Trent Osborn tells how CareFlight NSW leveraged its database to convert ‘bear buyers’ to regular givers.

Trent Osborn tells how CareFlight NSW leveraged its database to convert ‘bear buyers’ to regular givers.

Funds raised from the sale of more than 100,000 bears annually through the ‘teddy bear’ program have long propelled CareFlight NSW, generating more than $7 million in revenue annually. This funding plays a critical role in helping CareFlight complete life-saving medical rescue missions throughout Australia by helicopter and fixed wing aircraft.

In 2006, the teddy bear program was stagnating – net income had levelled off. Over the next two years, CareFlight successfully implemented a number of strategic initiatives to reinvigorate the program. Even so, by 2008, fresh approaches were needed to grow net revenue.

Fundraising analysis reveals risk and opportunity

An analysis of fundraising channels relative to other Australian nonprofits identified two key differences:

CareFlight had a relatively high fundraising risk profile as it was heavily dependent upon merchandise sales through the teddy bear program, as well as naming rights sponsorship. CareFlight was underperforming in one the fastest growing fundraising streams – regular giving. Leveraging assets

We decided to use one of our major assets – our database containing around 100,000 regular bear buyers – to develop alternative revenue streams. This required a major change of mindset, from focusing on selling bears to maximising revenue from an existing database.

As is often the case, a degree of reverence exists around any long-running program, making the introduction of major initiatives politically sensitive. We knew we would have to tread carefully!

Previously, we had successfully trialled a regular giving conversion program based on our direct mail database – but would this work for our bear buyers? Were our bear buyers loyal because they loved bears, because they supported our cause, or simply because we had an effective direct marketing model?

A compelling regular giving concept

For the ‘bear to regular giving’ trial, we decided to use a regular giving theme based on the ‘CareFlight Support Crew’. This focused on the concept that our regular givers were just like rescue crew members, flying with us on missions by providing vital regular financial support. Separately, we tested segments within our bear database to see how they responded to a regular giving ask according to the frequency and method of purchase.

It’s all in the timing

The timing of the ask had to maximise ROI for the new initiative, without damaging the bear program. We opted for calling someone approximately two weeks after they purchased a bear (as the best time to ask is just after a gift has been given). It also allowed us to continue with our next quarterly bear call within an acceptable timeframe.

Promising early trials

Early trials showed 5% of those contacted agreed to sign up to regular giving, while simultaneously there was very little drop in bear purchasing habits. There was significant variation to response rates according to purchasing habits and mode of purchase: those who had bought more bears or paid by credit card were more responsive.

Acquisition breakeven was less than four months. Over the next six months we further monitored the effect the regular giving conversion had on our existing bear program and found minimal impact. Most supporters continued to buy bears as well as become regular givers.

All on board

Our next step to transition into an ongoing program was to gain board support. We presented trial results coupled with comparative benchmarking data, and demonstrated the need to reduce our overall risk and dependency on bear sales and naming rights sponsorship.

When we approached the board, we used the analogy of ‘the golden goose’. The bear program had for many years been a golden goose for us, but there were other eggs it could lay if we leveraged the database. We carefully constructed and trialled a new program which would produce an excellent ROI, minimal ongoing administration and fundraising costs, whilst protecting the overall health of the bear program.

This became even more pertinent as, at this time, we were given notice that our naming rights sponsor would be exiting from a 20-year partnership as a result of corporate rationalisation. This crystallised the need to generate new revenue streams.

Regular giving continues to grow

Over a three-year period, our regular giving support base has increased from 397 to 4,069 donors. That represents an increase in monthly annualised income from $83,000 to $880,000. At the same time we have maintained profitability of the bear program. Present indications are that this rate of growth will continue for several more years.

We have continued to work on improving the program, increasing new average monthly gifts from $16.20 to $25.60. Our first upgrade program generated a response rate of 34% with an average gift of just under $10. The growth of regular giving income has now fully replaced the loss of income from our naming rights sponsor.

CareFlight “Bear Buyer” to regular giving
“Support Crew Member” conversion program
Cost per acquisition$87.95
Average monthly gift$25.60
Acquisition cost breakeven time3.4 months
ROI over 12 months349%
Average response rate5.3%