May 15, 2004

Edited By Paul Clolery

Does pushing the envelope push response?

The donor's taste and appetite for the shocking might be changing. Americans go through a collective mood swing every now and then. It's important for charities serious about raising money to be in touch with those feelings.

The mood of the donor was Topic A at a recent Executive Session held during the recent DMA Nonprofit Federation conference in Washington, D.C. Held in front of a packed lunchtime room of conference-goers, fundraising experts were quizzed by Paul Clolery, editor-in-chief of The NonProfit Times. Participating in the roundtable were: Rick Christ, president of npadvisors.com, Stuart R. Christie, senior account director, Brickmill Marketing Services, Anthony Genovese, senior vice president of Newport Creative Communications, and Lauri A. Palladino, vice president at May Development Services.

Paul Clolery: Good afternoon. Welcome to a live edition of Executive Session. We've seen a lot of transition during the past couple of months. Certain events can push direct response and push it very quickly.

For example, we saw the Janet Jackson fiasco at the Super Bowl and the ensuing hoopla. The Federal Communications Commission (FCC) is pushing radio stations regarding alleged obscenity, and Clear Channel pulled shock jock Howard Stern from radio stations across the country.

Many charities use shock in direct response appeals. Some charities have used selective nudity. They've used words that you probably wouldn't use in polite company.

Guys, do you think we're starting to see a roll back with regard to people using words or pictures or tones that might be a little softer?

Lauri Palladino: I can't imagine that anybody is going to be using pasties as a premium. I think that if you've got a great mission, which all of you do, you don't need shock treatment to lure your donors. You need to state your case clearly. I don't think you need a lot of sex appeal. You just need honesty.

I don't think you need shocking pictures, but I think you need photos and good words that draw the donors in to really look at who you are and what you're doing.

Paul Clolery: Is shock something that people are going to stop using? A few years ago a children's charity in Canada tested an infomercial with the F-word. Are we going soft?

Staurt Christie: I'll jump in on that. The one thing that you have to be aware of is that marketing is part of your branding. That's what you are going to be known as.

Some of the animal rights groups are able to use what I would call shock value fairly effectively. It's part of their mission. It's a logical connection. But for most organizations, I'd say you have to be very, very wary about using shock. It is going to be remembered by the donor, and it's going to affect your other communications, or how they are perceived by your donors.

Rick Christ: I'm more concerned that the nonprofits that have been responsible in their communication all along are going to get lost in, I guess, two trends. Trend one is other people are trying to suddenly look responsible in their marketing and sounding too much like us. Two, the fervor and the conversation about what's responsible and what's indecent, it's just noise that takes away from the mission and the message that we're trying to get out.

So, I think it's extra noise in the marketplace, and that's never a good thing.

Paul Clolery: Let's take it a step further. Are we going to go back to the days when we couldn't even talk about maladies? Is cancer, again, no longer going to be able to be spoken in polite company?

Anthony Genovese: I wouldn't change any controls, any mailings that I know have worked. I wouldn't allow Janet Jackson to determine what's going to be my message.

Although the FCC is talking about it and there's going to be new rules and regulations, I don't see it trickling down to the mail.

But Paul, to answer the question, no. I think if we are working with a comprehensive cancer center, we still have to talk about, obviously, the mission.

Paul Clolery: Nonprofits have long been grappling with getting to a younger audience. So if you are not going to be able to use some of the techniques that obviously they are talking about, ideas that got a lot of the hype, how are you going to be able to tap into that audience?

For example, let's talk about the Deaniacs. Hundreds of thousands, perhaps millions of mostly young people got online for raves trying to get Howard Dean elected president. Yet he got crushed in some of those states where he thought he'd win. What happened? Why were the young people responding in some ways, but not in the ways that mattered? Why did it not move them to take the next step?

Stuart Christie: I think part of that is that there was no consistency. What you saw of Howard Dean on his Web site was one thing that was extremely exciting and got young people very enthused. What the media presented, particularly after the one primary where he exploded, and the following series of explosions in debates, was a different Howard Dean.

