Edited By Paul Clolery

It's big dollars for a charity if the correct lists are used to prospect for new donors and by renting donor files. Strategy and innovative thinking are key to maximizing the effort.
List industry experts and a nonprofit mailer were brought together at the National Press Club in Washington, D.C., to talk about squeezing the most from a simple group of names. At the table were: Susan Anstrand, president and CEO of Names in the News in Oakland, Calif., Graham Hunter, vice president of May Development Services in Greenwich, Conn., Paul K. Martin, vice president sales and marketing at Atlantic List in Arlington, Va., and Angie C. Moore, group vice president at the Arthritis Foundation in Atlanta.
The session was moderated by Rick Christ, president of npadvisors.com in Oakton, Va., and Paul Clolery, editor-in-chief of The NonProfit Times.

Rick Christ: Let me start out with just a general question about list universes. There are concerns about lists becoming available. There's no shortage of nonprofit organizations. There are some big lists that come and go. Of the ones that are there and stay, are the basic counts or core donor lists growing, shrinking, or staying the same?

Susan Anstrand: Certainly with the downturn of the economy, the lists started to shrink. Then with most of our clients pulling out of the mail after September and not really getting back up until November, December, or maybe even January at the latest, the universes have shrunk on the larger files.
Prior to that, we'd seen tremendous growth in clients that mail, particularly the ones that mail monthly and can mail a couple million a month.

Paul Clolery: You're talking about 12-month lists. Is there a value in a list that is slightly older?

Ms. Anstrand: That remains to be seen. Everybody tries. One of the fears I have is everybody cannibalizes the six-month portion of a list and they don't go to the 12-month and the 24- month unless it's absolutely their best list.
They're starting to just take the seven to 12 months or the seven to 24 months because there aren't as many new names among the six-month select.

Paul Martin: The challenge that we see with most of our clients is there isn't a big enough universe at the 12-month, even 18-month level. There have been certain mailers that have always been willing to test deeper into the files, 24, 36 months, and even further than that.
The key, at that point, is to make sure that you've got additional information appended to that data because as a list manager, we're not going to be able to convince many people that a 48-month name is going to be worth mailing to even at a discounted price.
There has to be something else attached to it, such as enhancements along age and income. We've been doing a lot more with the ethnic and religious overlays. I think more mailers are realizing that they have to go and test those.

Ms. Anstrand: Our mailers still think that on the secondary lists, which might be publications or catalogs, that they should be able to go into those. But the reality is the older donor lists would probably perform as well and the long-term value might be better.
If you have a premium-based acquisition package, you might be able to get the three-month catalog names to work, but then you can't keep them or renew them or get them to respond to appeals. The 12- to 24-month donor name that's come from the same kind of market would probably work better.
We don't get so much into the enhancements on the older names. For our managed lists, we do suggest that if they've always put their $5 plus donors on, maybe the older names should be the $15 plus or the $20 plus. Maybe that extra dollar amount would boost the response versus the recency.

Graham Hunter: When we talk about the different list markets, obviously to all of us the primary list market for generating gifts is the donor list market. As far as going deeper into recency, you can go 24 months on some files.
We look at the value per piece brought in per list. If it has one of the higher values, if it's rated as one of the top lists, there's your opportunity to go deeper.
When you get into catalog lists or subscriber lists, almost always on a catalog you need a hot line.

Mr. Christ: Is the hot line 30 days, 90 days?

Mr. Hunter: We usually like it three months. It depends, again, on the list. Some of this is average gift driven. So if you pick up a catalog list that's doing well for you and it's bringing in a higher average gift, you might take a six-month recency as opposed to a three-month recency.
As far as the size of the list, we don't see donor files shrinking that much. Where we see a big turn in list size is in the consumer market. They're not doing the acquisition that they used to do, so their numbers are down.
You asked about the renewal rate being tied to the list. What we see in most of the long-term value studies is the renewal rate is tied more to the size of the gift. A person who comes in with a $5 gift has a worse long-term value over five years than a $15 donor. It's chronologic and goes right down the line. The $100 donor is worth $400 over five years. The $50 donor is worth something like $200, and as you get down to $5, it's $12 over five years.
It really becomes a question of not just what list you're acquiring them from, but what your renewal strategy is for the different dollar segments.

