By Sean Triner, Co-founder and Director, Pareto Fundraising and Pareto Phone
Back in 2005 I gave a Masterclass called ‘Swap or Die’. In it I explained why charities should ‘reciprocate’, that is, mail each other’s lists of donors. Reciprocal mailings are standard practice for many charities in the UK, where I used to work. Charities would swap lists, through a third party, and mail the other charity’s donors. People who donated would then become donors of both charities.
I demonstrated the evidence from UK and USA that this tactic doesn’t harm retention of current donors to any significant degree. Lots of charities came along to the Masterclass, and several were up for it. There were two main barriers: legal and subjective presumption.
Legal: If charities had promised donors that they would not swap their details, they were stuck. The solution was to stop promising that, and to change communications in a way that would allow them to swap later. No one knew why they promised it in the first place, since there was no law requiring them to, and it didn’t help acquisition results.
Subjective presumption: Not unreasonably, people presumed that swapping their database would undermine the loyalty of donors on their database. This kind of makes sense; surely increasing the amount of mail that individuals get from other charities would hurt their giving to the originator charity? This paper will help overcome this issue.
The current economic hard times gives me the best reason for highlighting the need to reciprocate in the future. An important note is that swapping is not an acquisition strategy; it is just a way of getting a good prospect list, so if you are not planning on renting lists and mailing other prospects then swapping is probably a waste of time. However, make sure you read the section ‘Privacy Statements’ so that you enable your organisation to swap in the future.
Throughout this document, I will refer to ‘mailing’ for ease of reading, but swaps work better than cold lists for emailing or phoning too. However, you need to be careful about local telemarketing and privacy laws.
Donor acquisition
Whilst acquiring a couple of hundred donors is relatively easy, strategic acquisition – ie recruiting thousands of donors – is extraordinarily expensive. It usually takes 12 to 24 months to recoup your initial investment. And anything less than a few hundred thousand dollars invested is wasted because the critical mass is never reached.
Swapping is useless to charities with less than about 3,000 people who have made a gift in the past twelve months (current donors). You simply can’t get the numbers to make the effort worthwhile. This paper is aimed at charities with at least 3,000 donors and at least $100,000 acquisition budget to spend on testing or trialling donor acquisition beyond face to face or who are already spending more than that on acquisition.
The benefits of swapping
The key benefit is that you massively reduce the cost of donor acquisition.
Some think the reason for this is the reduced cost of the actual data. This is because swapping may appear to be cheaper than list rental, but when staff time is taken into account for persuading board, colleagues, legal time, changes to privacy statements, policy, negotiations with partners, de-duping, having to defend your position every few months to a new board member who doesn’t like it and more you will see it is not that much cheaper.
Either way, list / swap costs are marginal when considered against the whole-of-acquisition costs. The real reduction in the cost of donor acquisition just comes from the fact that response rates are so much better, and loyalty second gift rates should be better too. Much better. A test between two charities last year had the reciprocals outperform the rest of the campaign by five times. The 12-month return on investment (ROI) was nearly double the next best list, and five-year ROI was even better. In another test the cost-per-acquisition for donors acquired from swapping was less than $1, with the next best list acquiring donors at $150.
I have often seen good acquisition packs mailed to a good swap partners achieving double figure response rates.
Problems and barriers
The Law
This is not legal advice – please consult a lawyer in your country about your particular situation.
Depending on country and state, the use of data may be carefully controlled. In Australia, as in the UK there are strict privacy laws, although these laws on their own don’t prevent swapping. However, a charity can act in a way that would make it illegal to swap. For example, if new donors were recruited and the privacy statement said ‘we will not swap your details’ or ‘we will never pass your details on to a third party’, then they can’t. There is no requirement – or reason – to make that statement, but if you are doing it then you need to take action immediately.
Stop saying it on all acquisition forms, on any acknowledgments to supporters, and on your website – even before you have agreed whether to swap or not. You may not plan to swap now, but if you don’t alter what you are saying then you are making it difficult for anyone to change that in the future. Back in 2005 there were charities that were in that position who changed their statements and were able to start swapping in 2008.
Protecting your data
Donor loyalty
It seems obvious that allowing another charity (competitor!?) to mail your database will mean your donors are less likely to donate to you next time you ask. The reality is that if swapped within reason (ie less than 10 times a year) nothing significant happens.
The reasons for this:
• Your donors are already getting lots and lots of charity mail per year and the swaps only account for a marginal increase in that volume
• With even the best swap results, at least 90% of donors don’t respond
• Donors are nice people – they give to lots of charities and we have seen that the more they are asked, the more they give; very few are near the limit of their finite pool
Privacy statements
Look at the slide show on my blog for a load of examples of privacy statements, but the best thing is to write friendly stuff. Don’t try to hide, tell the prospect the benefits, but without making it a chore.
Here are some examples:
Thank you again for your gift and / or communication. We at Youth CancerCare really value the relationship with you and wish to keep in touch with you and keep you informed about our work. It is only with support of people like you that we can continue helping youths cope with cancer . We recognise the importance of your privacy and the safeguarding of your personal information. We are careful with all your details and will use them to contact you about issues we believe will be important to you. If you do not wish to receive further communications from Youth CancerCare please call us on xxx – xxx – xxx or tick this box
Finding more people such as yourself to help youths cope with cancer is incredibly important and some like-minded organisations allow us to communicate our mission with their supporters in return for allowing information about their cause to be sent to you. They will only record your information on their database if you respond to them and give them your permission. I ask that you allow us to do this, and you can change your mind at any time in the future. However, if you prefer not to receive communications friends of Youth CancerCare through this program, please tick here and we will note this on your record.