That whole disconnect, I think, was a major part of his undoing in the campaign. The message there is what you do is going to have to be consistent throughout all of your media, whether it's Web, TV, mail or what have you.

Paul Clolery: Is it the method that you are using or is it just the fact that young people will go to an activity, but won't or can't take another step? For example, if we looked at the college campuses over the years, we would have had President McCarthy, President McGovern, President Anderson, President Nader.

What does it take to get people to move to the next step, to get excited, to move, but then to actually take action that's effective through direct response?

Anthony Genovese: Young people are going to make the contribution they can, which is time, and not make the contribution that they can't, which typically is money, because they don't have any.

With the Dean campaign, I'd like to see what percentage of the funds raised actually came from young people. It's probably not a lot. What he was able to get from them was time. Similarly, for a nonprofit to get young people to volunteer, whether it be for a walkathon or a marathon, it is one thing. To make the next step to actually donate money, I think, is something else.

I don't think that that dynamic is going to change, simply because it's an economic issue, whether they have disposable funds as opposed to time to donate.

Rick Christ: Tony, do you think it's a good long-term strategy to involve them now in non-financial efforts, hoping when they get older, when they get richer, they will remember who they are connected with?

Anthony Genovese: Absolutely. But again, I think that if organizations do have events that require bodies, that's where young people can be very effective, because they have the time and they have the enthusiasm.

Lauri Palladino: That's the beginnings of your donor loyalty program right there. If you do have an event like Tony was saying, a walkathon or a marathon, and if you can bring these people in now to work the water line at the marathon or work with the Special Olympics one-on-one with kids, I think you're starting that donor loyalty.

When they do have money, I'm sure that you'll be the first to which they go back.

Rick Christ: Getting lots of advice from my own kids, the way to connect with them is through the ways that we connected when we were young, but we've forgotten about them.

I'll tell you a quick story. One of my teenage daughters plunked $2.50 on the kitchen table for me. That by itself is kind of news, her giving me money. She said, “Dad, I downloaded a ringer.” I said, “what?” She said, “A ringer for my cell phone.” I said, “What's wrong with your cell phone?” She answered, “Nothing, but I had to have this new ringer.”

It was the theme song from “Alias,” a show she loves. I thought I was cool because I learned to actually program the ringers that I have on my phone. She's downloading ringers that cost $2.50, and now her phone rings to the coolest song in her head.

I was thinking to myself, if we could latch on to that somehow, if it was 20 years ago and she could have downloaded the ringer, “I'd Like to Teach the World to Sing,” what would that have been worth to Coke?

Furthermore, is there some data geek out there who tracked her phone number and the ringer she downloaded and connected it with some demographic so that they can send her a text message telling her to watch something, buy something, vote for something, give to something? Can we tie into that kind of a marketing strategy? That takes a whole lot more branding than we normally talk about in this venue.

Right now, wireless is probably less important, less pervasive in terms of ability to send information and do things than Internet connection, although I'm wireless in my Internet connection, even in my own home. So as long as there's a Starbucks nearby, I'm in business.

Anthony Genovese: The other thing about wireless, the reason why that could be the final frontier, so to speak, is that it's always with you. The fact is that my computer is hooked up to the Ethernet upstairs in my room, but my cell phone is with me.

If somebody wants to connect to me, they can do it right now, although I did turn it off for this presentation. But I think that's the thing. It's freeing you from the binds, the tethers.

Paul Clolery: Let's get back to the printed word, photographs and copy. In general -- anybody can jump in here -- what style changes are you seeing for use of copy, use of words, language, type size, type style?

Lauri Palladino: I had a client who tested and now, we've gone back and forth on, the two-page versus the four-page. They did the two-page versus the four-page. But they tried a different angle.

They are a children's charity. Instead of having the story of a child, which we all know is very compelling and works, they used the technique of having the story of the child's teacher.

I thought it was really, really great. It pulled much better. It did about 2-1/2 percent better, and got a higher average gift than the two-page letter that was just the story of a child and the mission.

This was very compelling. The point of view was a teacher who runs a program that works with the children. Some of these children were really problem kids, had social problems, and she watched them come up and start to be normal kids through these programs.

