It seems like heresy, but unfortunately too many nonprofits still do not evaluate their direct mail appeals properly, if at all. Vic Zacharias outlines some the key measures to track and how this will improve your performance.

It seems like heresy, but unfortunately too many nonprofits still do not evaluate their direct mail appeals properly, if at all. Vic Zacharias outlines some the key measures to track and how this will improve your performance.

I’ve heard many reasons (excuses) over the years why organisations have not measured the performance of their direct mail appeals. They include: “I’m too busy with the next appeal”, “We don’t have the skills internally”, “It takes too much time” and “Nobody bothers reading my report!”amongst many others. All these reasons (excuses) are valid, but they should not stop any fundraiser from obtaining the necessary information to do their job.

Not all organisations have statisticians, mathematicians or business analysts on board – nor do they need them. Measuring the performance of an appeal can be as easy or as complicated as you want and there are a range of basic metrics to capture.

Why is it so important to measure performance? To determine how the campaign performed against its key metrics, i.e. budget/targets and in comparison to previous efforts Present key findings, such as – how did the active donors perform? What was the reactivation rate of lapsed donors? Did donors give more or less than last year? What were the results of any split tests? Impact of any factors that affected performance, both positively and negatively. For example, government economic stimulus (positive) or a federal election (negative) To inform recommendations – what was learnt from the campaign and how will this be incorporated into future appeals to drive better results.

Every campaign should have a set of Key Performance Indicators (KPIs) which are meaningful and measurable, based on past and peer performance. Nonprofits that don’t evaluate campaigns according to a set of KPIs risk “leaving money on the table”.

TIP: Create a post campaign report template which includes data/tables and narrative. Use it for all your direct mail campaigns and keep it consistent for year-on-year comparisons.

It is important to establish a process that ensures all the necessary information is captured along the way. Elements such as data extraction, segmentation, accurate recoding of campaign costs, the campaign set-up in your fundraising/CRM system, and any ‘tests’ planned can affect the preparation of a post campaign analysis.

TIP: Keep accurate information to help you build your post campaign report, such as invoices of costs, copies of your data extraction brief, creative/campaign brief and mail house brief.

What should be measured?

Below are some important KPIs to measure your direct mail campaign performance. This is by no means an exhaustive list, but it is a good start.

Mail quantity and unique contacts Response rate (%) (i.e. how many people donated to the campaign) Gross revenue in dollars Average donation (mean) plus median and mode Donations per ‘000 mailed (makes comparison more accurate as it removes the variance in mail quantity) Cost per contact (you can include follow-up mail/phone costs together and/or separately) Cost as % of total donations Income and expenditure against budget (%) Net profit against budget and ROI ($ raised / $ spent)

It is important to have comparable information from the previous corresponding period so you can perform a year-on-year comparison.

Case Study – Epilepsy Action Australia

A simple campaign KPI table can have a significant impact on the way you approach your next appeal. The table below contains real figures from recent Epilepsy Action Australia campaigns.

Overall performance improved in 2009, including KPIs such as response rate, average donation, total donations, net profit and ROI. Tactical adjustments were made based on analysis of the 2008 campaign. These included bringing the campaign date forward, mailing fewer (lapsed) supporters to improve the response rate, attempting to increase the average donation with upgraded ask amounts and increasing the amount of telemarketing follow-up effort. This helped increase income, but also increased the overall campaign cost.

Armed with the data, changes can be implemented to sharpen performance at both the campaign and the segment level. The plan for 2010 will be shaped by the 2009 results, aiming for further improvement.

Vic Zacharias has been a direct marketer in the nonprofit sector for almost a decade including roles both on staff at charities and as a consultant. He is the director of Focus Fundraising and has helped clients achieve award-winning results for the last seven years.