Mr. Christ: Have you used consumer lists, by Graham's definition? Have you had any success?

Angie Moore: We come at it from a different perspective because we're not a monthly mailer. We have four major mailings a year. So, we haven't seen an impact of donor files starting to be reduced. We're not trying to go back to the same lists every single month.
We're a little bit of a hybrid program because we do have a membership program that deals with the magazine. So, we have often dipped into these non-donor lists in an effort to find new sources for members. The primary benefit of membership is a product -- our magazine.
They haven't traditionally worked for us, so we have always tended to go back to those traditional donor lists, which has been fine for us.
We saw some changes in our responses going from 1999 to 2000, and even in early 2001. Our acquisition program started to see some decreases in responses from traditional strategies, which has sent us in a different direction trying to find new outlets, new audiences, new ways to look at files.

Mr. Christ: Nonprofits are not alike, not only in mission but in what they're mailing. A lot of people have a vision of who they are and their offer. But it may be very different from how the recipient of the direct mail package views the offer.
When you said a minute ago that you have a membership package that includes a magazine, that magazine is the tangible result of their contribution. In that sense, I'd be surprised if some subscriber files didn't do well for you, certainly better than say a catalog list because these are people who write checks to get stuff.

Ms. Moore: You're right. It goes to show how much the offer really matters. For lack of a better word, what we sell is a membership relationship, which is "become a member of the Arthritis Foundation, support the mission of the Arthritis Foundation. There are going to be some intangible benefits and then you're going to get this magazine six times a year that focuses on arthritis and related conditions."
We're in the business of generating a membership relationship, a charitably-based membership relationship. So when we went to subscriber lists, we found that the subscriber lists wouldn't work for us. We weren't selling subscriptions at that time.
We're opening up our strategy with the magazine to involve a subscription track. We're going to go through and re-churn some of those old lists that didn't work with the membership offer. We'll see if we can engage them.

Mr. Martin: That's a very good point because you're making a generalized statement, but people subscribe for a million different reasons, and you're health specific.

Mr. Hunter: A lot of this is driven by the organization's budget. When you talk about whether a consumer list worked or not, it's based on a threshold or value.
Some of these large mailers, who are going out with 40 million or 50 million pieces of acquisition a year, they're in the mail for under 30 cents each. For them to have a cost-effective list, they might only need to generate maybe 15 cents income per piece; a 1 percent response of a $15 average gift.
Organizations that aren't mailing that big might require a higher threshold, and therefore they would say the consumer list market is not working.

Ms. Anstrand: We all know that older people work in the fundraising market and the majority of the people on these files are in their 60s, 70s, (and) 80s. What do you say to clients who want a younger audience? We try to find them younger names and they flat out don't work.

Mr. Hunter: I always say to them, yes, I can do it at a higher cost to raise a dollar.

Ms. Moore: I think that's important. There are a lot of issues that drive nonprofits to your door, and we're a perfect example because we're saying "we really wish we could engage the boomers." It's the fear of our file dying.
For every person on our file who gets a year older, the rest of the world is growing older, too. So, there are people who are moving into and out of our radar, but there is a huge need to learn a relationship technique for this new group.
The need to engage boomers in our organization is not driven by direct mail or direct response. It's driven by the need to engage them in an annual campaign. We want to engage them in our high-dollar events.
We're the lead generators for those departments or those initiatives. I think what has to happen, we have to test it at a risk-free level. When it doesn't work, we can then continue to go back to our strategies that have worked and churn the audiences that do work.

Mr. Clolery: Someone said something a little while ago, and I'd like to get everybody to talk about it. We were talking about data overlays. We can take a name and throw 93 different overlays on it to find out that the person is left-handed, wears Nikes, and may have been a bed wetter. Has anybody at the table set up an ethics policy whereby you say, no, I am not going to go out and get this information because it's a privacy issue?

Mr. Martin: I'll speak up because we've done a lot of overlays. The Gramm-Leach-Bliley law took a lot of that off the table. The exact birth date and a lot of the driver's license information, those things were taken off.
By the time it gets to us, a lot of that has already been filtered. If the client says this is good for us, we proceed with that.