That interview technique, I thought, was really, really great. It wasn't so emotional as the parent's story or the kid's story. It was really taking a step back and taking an objective look at the child and the child's progress.

Stuart Christie: As somebody who's right squarely in the middle of the age band of the donors for most organizations knows, as I look at Web sites, and it's across the board, I find myself squinting and just struggling to read what's on there.

You know, we say in our letters, hey, go with the larger font, open it up. And yet, very, very few are doing it on their Web sites.

Paul Clolery: There is that little thing called zoom text command, you know.

Stuart Christie: These arthritic little fingers are having trouble working that. All I'm saying is when I first go on there, I struggle to see it. It's something that we're trying to do with our clients. Just be sensitive to the fact that if you do it in your letters, do it on your Web site as well.

Paul Clolery: But in terms of letters, do you have enough demographic information about those potential donors that you can have the same letter, the same graphics in a different size type to different age groups?

Stuart Christie: Absolutely you could, sure. Just as you are varying the text, absolutely you can do that.

Anthony Genovese: I think technology is also allowing us to use more of the script fonts so it looks hand-written. Also, there's the ability to use closed-face envelopes and have a matched mailing. It used to be very expensive. Now the technology allows us to essentially use the closed-face envelopes with personalized letters. All these things to make appeals look personalized and more done for the donor, I think, is going to help response, or at least give you an edge in the mail.

Paul Clolery: A lot of charities rely on the $10 gift, the $15 gift. In my personal giving, I give to five organizations, four that are standards and one's a wild card every year. I always make sure that the gift is substantial enough that it actually means something.

Over the years, the “asks” remained the same each time that I got the envelope, until this year. I've started seeing the “asks” going up. Have you seen your clients or the charities up-sizing the ask because the economy is getting better?

Stuart Christie: I don't know that it's necessarily a matter of the economy getting better, but yes, I think that the clients we're dealing with are very aware of the need to upgrade, and most, especially with the donor packages, are working upgrade tables to move the giving up the ladder.

Rick Christ: Indirectly, it is the economy. I think that the ask string is one of the most critical elements, certainly of the reply form, maybe the whole package. And, it's probably one of the most under-tested elements.

The ask string, in my experience, is created on the fly, based on the confidence in the package, which is indirectly related to confidence in the economy, confidence in the client, confidence in your relationship with the client.

So, I think there are times when you say, “well, this is a great package, let's get bold with the ask string.” There are others where you say, “well, either we are worried about retention or we're not crazy about this package, so let's get conservative with the ask string.”

I think there's a lot of opportunity for more. I know of one nonprofit that's doing it online, variable “asks.” There's obviously a lot of opportunity there, as well.

Paul Clolery: When you say “variable asks,” is that within the same donor or within the same group of donors or just on the Web site, a random ask that will roll through?

Rick Christ: In general, most charities have a static giving page that has one ask string. That ask string may be one amount or it could be three amounts. But it's the same, no matter who gets there. Again, the technology is easy to take the data and have basically a mail merge Web page. You are just feeding in an ask string based on the information you have on the donor and their gift.

From there, you can also do testing. Testing is quick. Honestly, it's easy to do online.

Anthony Genovese: I do think it's important, though, to stay within your donor's comfort zone. It would be great to upgrade every $50 donor to a $250 donor, but I'd hate to upgrade one or two and lose the other 100. I think that's what we have to be aware of when you do decide to try to go with a very aggressive upgrading strategy.

I think that people's giving patterns perhaps are going to be driven by the economy; then the gift ask will be driven by the giving patterns.

Paul Clolery: I was pretty surprised when one organization went from the $25 initial “ask” it had for several years, which was less than the gift that I sent, to $150 as the bottom “ask.”

Rick Christ: The real question is, Paul, did you give more because they upped the ask string or did you not?

Paul Clolery: I did not in that case because I was caught off guard at the aggressive nature of the “ask.” I still gave the same amount of money to that group of charities. It's just that particular organization didn't get as much as they had previously.

Lauri Palladino: How many times in the prior year had you given to that organization, only once or multiple times?

