reflected here are consistent with Avalon’s industry experience.



Acquisition Program – Critical Elements for Success

List Selection – it doesn’t matter what you say if you say it to the wrong people.

Offer – What are you offering and what will members receive in return?

Messaging/Case for Support – How do you represent yourself and your offer?

Format and Design – Do you stand out?

Timing – Does it make sense to send the campaign at particular times of year? (Prior to large exhibition opening, calendar year end, announcement of next year’s programming, etc.)



Acquisition Prospects

Because acquisition response rates tend to be low, a wide net must be cast.

• Mail to internal core internal prospect audiences:

— Ticket Buyers

— Lapsed Members

— Event attendees

— Lower dollar donors (under minimum membership level)

— eNewsletter/web names

Note: whenever possible, you should make every effort to gather as much information about these prospects as possible (name, address, email, phone)

• List market exists for acquiring names of other like-minded individuals

— Organization may rent or exchange names



Acquisition Program – Rental vs. Exchange

Making the decision whether or not to rent and/or exchange your

membership file.While the decision to rent vs. exchange only varies based on the organization, many groups find that list rental revenue provides substantial income and can help offset the investment in acquisition.

Your names are not unique to you – if you are not extending them, another organization surely is!

Many organizations (especially cultural groups) only make their list available on exchange. If you do not have a reciprocal list to offer, these strong prospect lists will be unattainable

Most files charge more if a reciprocal list is not available

Exchange lists are cheaper than rental lists, allowing AFI to return the investment faster

Most organizations only share donors names under $100 – no one is sharing their best donors



Acquisition Messaging



Arts messaging must balance philanthropy with benefits, while making a sophisticated case for “general unrestricted funding”

Benefits-BasedMembership Model

Mission-Based Membership Model

Messaging is based on benefits and “what’s in it for me?”

To be successful, benefits must offer real value

More dependent on key benefits for upgrading to higher giving levels

Results in a more transactional relationship, especially at lower giving levels

Tends to result in more marginal commitment and lower retention rates

Institutional messaging focuses on mission

Tangible need drives the philanthropic case for support

More investment in educational materials required to inform Members on need

Benefits still support—but don’t drive—giving

Results in a stronger Member relationship and higher retention rates

Acquisition Messaging – Balancing Benefits and Mission

Arts Organizations



Overall Messaging Strategy

Messaging should lead with benefits but also include compelling education and community outreach programs and future plans – and explain how Members help make it all possible.

Use of “Member” and “Membership” have been shown to produce stronger response rates. It is important to use these words frequently in benefit descriptions

Arts organizations often battle against patrons’ incorrect assumption that ticket sales cover the full cost. Member communications should state, “Ticket sales only cover 60% of our operating costs – we need your Membership support to help cover the gap!” in all requests for support.

Use “Plain English” – write in a conversational tone, use the first person. People give to people!

Consistency of messaging is also crucial – once the messaging strategy has been determined, it must be repeated in all communications and across all channels.

Incorporate testing to be sure you are always learning and improving your approach



Direct Mail Acquisition



1.Outside Carrier

2.Letter

3.Reply

4.Reply Envelope

4 Critical Components of a Direct Mail Acquisition Package



1. Outside Carrier

Include organization name and address (as registered if mailing 1st class)

Postage treatment?

Teaser?

Window or closed face?

4 Critical Components of a Direct Mail Package: Carrier



2. Letter

If personalized, donor name and address correct?

Easy to read? (Eighth grade level)

Johnson Box?

Ask on page 1?

Who signed it?

Frequent use of the word “You” and “Your gift”?

PS?

PROOFREAD!!!!!!

4 Critical Components of a Direct Mail Package: Letter



4 Critical Components of a Direct Mail Package: Letter



3. Reply

Donor name and address correct?

Easy to complete?

Source Code?

Payment information?

4 Critical Components of a Direct Mail Package: Reply



4. Reply Envelope

Correct return address?

BRE (Business Reply Envelope) or RAE (Return Address Envelope)?

Thank you?

4 Critical Components of a Direct Mail Package: Reply Envelope



Optional Extras

Lift Note

Inserts – Brochures, Testimonials, Event Highlight, etc.

Premium?

4 Critical Components of a Direct Mail Package: Extras



Acquisition Program – Direct Mail Member Acquisition Successful Arts Membership Formula

Consistent introductory discount offer on base level of membership (list all levels up to $3,000 on reply form)

Personalized closed face carrier

4-page letter with expanded information on benefits balanced with a mission-based case for support

4-color benefits insert highlighting the membership experience, not just featuring what the benefits are

Upcoming program insert/philanthropic mission insert



Acquisition Program – Sample Packages



TESTS: WHICH WON?



Discount Offer Test

Added discount to carrier teaser/

changed PS discount

language from $3 to 10% discount

TESTS: WHICH WON?



Telemarketing Acquisition



Acquisition Program – Sample TM Script

INTRODUCTION: Hello, May I speak with Mr/Ms_____? Mr/Ms______, my name is (your first and last name) and I am calling on behalf of ORGANIZATION from TELEMARKETING FIRM. This call may be monitored or recorded for my quality as a professional fundraiser. I am not calling to sell you tickets or subscriptions today/this evening.