Mr. Hunter: I think fewer people are concerned with it than is perceived. I also think that the way that the data is used is not an invasion of privacy. No one goes out and lists this data about you anywhere for the public. They use it to market things to you that you probably want. If you don't want them, you throw their piece of mail in the garbage.
This data about you that's being put out there is on a computer tape in a record that is used for segmentation. It's not used to, say, call the neighbors and tell them you have three bank accounts.
The ethical question can be addressed by how the information is used. If the information is used ethically, then you're okay. That's my view.

Mr. Martin: But all it takes is one incident, one thing to get in the press and the whole industry gets smeared.

Mr. Clolery: Go back to the question. Is there something on any list that you would not allow to be asked or to be overlaid that's currently available now?

Mr. Hunter: Do I have an example? I can't think of anything. The stuff that we use in fundraising, in my opinion, and other people could jump in here, the modeling data doesn't go very far.

Mr. Clolery: Talk about that a little, about the modeling that you mentioned.

Mr. Hunter: I don't see that working. Consumer people love that. In fundraising, there are some success stories, but they're few and far between. Modeling is not the predictor -- whether people give or not. They can't even get a good correlation between income.
In Brazil, they time their mailings. They get paid once a month and if they miss the date, then they don't mail because they know no one is going to give to them.
When you think of the size of the gifts that you get through direct mail, $15 or $20, it's disposable income. You either have it or you don't. It's really not like comfort level altering money that people are giving away.
In some cases we see the little fragile handwriting on the reply slip and there's a little concern there. But for the most part, you're talking about disposable income that people have.

Mr. Christ: Let me also take it from there to seasonality. Are there issues of seasonality where you might try in February after all the end-of-year giving files have been updated? How much of a role does that play in mail plans?

Mr. Hunter: I think if you're using consumer lists, seasonality has an impact. I think that, again, with donor files, we reuse donor files.

Ms. Anstrand: Do you find it on commercial files, though, if you were to get the one or two-month hot lines right after all the Christmas buying is done.
They're the biggest, but are they the weakest at that point? Are they better than sale months, where all the people come in and buy lower-dollar things? And then there's the months where if you're buying, particularly if it's somehow related to your cause, if you're an environmental group and it's backpacking.

Mr. Hunter: It could be a weakness. If all of a sudden a segment that you use is huge because of timing, there could be a little concern there. But, you test that out.

Mr. Martin: I'll disagree on the nonprofit side. I think there are a couple exceptions. One exception is with premiums. We have a couple clients, one in particular, that does very heavy premium volume a couple of times during the year.
Even when I'm talking from a list management side, I know if you're a broker you have to be aware of what this person is mailing because there are certain times of the year they're going to have an appeal out there. Those donors might not work as well for your appeal.
Sometimes it is resolved and someone will say just give me your nonpremium names and I won't worry about it.
I think seasonality is important if they're a holiday theme sticker or a patriotic sticker in the wake of 9/11. It seems like there were dozens of organizations that all of a sudden used American flags. I think that does affect the names, and the quality of names, depending on what you plan on mailing.

Mr. Hunter: You wouldn't roll with a package. If you had a premium package and a straight package, you know when you've mailed them and you like the results. I would never take a name label package that I've mailed in January and just assume that I could mail it another time of year. I might have a test line in there to see if I could do it. But, I would never roll with it before I knew.
So I think that even though there's a concern, you have control over the concern. You can't just do it. You have to test it.

Mr. Christ: I want to go back to September 11th for a minute. We all know where we were at those moments. I remember going to a direct mail planning meeting on the 12th of September. At that point, we didn't know, "was it over yet?" The discussion was what do we do with the packages that were ready to mail. I thought, "if you don't mail, we know you're not going to make any money."

Ms. Moore: Right. Some money is better than no money, particularly when you guys get the money on a presented letter.
I don't know if you'd call us lucky or not, but we are not like most charities. We didn't have a November acquisition mailing.
Our fiscal year is a calendar year. September acquisition was our last major acquisition mailing of the year. Unfortunately, it dropped on the 13th and 14th. We had to push forward.
I was on vacation that week. I got an emergency phone call in addition to everything else going on that asked what do we do. We had six hours to figure out whether to drop it or not.

