Derek Glass compares and contrasts data cooperatives and list swaps, two emerging sources of acquisition mailing data which are proving valuable for those in the know.

We all know that the biggest challenge to successful direct mail donor acquisition is sourcing great lists.

The typical response rate to a basket of the top 10 or so lists available will yield a 1% to 2% response rate, depending on how compelling your cause and creative are.

Each cash donor you acquire will cost between $100 and $300. A 100,000 name mailing, with a 1.5% response rate, $30 average gift and a $1.50 cost per piece will leave you in the red over $100,000. You have to hope that those 1,500 donors you acquired will donate that much (and more!) in the future. It could take 2-3 years before you break even.

In the past four years, and in 2009 in particular, this has changed – dramatically.

Emergence of data coops and list swapping

In 2006, data cooperatives burst onto the scene in Australia, and suddenly charities could achieve 4%-7% response rates. It was a financial “game-changer”. Now, direct mail donor acquisition costs fell below face-to-face and telemarketing, with comparable scale.

By 2009, dozens of charities were privacy compliant (a requirement of joining either of the two data cooperatives that now serve the Australian fundraising market).

Around this time, nonprofits began to swap their donor lists directly with each other.

With the world financial markets collapsing, and everyone watching their response rates carefully, charities involved in list swaps started to see eye-popping results. Response rates of 6% to 12% are common, depending on how closely aligned in mission the two charities are. This took everyone involved by complete surprise. It was breath-taking to witness.

High growth for some charities

There is now a whole new breed of charity emerging. Organisations that were virtually unknown just a few years ago are now some of the biggest and most innovative mailers in Australia.

Since 2006 groups like Seeing Eye Dogs Australia (SEDA) have experienced tremendous growth. According to Leigh Garwood, general manager of SEDA, “we grew our monthly puppy sponsors from 1,500 to 7,500, creating a sustainable pool of long term supporters for many years to come.”

Then, high-profile global animal rights organisation PETA went from almost zero Australian donors in 2008 to 7,000 cash donors by the end of 2009 – their first year mailing in Australia.

Even fundraising traditionalists will be pleasantly surprised to learn that in Melbourne, 75-year-old Lort Smith Animal Hospital has successfully tested list swaps and data cooperatives with no donor backlash.

“The response rates to our cash appeals have actually gone up, not down,” says Amel Bendeddouche, Lort Smith Animal Hospital’s direct marketing consultant. “The donors we acquire from list swaps and data coops also have higher second and third gift rates.”

Sydney’s fast-growing medical research charity Centenary Institute is also enjoying cash positive results using data coops and list swaps.

“We are acquiring more donors at a lower cost,” says Sally Castle, Centenary’s marketing and fundraising manager. “And we’ve also learned more about the characteristics of our supporters as a bi-product.”

Coops and list swaps compared

Any charity can swap donor lists or join a data cooperative (but you must be privacy compliant). It’s not just for the “big” players with lots of money to invest. A cash positive response rate on acquisition takes those financial leveraging risks away.

There are a few key differences between data cooperatives and list swaps.

A list swap is a direct exchange of donor names between two organisations. It is usually handled by a list broker. The list broker works with both organisations to ensure that both are swapping “like-for-like” names. They also provide both sides with samples of the mailing packs, and they arrange fulfilment of the names back and forth.

A data cooperative is a “pool” of names, from many different charities and other mail-order companies. Regression modelling is used to score those people in the pool who look most like your donors.

Data cooperatives can also tell you which of your lapsed donors are best to reactivate, which are best to cross-sell to monthly giving, which are best to upgrade, and they can help you target merchandise and catalogue offers better as well.

List swaps are less expensive, usually a flat fee of about $300 to have a broker arrange the swap. Depending on the swap partner, response rates can run as high as 10% or more. But you won’t see that every time, and it depends on who else is keen to swap at that moment.

Data cooperatives cost a bit more, about $150 to $250 per thousand names, but that is still lower than rental files which run at $300-$400 per thousand and pull lower response rates.

Data cooperatives give you the added flexibility of being able to order the names when you want. They also tend to have larger rollout universes, which is important when considering how much scale you can get out of your program.

List swaps give you more “control” over who mails your list, and when. A list swap clearance request from your list broker will have it all spelled out for you: the name of the organisation, a sample mailpiece, and the mailing date.

With data cooperatives, you do not know which other charities are in the cooperative, and you cannot control when they mail.

Some of the service providers for list swaps and data coops:

Alliance Data Direct –
First Direct Solutions
The Prospect