Paul Clolery: Multiple times.

Lauri Palladino: That's probably why they were asking you for more.

Paul Clolery: What did we learn from the last holiday season in terms of techniques used? I saw on a number of (nonprofit) Web sites -- I know Rick can probably speak to this -- working with for-profits putting buttons on the for-profit's Web sites.

There are some organizations that made a fortune this past holiday season just from for-profit buttons. We all know that they work, but let's work it back the other way. How do you approach the for-profits?

Rick Christ: It was directly related to the people they hired to do the work for them. They went into corporate environments and secured corporate sponsorships that resulted partly in the banner ads you saw, but also in-store displays, in paycheck envelopes to employees.

The easiest way is to go find Web sites that have matching demographics and pay them to put a banner ad up. It's not that expensive.

Paul Clolery: Pictures versus copy, what would you rather use? Is there a scientific percentage somewhere?

Stuart Christie: No. Each has a role in the package. It's not an either/or proposition. The pictures serve a very strong graphic element as part of the balance of the graphics of the package. Then they also should serve as a complement to what you are conveying in the copy.

The only thing you have to be careful of with the pictures is that it is a logical connection to the copy; that you don't have a disconnect of image with what you are saying in the copy.

Anthony Genovese: I think that in the OE (outer envelope) in particular, pictures can work. They have to be something dramatic, but not dramatic to the point of keeping people from opening the package. I think that's why we don't see a lot of pictures on the OE. Also, it gets away from the personal letter, the look you are trying to achieve.

Paul Clolery: You bring up a good point. At what point does the outer envelope mean a lot to the “ask?” Do you put copy on it? Do you put pictures on it? When do you stop? What testing has been done?

Anthony Genovese: Well, lately, we've actually been testing a lot of blind OEs.

Paul Clolery: When you say “blind,” that means no return address as well?

Anthony Genovese: Just blank. People tend to open them. Our testing over the years, and it continues, has shown that those letters tend to get opened more readily. But again, that's why I say that if I'm able to get something dramatic that will enhance the openability, then I definitely would put something on the outside.

But lately, it seems that at least the clients I have been working with, the blind OE has been working very effectively.

Paul Clolery: In acquisition or renewal?

Anthony Genovese: Both.

Lauri Palladino: My experience has been that we have been using a lot of four-color images and two-color images, both photos and images, and they are getting opened, you know? We're doing well. A lot of our clients are using OEs with art on them and teaser copy, and they are still getting opened.

Some of the smaller religious nonprofits that we work with that have had success with blind OE as well. But I think it also depends on your brand identity when you're out there, too.

Stuart Christie: We do a lot of premium mailings. I have to say that the four-color imagery, the teaser copy on there, has been a big part of the success of the packages. Again, both acquisition as well as donor renewal, if you use it on both.

Paul Clolery: Stu, how do you know that it's not just an impact of the premium? You said it's a premium package.

Stuart Christie: It is a premium package. We have tested without the teaser copy and with the teaser copy. It's almost always more successful with the teaser copy.

Rick Christ: I got more elaborate premiums in the mail this holiday season. I have a drawer full of reply envelopes, thank you all. I got a few pieces of jewelry and things like that this year in a volume that I've never gotten before.

Paul Clolery: Did you send in? Did it work?

Rick Christ: Yeah, it works.

Anthony Genovese: What about whether these folks can be then retained? Have you guys looked at that, what long-term value: As good, better, not as good?

Stuart Christie: The patterns that we've seen, both of renewing as well as upgrading, have been consistent with all the experiences that I have had with direct appeals as well. The fact that you are bringing them on with a premium doesn't negate their long-term value. It's just for the most part, you will be renewing with premiums.

Anthony Genovese: I have a client that did some testing of premium packages and non-premium packages, and we ran some long-term value analyses. And in fact, these were very simple premiums, labels, and they weren't convinced that they should continue with the labels.

The long-term value showed -- and then we weren't sending only premium renewals -- although the long-term value showed that the premium donors did not renew quite as well, we were getting almost twice as many premium donors, so that the long-term value as a group was much, much, much higher. There was a very small falloff in renewability.