Mr. Martin: That's pressure.

Ms. Moore: We dropped it. We dropped it because we went back to the ideas, we don't know where this is going, this is our last chance, it was a three or four million-piece mailing. We had no choice but to go forward with it, and if we only got 50 percent of our mailing goal, we would have to live with that when those numbers flushed out.
We had a donor renewal mailing that dropped every month after that, and we went forward with our plan. We adjusted October just barely, and that was simply because our September donor renewal also dropped on the 13th.

Ms. Anstrand: So how did September do, with no competition out there?

Ms. Moore: There were a lot of people who dropped in September. The middle of September is prime time. Our September acquisition was off in response to an average gift by significant numbers, in the 20 percent range. It did not meet goal.
Our biggest concern was that October donor renewal did worse than September donor renewal. September donor renewal was down significantly, and October was even worse.
We were already having trouble in acquisition pre-September 11th. This just added to our challenges. Honestly, I don't know of any charity who escaped.

Ms. Anstrand: I don't know anybody who didn't lose at least 20 percent.

Mr. Hunter: I could tell you a couple. The exceptions were religious. People who mailed all souls appeals and devotional appeals. I had a mailing drop on September 10 for a Catholic organization and we did great. But, that makes sense.

Ms. Moore: Our July acquisition was hurt by it because we didn't get the tail that we needed or that we had typically expected.

Mr. Clolery: What is the window that you track when you drop something say February 1? When do you say we're no longer counting when things come in? Is it two months, three months?

Ms. Anstrand: Every organization is different. Some people keep their keys open forever and others that mail monthly might only keep them open two months, or maybe even a month and then just drop into a late mail bucket and move on.

Ms. Moore: We track ours forever. We track until the fiscal year closes. When the fiscal year closes it dumps in. So January acquisition will get their full tail counted. It eventually gets chopped off, but from a results perspective we're always going to look at the results as they fall.
Our doubling day is around 20 days. We stop watching so intently when we get past the 2-1/2 months because at that point you're actually into another mailing and you're watching those results come in.

Ms. Anstrand: But it also depends on how you drop it, whether you truck it and drop ship it. If it's dropped on the East Coast, then your West Coast lists are going to come in a lot slower. And, who knows this past fall what happened because the mail just was hard to ...

Ms. Moore: This is where all those charities that used monitoring services really paid off because they got to see that 50 percent of their packages never arrived.

Ms. Anstrand: Did you use one of those?

Ms. Moore: No. We do now, though.

Mr. Clolery: We were talking about overlays earlier, quick answers, rapid fire: what's the oddest selects that you've been asked for?

Ms. Anstrand: The one we work with the most is age because that's the biggest indicator. Certainly some of the other lifestyle selections that come across, pet owners, they're really pretty marginal.

Mr. Christ: Once where I was working with a group of United Ways, I took their donor files and overlaid them and compared them with the general population in those areas. I found out the biggest distinction was not income or education, it was length of residence. Some 85 percent of the donors had lived in the same house for 10 years or more.
When you think about United Way's local appeal, you've got to have roots in the community for it to work. It made us look at lists that respected that issue, gardening lists, for example. Architectural Digest lists did very well because they were people who had roots, literally in the case of the gardening lists, as opposed to more recreational kinds of lists.

Mr. Clolery: Let me take the question in a different direction then. Tell me a list that worked for an organization that you just had no idea would work as well. For example, we did a story about a particular arts organization, very high-end, very erudite crowd, and the Playboy list went through the ceiling for them.

Ms. Anstrand: I won't say who it is, but it's a well-known charitable group. They use TV Guide change of address. Once that worked I decided that anything could work. TV Guide seniors works.

Mr. Clolery: TV Guide change of address, why did that work?

Ms. Anstrand: Well, it had a name label package.

Mr. Martin: Since you mentioned Playboy, it's no longer out there, but I know a couple of the Republican committees that we worked with many years ago used to get the Sex Over 40 file -- a publication.

Mr. Hunter: Did that work?

Mr. Martin: Yes, phenomenally well.

