Mar/Apr 2006

Innovations in Online Direct Response Fundraising Drive Results

by Vinay Bhagat, Founder and Chief Strategy Officer, Convio

As nonprofit organizations accumulate experience with planning and executing online programs, best practices are emerging — particularly in the area of online direct response fundraising. Likewise, technology advances in Internet marketing and fundraising are enabling more sophisticated approaches and, consequently, stronger results. This article highlights best practices and technologies that virtually any nonprofit can use for more effective direct response fundraising programs.

Building constituent email files

There is growing appreciation throughout the nonprofit sector for the importance of building constituent email files. Across Convio's client base, email files are currently growing at 9.4 percent per month. Some organizations have even built "usable," or good, non-opted out, email files several times larger than their active donor files.

Today's Internet savvy organizations realize that having a constituent's email address allows them to cultivate, motivate, mobilize and solicit the constituent at nominal cost. They also realize that having an email address and communicating in an integrated fashion lifts donor value. The National Wildlife Federation, for example, recently reported an $80.32 average annual donor value for constituents that they communicated with and solicited via both mail and email versus a $33.27 annual value for direct mail-only donors.

Successful groups focus on "organic" email file growth tactics: maximizing the percentage of people who convert on their Web sites from visitors to subscribers; running "viral campaigns" in which people forward messages to their friends; and collecting email addresses offline at events and on direct mail reply devices. Email list rentals and exchanges are not nearly as effective because they violate consumers' expectations about permission-based marketing, whereby a consumer directly volunteers his or her email address and agrees to receive communications with a specific organization. Furthermore, tests of third-party lists that I have seen have yielded poor results.

Some groups have tested email appends, or finding email addresses for segments of an existing mailing file via address matching services. For the most part, appended email addresses have not performed as well as organically developed email addresses as measured by email open rates and responsiveness to appeals. However, some groups have had a positive return on investment (ROI) through appends. The Anti-Defamation League (ADL) appended email addresses for lapsed and long-lapsed donors. Over 12 months of engagement and appeals, the organization achieved a four-fold ROI in terms of online funds raised compared with the initial cost to conduct the append.

Appealing to constituents

Many nonprofits are becoming more systematic about converting email subscribers to donors and renewing existing Web donors. As a best practice, nonprofits should establish a regular email appeals calendar with four to 12 appeals planned in advance for the year, coordinated with direct mail efforts. Organizations also should plan to leverage newsworthy events for special "micro-campaigns" (see figure 1 for a poignant example from the ADL). Today's most advanced online fundraising technology makes it easy to launch these special campaigns in minutes versus hours, so it is easy to be responsive to opportunities or needs. 

Fig. 1 - Responding to events in the news (Anti-Defamation League)

Optimizing response

Leading nonprofits are realizing, too, that they must move beyond the "one-size-fits-all" approach to online fundraising and are starting to tailor their donation forms to specific campaigns. Ensuring that the donation form matches the overall theme or brand of a campaign enhances conversion rates as does removing unnecessary navigation options from the donation flow.

Additionally, many organizations now can test how campaign forms are configured. For example, should you ask an involvement question before or after someone selects a gift amount, or not at all? New innovations in online fundraising technology, such as the functionality available in Convio's latest offering, Convio5, make it easy for fundraisers to configure and launch custom donation forms matched to the theme of a campaign, apply their own messaging and test the sequence that a constituent would have to go through in order to donate.

Historically, customizing donation forms has been time-consuming and costly, typically requiring a nonprofit to request that its IT resources or software vendor make a customization. That extra step has made it nearly impossible to respond quickly with tailored efforts, and frequently is cost-prohibitive. To enable rapid launch of campaigns pegged to breaking developments and other time-sensitive events, some Internet solutions now offer a library of pre-built donation forms for a variety of needs.

Testing

As email files have grown, more groups have started email "split cell" testing. Split cell testing involves creating several different versions of a message (variants) to test; creating the same number of randomly generated, equal-sized, small yet statistically meaningful samples from a list; sending the variants to the sample lists; assessing which variant performed the best; and utilizing the strongest performing variant for the full appeal. As an example, the ADL recently ran a three-part split cell test varying the subject line of an email and found that the top-performing message had a 15 percent higher open rate and an 81 percent higher click-through rate than the lowest performing message.

Email campaigns

Nonprofits are getting more sophisticated in executing email campaigns. New online fundraising technology makes it easy to create and send an automated sequence of email appeals that targets the same list several times, suppressing respondents from subsequent asks. The second message (appeal) often has stronger messaging than the first. This practice helps drive a higher cumulative response rate from a list — similar to sending multiple renewal requests in the postal mail.

Integrating online and offline channels

With growing frequency, nonprofits are embracing integrated marketing across channels. They are encouraging people to go online to give in response to a direct mail ask. Some groups simply highlight their Web site's home page, while others encourage supporters to visit a special URL. Nonprofits are using this practice for both donor acquisition and retention.

To support this practice, the best Internet fundraising solutions make it easy to create customized landing pages and donation forms with configurable Web addresses, or URLs. That makes it easy to track the number of people who are going online to donate in response to a direct mail piece. As people give online to a specific campaign through these forms, gifts can be automatically source-coded as attributable to the mail piece.

A related technique is the use of micro-sites, or stand-alone fundraising or advocacy mini-Web sites with specific campaign-related branding and a unique Web address. Such sites are commonly used for high profile campaigns that have their own brand. Nonprofits also use this tactic when integrating with direct response television or radio efforts. Again, the best online tools make it easy to quickly create such micro-sites, fine tune them for donor conversion, and ensure that they are linked from a data perspective with the organization's main Web site.

Increasing donor value

Nonprofits that embrace the Internet strategically are developing new ways to boost contributions and donor value online. Several groups are encouraging monthly gifts online versus one-time contributions. Monthly donors not only have a much higher annual donor value but also renew at much higher rates. New online fundraising technology enables nonprofits to effectively manage monthly/sustaining giving programs using credit cards and bank debiting (EFT).

Nonprofits also are able to leverage new online fundraising tools to drive matching gifts. With these tools, a group can include employer look-up and matching gift information directly in "thank you" Web pages and email auto-responders that online donors see right after they complete their transaction. To support major donor cultivation, effective online fundraising tools notify administrators via email when a supporter gives a large gift online so the appropriate staff members at the nonprofit can follow up personally.

Additionally, organizations are providing more donor choices online as a way to enhance relationships and, in turn, value. For example, several groups are promoting designated giving. New online fundraising capabilities allow donors to apply all of a gift to one campaign or allocate their gifts among several specific initiatives. This is a common practice in higher education fundraising today.

Conclusion

Internet fundraising continues to grow rapidly as more consumers move online and become increasingly comfortable transacting through this new medium. The organizations that will maximize their performance online are those that are proactive, deliberate and moving quickly when it comes to online marketing. These groups are systematically building email files, running regular creative appeals, optimizing for conversion of Web site visitors to donors, testing, practicing channel integration and leveraging the best techniques to build long-term donor value. And, while technology is not a "silver bullet," advances in online fundraising technology empower nonprofits to utilize these best practices and generate stronger results.