Monday, May 3, 2010

Data That's Relevant to the Majority

There’s a ton of fundraising-effectiveness research available these days but is it relevant to the realities of the majority of organizations?

There’s been lots of buzz in the past week about a new study on email fundraising released by M+R Strategic and NTEN. What’s attracting attention is the study’s conclusion that organizations with smaller email lists are getting better results than those with larger lists. In fact in some data categories, the small list results are almost double those of the large lists. These are interesting findings but here’s what I was thinking.

The definition of a small list according to the study is under 100,000. But 100,000 is an astronomical number of email addresses. For most organizations, having 5,000 - 10,000 email addresses would be a stretch. So, let’s resist the inclination to be intimidated and see how the numbers play out if you are only sending let’s say 5,000 emails.

Based on the study’s findings for small list campaigns, you can on average expect:
  • Open rate - 19.8% which means that 990 people will open your email
  • Click through rate - 4.1%. OK, now 205 people will use any link in your email to visit your site
  • Response Rate - .25%. That means that 12 people will make a gift
  • Given the average gift amount of $100.65, your campaign will gross $1207.80
  • And if you can do this – as small list organizations are – 2.3 times per month, or let’s say even 25 times per year, that’s $30,195
Admittedly there are lots of assumptions in these numbers including that 5000 is even a large enough sample to generate average results. But it does raise questions. What are the costs associated with an ongoing email campaign including the acquisition and maintenance of lists, the development of regular email content and monitoring results? If that takes an additional staff person, your email campaign just became a losing proposition. Or, does the value of first-time or monthly donors mitigate the cost? What’s the longer-term value of having almost 1,000 people visit your site? If you can double the number of emails and reach over $60,000 in gross revenue, does the campaign become worthwhile?

I don’t have all the answers. Every organization will have to come to its own conclusion but it seems to me that for most, it’s not a slam-dunk. An informed decision can only be made on a careful consideration of the numbers. The good news is that the digital world can provide all the data necessary.

Make it work:

  • When considering an email campaign, do your diligence and use available research to project results.
  • Don’t forget that there is a qualitative aspect to email campaigns. Effective writing and compelling design will always be more successful.
  • Remember that the effectiveness of the donation landing page is also a key component. Make sure that once they get there, prospective donors are encouraged to give.
  • Think long term and consider how you can increase the size of your email list and the cumulative effect of increased site traffic.