Mr. Hunter: Frederick's of Holly-wood just did an age select. I'm going to test that.

Mr. Christ: We are going to down a road I am not sure I want to pursue.
I know another one. We have kind of a health publication, and on the side of not eating butter, and they used Omaha Steaks successfully.

Mr. Clolery: So, what have we learned about using these lists that you didn't think actually would work?

Mr. Martin: You've got to test. Test secondary or tertiary markets. Try one or two as a test each time you're out there with your control package.

Mr. Hunter: One fundamental truth is that you're looking for direct mail behavior, and you start there. So, any list that displays direct mail behavior just by that criteria alone might be worth testing.
If you can get people who displayed direct mail behavior in the last month, that might even be better. Once you start adding age to it and information like that, the name of the list or what they actually bought is important, but it might be secondary because they have the behavior you're looking for.

Ms. Anstrand: You have to be careful with the universe size. What everybody forgets is that you slice and slice and slice and slice it and suddenly you've got no roll-out potential, and it's $170 a thousand.

Mr. Christ: You have eight names that work really well. They'll cost you a dollar apiece.

Mr. Hunter: You have to have all those selection charges waived.

Mr. Christ: Not being any copywriters in the crowd, we would say that lists are the single biggest impact on the successful mailing. A list owner who thinks that says, therefore I can charge anything. Let's face it, list pricing isn't cost-based. All lists are basically paid for by the function that drove the list. The actual cost of giving you your names is $3 a thousand but they charge $100. So it's value based, not cost based.
In good times, do list owners jack up their prices?

Mr. Hunter: They first ask the list owners for the better price and you'll say no. But when you put your cards on the table, when you start talking about the relative value to a client, the mailer, their response rate, their income per piece, their cost, they could go to you or they could go to somebody else, the list owner has the decision to make. Do I want the revenue or not?
Once you get to that level, list owners, I find, are very receptive. "I want the money. I don't want you to go away, but I don't want you to be under paying either." Most of the time you get what you want.

Ms. Anstrand: When it's on your secondary and tertiary markets, there and many lists that look the same at that level. It's not your core market, the list that you have to have.
So if you can go to 10 list owners and five of them won't play ball, the five that don't are not going to get my orders. Exchanges are usually out of the question in the secondary and tertiary market, unfortunately.

Mr. Martin: Base prices have not changed in I don't know how many years. I've been in the business 13 years, and I think a 12-month select is still $70 or $75 a thousand. So we're having a tough time in balancing the select charges.
That's the markup where list owners are looking to generate more income. But I will agree if a broker or a mailer comes to us and is armed with information about what they're doing, what they're trying, how many lists, we want to engage in a dialogue because we know they can go elsewhere. There are a thousand list companies out there and we want that person's business.
We do, however, have a hard time when somebody just says give me a better price because, and we deal with that on a pretty regular basis. We'll say especially when you start net names and discounts and things like that on continuations, give us a little information.

Ms. Anstrand: Clients that we work with have different agendas. Some of them really don't want to get their names out there. They exchange their names and they rent them because they can't always exchange. But their primary function isn't list rental income because there's the donor file and they use their own file a lot and it just isn't on their radar screen.
We have others that want lots and lots of list rental income. For those, we certainly would be much more willing to bargain and lower the price and waive the select fees because we know that those list owners would like half the income, not zero. It's no work on their part, and their names aren't really being abused.

Mr. Christ: One of the issues that I've had to do some negotiation in the past is on the area of duplication rate or net name agreements. Are you seeing that the same lists put together are duplicating within them and against your own house file at a higher and higher rate, therefore driving up the net cost of mailing, or staying about the same.

Ms. Moore: I think ours has stayed about the same. We'd like to have less duplication, so we can mail more new names. But I don't know that ours over the last couple of years has seen any major shifts in the number of names that we retain versus can't mail.

Mr. Hunter: It's directly related to the size of the merge/purge. When I'm picking lists for my different clients, I do it and I decide what's the gross names I have to pick based on what I have to net. I go through merge/purge sheets and if the output I'm looking for is 200,000, when is the last time this client had a 200,000 output, and what was the retention rate?
That's what I base it on because if they mail two million, their retention rate might be 58 percent, but if they're only mailing a half a million, it's probably going to be closer to 75 percent.