Lauri Palladino: We've seen that as well. Most folks, when they mail out their premium, they say, well, you know, I'm getting this higher response rate and this lower average gift. Does that mean that I'm not getting as many $25-plus donors?

But when you really start looking at the data in depth, you are getting as many $25-plus donors. And yes, you're getting your $5s and $10s, and they are also helping you to fuel your program. The long-term value is as good when you look at it, when you really separate out by level, gift level.

Look at the return on investment (ROI). Dig deep into your files, folks, and use that information to strategize going forward. Once you're into a premium, I don't think you're stuck with it. I really think that you can do a mixed bag very successfully. You have to be ready to roll up your sleeves and look over the long-term and really work at it.

You can't just look at one year. You've got to look at it over a term of about three, four or five years.

Paul Clolery: Do you change the premium as the donor ages? If you have had the same donor for five years, do you try changing the premium on the individual, or do you find that one particular item works very well with somebody so you stay with it?

Stuart Christie: I've seen it done both ways. I have seen long-term donors maintained and upgraded and so forth using consistent premiums with them. By the same token, I've also seen very successful programs that we've run where we've varied the premium.

There are certain elements about the premium. There has to be a built-in obsolescence in it. It has to have a utility to it. But as long as it meets these basic criteria, I think you have a lot of leverage with what you can do within that as a medium.

Paul Clolery: Once you're in the mail with a package, or on the net with an offer, it's public domain and everybody sees it and everybody in this room reads everything everybody else has done.

So in the past six months or so, what have you seen that you have smacked yourself on the head and said, “I wish I had done that?”

Lauri Palladino: Oh, I don't know. We have a lot of folks that are doing everything. You know when the time to change the premium is? It's when it stops working, OK? I haven't seen anything recently that I've said, oh, the light bulb went off and I said I wish we had done that.

Anthony Genovese: I saw an appeal that I looked at and said, hey, I'm glad I didn't do that. This was actually an appeal, a very high-dollar kind of ask, but you couldn't make the gift through the mail, but you had to go to the Web page. I thought it was the goofiest thing I'd ever seen.

One of my clients asked me about it. Hey, these guys are doing it. I don't want to mention the name because it's a very well known charity. They said, do you think we ought to do it? I said, well, let's see if they do it again, because it had all of the hallmarks of a failure. And they haven't come back and asked us about it again.

But it literally had the Web page on the back, and there were very poor images of their Web page -- go there, click on this, click on that. I'm scratching my head saying, you know, why didn't they ask for the gift in the -- they were just trying to drive people to the Web page.

It was, I think, $200 seemed to be what they were -- but no envelope or anything. You had to go to the Web to do it.

Paul Clolery: What would make you not give a gift in that forum? If an organization that you have supported for a long time did something like that, would you find a way to give to it? For example, would that be a better technique for a retention versus acquisition or would it not work at all?

Anthony Genovese: Well, I think as sort of a Web-savvy guy, I might think of going there, but you know, the guy who got this was an 80-year-old guy who had never been on the Web. He passed it on to me. It was like, you know, what am I supposed to do with this? But do you think we ought to be doing it?

So it seems like an odd use of the mail to drive people to the Web.

Rick Christ: I second that. Being a Web guy, I don't do that.

Lauri Palladino: It sounds like a giving prevention action.

Paul Clolery: What are people doing with the emails that they are collecting right now online.

Rick Christ: Most people are sending them e-newsletters. One trend I noticed this year is that several large nonprofits sent email end-of-year appeals.

So I faithfully contacted them and said, I'm going to be on this panel and I'd really like to get some information to share.

Then I learned a second trend, and that's that many of these large nonprofits, the next newest trend that they've got is they are actually starting to measure the results of individual emails. Up until now, for many nonprofits, the Web has been a bucket, and money has come in, that that's been good.

But it's been difficult for many of them to measure, if we sent out this email, how many gifts do we get from this email versus a different version? So the pleasant new trend I found in there was some of these are actually starting them out. It means they have no idea how well last year's end-of-the-year email did compared to other emails during the year.