Please check your privacy statement with your lawyer – this is just a sample and not legal advice.
Theft
Not such a problem in many developed countries, but in many countries actually exchanging the mail files could be costly when one partner just adds the whole file to their database. Ensure that you put seeds in the list. These are names and addresses of some of your colleagues who will help you monitor the use of the list, including the timing and quality of the mailing. About one or two seed names per 1,000 will do. Both parties should agree the volume of seeds. Better yet, use a third party to do the data work.
Volume
You can only swap your donors a few times. Up to 10 times will not harm loyalty significantly but to be honest the time pulling it altogether to fit in with your cold mailing cycle and not mailing at the same time as your swap partner means you will probably only be able to swap two or three times a year. This means for a charity with, say 10,000 donors swapping three times, you would probably mail 20,000 all up (after de-dupes etc). Getting 3% would get you 600 gifts – increasing your total database by 6%.
However, across the same year, you may expect about 6-15% natural attrition on your database – so by swapping you have still not really increased the net size of your database. The bottom line is that you cannot grow your database using swaps alone. They need to be combined with a cold mail acquisition program.
How it works
Straight swap
Charities A and B agree to swap databases A and B – their warm donor files. They agree on timing so that they don’t mail the files at the same time – if charity A sends a warm mailing to database A, we don’t want charity B sending a cold one to database A at the same time.
The databases are then de-duped against current donors. (There is no point de-duping against lapsed donors as sending a cold mail to your own lapsed donors is not a bad idea if they are still donating to another charity – it means they are still there and breathing so good lapsed prospects.)
The de-duped lists are then mailed with cold packs and any responders are added to the mailing charity’s database.
Data cooperative
Instead of a one-on-one swap, it is possible to pool your data with a non-charity mail order company. Your donors are effectively added to the list and other charities and businesses can mail them – and you can mail their people.
In Australia, Australia Post runs a co-operative through First-Direct Solutions (used to be Geospend). Their Geospend survey lists have always been pretty good; expensive at first glance but you really do get what you pay for when sourcing data. Their co-operative was (I think) the first successful one in Australia and is well worth joining if you are acquiring donors through the mail. Check out the information here.
Also, Alliancedata’s insight product, which I believe was set up by ex-First-Direct staff, is another option. Visit their website here. I would advise charities to join both and think of them as two separate ‘lists’.
Your next steps
Check out the slideshow on my blog.
Whether convinced or not, please take step one – it doesn’t mean you are committed to anything and is a professional approach to ‘scenario planning’ ie, it allows your charity to respond in different ways in the future whereas if you don’t take this step your charity has restricted options.
If you have less than 3,000 donors then swapping is pretty marginal but still do step one.
1) Check your privacy statements on all materials and communications that gather information about donors. Remember to check any privacy statements on your website too.
a. If the statement restricts your ability to swap, amend immediately.
i. First check anything about to go to print and delay the print run to amend.
ii. Destroy materials already printed incorrectly; don’t phase them out as this causes much confusion later – you are better off knowing that any donors acquired after x date were recruited with the new statements.
b. If the statement doesn’t restrict you, it is still worth revising and making it friendly.
c. You may want to run this by your lawyer.
There is no point going any further until you have a program to produce cold packs, mail people and look after them.
2) Join the co-operatives and use their data files as ‘lists’ to compare against others you buy.
3) Talk to like-minded charities or agencies like Pareto Fundraising to find potential partners.
4) Agree terms, segmentation and swap dates.
5) Get the data de-duped.
6) Add the data to your data supply as ‘lists’ to compare against the cold lists and co-operatives.
7) Get ready to enter lots of new donors into your database.
Remember, data swapping is not a replacement for your acquisition strategy; but if executed well, it should be an effective part of new donor recruitment. Good luck!
Sean Triner is co-founder and director of Pareto Fundraising and Pareto Phone. Currently, he is travelling around the world presenting to, working with and challenging fundraisers. For more stories like this, check out Sean’s Blog.
Good luck.
Glossary
Prospects
People who are not currently donors, who the fundraiser believes may become donors. Typical prospect lists include donors to other charities, bought lists matching profiles,
Cost per acquisition
This is a useful measure of the actual net cost of getting a first donation. This is because all strategic sized donor acquisition programs cost more to run than the total donations sent in response. Charities need to maintain a relationship and follow up the donors for additional communications to recover costs and begin to generate net revenue.
Usually does not include staff costs (though it should) it is expressed in dollar amounts.
Classic donation example: It costs $100,000 to send a mailing to 75,000 prospects for post, print, mailhouse, design, copy, data costs. A response rate of 1% is achieved, generating $41,250 ie 750 gave an average of $55.
We say those 750 donors are newly acquired, and their cost per acquisition was
($100,000-$41,250)/750 = $78.33
Regular giver (RG) or Planned Giver
A donor who makes an automatic deduction from their bank account or credit card to the charity.
Cost per acquisition for regular givers may be calculated in the same way as above; you can expect RGs to be much more expensive. It is worthwhile charities investing $500 per donor for high value regular givers such as child sponsors.