SINGLE TICKET BUYERS: I wanted to first thank you for your patronage to the ORGANIZATION. (I see that you attended some of our ____ performances and I hope you’ve enjoyed your experiences with us.)

SUBSCRIBERS: I wanted to first thank you for your patronage to the ORGANIZATION. I see that you are a season-ticket subscriber and I hope you’ve enjoyed your experiences with us.

WEB NAMES: (please read verbatim): I wanted to first thank you for your patronage to the ORGANIZATION. I see that you created an e-patron account on our website.

This year, the ORGANIZATION has a spectacular season of performances including _______!

(Highlight 2-3 performances based on prospect’s area(s) of interest.)

2010/2011 SEASON - UPCOMING PERFORMANCES HIGHLIGHTS

SEASON PROGRAM LISTED HERE

SAMPLE TELEMARKETING ACQUISITION SCRIPT

CASE FOR MEMBERSHIP / FIRST ASK - $120 LEVEL ($80 tax-deductible):

As you may know, bringing the world’s greatest artists and performances to the ORGANIZATION, as well as exposing millions of children each year to the performing arts requires substantial resources.

Because ticket sales and subscriptions only cover half of our current program needs, we are extending a special invitation for you to become a MEMBER of the ORGANIZATION.

When you become a Member, you receive benefits that make your evenings here more enjoyable, including the ability to purchase tickets for all ORGANIZATION presentations before they go on sale to the general public. And because our important artistic and education programs are dependent on support from the community, the _______Foundation has agreed to match $1 for every $2 you contribute at this time!

Mr/Ms____, our first suggested level of membership is the $120 _________ LEVEL, which includes: access to our Member Lounges – which offer complimentary refreshments and a more private area to meet with your guests 45 minutes before curtain and during performance intermissions.

You would also receive 4 parking coupons, each good for a one-time $2 discount off the regular parking rate in our expanded garage! (We understand that many of our patrons are concerned about parking prices so we’ve added this special benefit as thank you for your support at this level.)

SYMPHONY PATRONS: You would also receive an invitation for two to attend one Symphony working rehearsal.

THEATRE PATRONS: You would also receive an invitation for two to attend an exclusive backstage theatre event.

Mr/Ms____, the ______ level comes with a gift of $120 -- and $80 of that is tax-deductible.

Considering these wonderful benefits, as well as the importance of keeping the performing arts and arts education strong in our area, may we count on you to join us as a ___________ with a gift of $120?

Same offer as DM package.No cold calling – only warm prospects (ticket buyers, even attendees, lapsed members)Conversational tone – ask what they like about the organizationTHREE asks!Pleasant close to call



Email Acquisition



SAMPLE eACQUISITION

Look and feel is similar to DM package.Same discount offer carried throughMessage will also be carried over from the DM.Can be sent to in-house prospect lists



Web Acquisition



SAMPLE HOMEPAGE



Name and

email captured online or

onsite

Targeted

welcome email

Engagement email

(survey of recent

experience and overall interests)

E-Newslett

er or Educatio

nal Piece

Email Fundrai

sing Ask

Direct Mail

Fundraising Ask and/or

telemarketing call

Web Acquisition

Consider creating a “Welcome Series” for prospects new to your e-list.



Onsite Acquisition



Ticket envelopes used in fulfillment of exhibition ticketsPatrons purchasing tickets should receive a Membership brochure at Ticket Office windowMembership brochures should be readily available in all areas of the campus that visitors frequent, including refreshment areas and gift shopsOn-site sales incentives include discount certificates for use in venue refreshment areas or leftover promotional itemsMarketing materials distributed at special exhibitions should contain a Membership flyer or “stuffers” with special offers or incentivesPlacement of Three Sheets can be employed to advertise the benefits of membership and current on-site sales incentivesConsider Raffle Cards can be distributed to give a way a free year of Membership or exhibition tickets and allow for the collection of mailing addresses and email for future prospect mailings

Onsite Acquisition



Membership Month Initiative can be executed in conjunction with online efforts, and allows for buy-in from PCT staff. Advertising can include promotion in newsletters and buckslips in mailings. Incentives are an important component of this promotion, as is a catch phrase, like “March is Membership Month!”Sales Associates should attend regular briefings about the benefits of Membership, and ask all visitors “are you a Member?”Incentives are also important to offer to staff as a reward for selling Memberships, and can consist of tickets to performances or gift certificates at local businesses

Onsite Acquisition



Final Thoughts

Acquisition serves a valuable role in an organization’s growth plan – as well as additional marketing/PR outreach

Membership acquisition programs can be a direct source of major donors and planned gifts – don’t forget to include higher giving levels and planned giving information on the reply form

Acquisition should be implemented across multiple channels in order to engage the most people

Remember: People give to people. Do your solicitations sound like they’re coming from a human being, or an organization?

Have you said “Thank you”?



Thank you!

Kerri Kerr Dara Rosenberg IgersheimVice President Senior Program Manager

Avalon Consulting Group1150 17th Street, NW Suite 200

Washington, DC 20036202-429-6080

[email protected]@avalonconsulting.net

mailto:[email protected]

mailto:[email protected]

AMMC 2011 - Acquisition 101

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Transcript of AMMC 2011 - Acquisition 101