From now on, they will be able to measure some results. I think the best news is that they are actually sending some out and doing something with it.

Anthony Genovese: We've actually had some clients that have requested that we put email collection on the response device. Unfortunately, none of them have done much with them. But I know there's a question -- Rick and I have talked about this -- as to whether it's going to repress response to the direct mail, because you are asking them to do an additional thing. We tested it with a couple of clients, a fairly large group that was measurable, and it really had no impact on direct mail response, collecting the email address, which was sort of counterintuitive.

But we're happy about it because it does allow the clients to collect these email addresses and to not have an effect on the program.

Now, if they start sending these e-newsletters out, they'll really be cooking.

Paul Clolery: Let's go back the emails for a second. A lot of nonprofits make a lot of money on their list rental. We're seeing in the for-profit world, email list rental going at $300, $400, $500 per thousand.

Are nonprofits starting to rent their email lists, and are they seeing a substantial amount of money; more than they would from their regular lists?

Rick Christ: If there are any out there that are, please see me afterwards, because it's the biggest frustration that I face right now, finding good, valid email lists that my nonprofit clients can use.

There's a hunger out there for them, provided that they are permissioned, opt-in, chaperoned emails that abide not only by the relatively skimpy standards of the federal legislation, but that they in fact do a good job of endorsing the message and won't result in a flood of bounces back to my client.

So finding those lists is hard and getting those people to do what I want is hard. I was just joking at lunch today: can we task the list? Well, not really. I really can't split the lists up into different segments; hence the word “task.”

I don't really want to roll out 100,000 of your names, because that's all you have. So the answer is no, nonprofits are putting that farther down, correctly so, farther down their list of priorities, making money from the rental fees of the list versus acquiring the names and bringing in donations from it; that needs to be, at this point, their top priority.

The second thing is it's a numbers game. Most nonprofits are generating 1 to 5 percent of their revenues online, and that's because most nonprofits have an email file that's 1 to 5 percent as big as their direct mail file. It's no big surprise.

So the numbers aren't there to generate a large volume of income. The marketplace isn't established. I'm one of a very few people who's trying to get out there, compared to -- you know, 15 percent of the people in this room who are in the list business on the postal side.

So it'll come, but it isn't there yet.

Paul Clolery: We're seeing a change in the economy. Some major cities along the coasts are doing well, some other cities are doing well, but we're seeing an unprecedented need for certain services, food, clothing, shelter. It seems that the recovery is not happening in certain areas in the country.

Are some of your clients now stepping up the number of asks, the number of packages they are sending out? Has anybody changed the way they are making their asks to handle this unprecedented need, while some of them are doing better in the mail or throughout the other methods that's just not keeping up with what they need to do? So what have they changed to keep up?

Anthony Genovese: I've seen more use of urgent appeals, additional appeals. A couple of my clients, because the need is so great. And I think that clearly, when the economy isn't doing well, you're not collecting as much money as you thought you would.

You're right, I think we do have a sort of a slow recovery going. They say it's not a jobs recovery. I think that for a lot of the homeless shelters, the food banks, et cetera, the need increases and we have had to do some emergency appeals because of that.

Stuart Christie: I think in general, we definitely saw cutbacks for a year or more following 9/11, and people watched as their donor files started to erode. It hit reality that you don't have a choice, you've got to get back aggressively in the mail to constantly replenish those donors that are lost and to bring on new ones.

So yes, we're definitely seeing more mail activity, and I think it's just the reality of what's happening with their donor bases.

Lauri Palladino: We're seeing a lot of increased frequency in appeals and we are as well seeing people doing more urgent appeals and additional appeals to their donors throughout the mailing year. I think that a lot of charities really need to take a look at the rate that their donors are falling off the file, the lapse rates and really start tightening up the way they mail.

Instead of waiting, you know, until somebody falls off the file, what are you doing to try to increase response at the six-month mark? Are you going out and talking to them and trying to get them to make that second gift faster? I think that that's where we are seeing a lot of people paying attention. You know, don't let them fall off that quickly.

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