Mr. Martin: When a broker or a mailer comes to us and says we've mailed your list and we used to net this amount and then it dropped to this amount and they show us, that gives you a lot more leverage in negotiating. Susan mentioned exchanges where that's a whole different ball game.
As a manager, we often ask the question, what were the other lists? As you said, we know that there are certain lists that they mail each other, they exchange each other a million names a year, so of course they're going to net out at 40 percent or less than that.
I think a nonprofit should always keep a close eye on that, and that can help drive an effective negotiation, whether you're doing it yourself or your broker is going out there and to be armed with that and not be afraid to share at least the basics of the merge/purge. You don't have to share all the information, but I think sharing that information definitely will help you negotiate better and get better pricing, hopefully.

Mr. Christ: Think in terms of a big museum in a medium-sized city that is traditionally doing one mailing a year. Do you try to make that mailing bigger, or is it a good strategy to say maybe I should to two smaller mailings?

Ms. Anstrand: I think regionally, two smaller mailings. First of all, your universe dupes out much more heavily than it would on a national basis, particularly if it's cultural. There just aren't that many other cultural lists, and certainly you can get the magazines to work. You get a higher rate because you're local and people know you, so you're going to get that lift. But you're going to lose so many people because they've given to the other arts groups.

Ms. Moore: One mailing a year is not a lot. If that's a real example, going to a second mailing may open a completely new area.

Mr. Christ: A lot of regional nonprofits have this once or twice a year phenomenon. So, they wait for six months until it's June again. Maybe what they really ought to do is you get more mileage out of a mailing in September even if September wasn't as good a month as June, it beats mailing to more names in June that aren't as good in the first place.

Mr. Hunter: If you're going to mail a million pieces and you want to do it one time, the lists that have the highest value per piece, you would be better off mailing that same list two times at a half a million than mailing the one mailing at a million.

Ms. Anstrand: Those lists you're using are mailing as well, and adding fresh names. By the time you get six months out, they've all done their acquisition.

Mr. Martin: I had a question for Angie. When you go back to those lists four times a year, you're saying you're taking the same segment, same universe four times a year and not seeing list fatigue at all?

Ms. Moore: For instance, in our example of a January and March acquisition mailing, March will exclude the January names. But in July, we won't exclude the January names.

Mr. Martin: You'll go back; so it's really almost a six-month cycle you're going through?

Ms. Moore: Yes.

Mr. Martin: We have mailers that go out maybe a little more frequently. But they see list fatigue quite a bit. It could be a number factors, the updates on that list are only one time a year or maybe once every two years. They're constantly seeing this problem with attrition. You've mailed and gotten those best people to get on your house file and maybe you're renewing them. Once you got those people and stripped them off, there is a downward trend.

Ms. Moore: It depends. When I dip into the ABC organization in January, I'm not taking their entire file. When I go back in March, my goal is to not take the exact same people I mailed in January.

Mr. Hunter: It's list by list, too. You might find a list that, yes, it gets fatigue. It's my best list and it's doing 50 cents income per piece and by the time I mail it the sixth time it's only bringing in 25 cents income per piece, but that's still better than others.

Mr. Clolery: Mailbox versus in-box; let's talk about electronic lists. How are they doing?

Ms. Moore: I haven't used them yet.

Mr. Hunter: I have a strong opinion about them. They are really not too good. I think the opt-in versus opt-out was a mistake for the email lists.
I think the quality of the email lists is in the tank. That's why instead of getting the $250 per thousand at the rate that they put on their data card, in the consumer world they're making deals like cost per acquisition (CPA). I'll pay $3 to $5 CPA rather than the $250 /M names they are asking.

Ms. Anstrand: But the most important part at least when we do acquisition mail for our clients is to be targeted, and none of the email lists are targeted yet.
Even if you could do merge/purge, I've got several email addresses, my daughter has an email address, my husband has an email address.
An organization gathering email addresses of their own donors and communicating with them that way and possibly eventually renewing them or getting extra gifts, I think that's where it is and where it needs to start.

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