AMMC 2011 - Acquisition 101
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  • 1. ACQUISITION 101 2011 AMMC Conference Avalon Consulting Group www.avalonconsulting.netAvalon Consulting Group, 2011 October 24, Inc. 1All rights reserved, 2011
  • 2. Philanthropic Trends Chronicle of Philanthropy reported that the ―nations 400 biggest charities suffered an 11-percent drop in giving in 2010, the worst decline in two decades…‖ Target Analytics Index Report (2011 Q2): During the recent recession, arts and culture organizations particularly struggled with new donor acquisition and first-year donor retention. In the first half of 2011, however, large increases in revenue, donors, and new donor acquisition indicate that the sector may be experiencing at least a stabilization, if not the beginning of a recovery. • New arts and culture donors increased by 6.8% from Q2 YTD 2010 to Q2 YTD 2011. This was one of the largest new donor increases in the index but is likely at least in part a rebound from 11.5% declines over the same period the previous year. Consumer Confidence Index® continues to fluctuate. There has been a downward trend over the last 7 months (though September was flat with August). Avalon Consulting Group, Inc. 2 All rights reserved, 2011
  • 3. Membership as a pipeline to higher level givingMembership plays Planned To get major anda vital role in the Gifts planned gifts, you Majoroverall fundraising Donors must build up thecontinuum. Renewed donor pyramid. Donors New Donors Acquisition Prospects/Visitors General Public Avalon Consulting Group, Inc. 3 All rights reserved, 2011
  • 4. Why Acquisition?Importance of Acquisition Despite our best efforts, file retention is never 100% – people move, pass away, and change their minds about their support. Serves an important role in organization’s revenue plan – is the organization’s goal stability or growth? If growth, how much growth is desired? Acquisition serves many purposes beyond just reinvigorating the membership program – it’s a great source of $1,000+ donors, planned giving notifications, and marketing/PR exposure. Most organizations invest in acquisition – which means they are losing money to acquire a new member with the expectation that the investment is returned in 2 to 4 years.Avalon Consulting Group, Inc. 4All rights reserved, 2011
  • 5. Direct Marketing Acquisition Campaigns Direct marketing acquisition can be executed through multiple channels: • Direct mail • Telemarketing • Email • Web • On-site  VALUE OF INTEGRATIONAvalon Consulting Group, Inc. 5All rights reserved, 2011
  • 6. Benefits of Multi-Channel Integration Why should multiple channels be used? $80 $60 $40 $20 $0 DM, TM & Web Only DM & Web DM & TM DM Only Web Income/Member Average Gift It’s best to reach out to members through multiple channels, allowing the member to give through their preferred channel rather than yours. Members who give through all available channels are the most valuable when measuring income generated per member. Data based on Avalon client performance.Avalon Consulting Group, Inc. 6All rights reserved, 2011
  • 7. Why Use Direct Mail for Acquisition?Benefits of using Direct Mail (DM) Most cost-effective way to reach the largest prospect audience possible List market allows organizations to obtain names that aren’t otherwise accessible Using existing data and the latest techniques, DM can be personalized Data segmentation allows results to be tracked in great detail so that each successive mailing is more effective than the last Volumes are larger, so statistically valid overall results (and test results) are possible Still the largest source of individual giving revenue Collateral PR benefit and marketing/sales outreachChallenges of using DM High initial investment, especially for acquisition Postage and printing costs go up each year Once it’s in the mail, there’s nothing you can do about it – no way to adjust strategy until the next mailingIsn’t Direct Mail junk mail? Only of the cause does not interest you. Otherwise, it’s an invitation tolearn more and make an impact on an issue that’s important to you. Avalon Consulting Group, Inc. 7 All rights reserved, 2011
  • 8. Why Use Telemarketing for Acquisition?Benefits of using Telemarketing (TM) Personal outreach to members is hard to achieve – TM offers a way to reach out directly to your members and have a real conversation with them TM offers real-time results – strategy can be changed from day to day Higher response rate and average gift compared to DM and email Most effective way to reinstate recently lapsed members (up to 5 years lapsed) TM enables your organization to respond to members’ objection responses directly and attempt to overcome them –provides critical feedback on how members are feeling about their membership and your organization Members who are contacted by phone and say ―no‖ have a higher donor value than members who are never contacted by phoneChallenges of using TM Expensive if done out-of-house – pay $5-6 per contact Have to give up some degree of control – telemarketers are human beings and do make mistakes Even productive campaigns only ever reach about 60% of the fileDoesn’t everyone hate telemarketing? For organizations with large donor programs, telemarketing can produce10-30% of the organization’s overall revenue. You would be surprised by how much people like to talk! Avalon Consulting Group, Inc. 8 All rights reserved, 2011
  • 9. Why Use eFundraising/Email for Acquisition?Benefits of using eFundraising/Email (EFR/EM) Results are immediate and can be used to inform DM and TM strategy Higher average gift than DM Costs are lower than DM and TM – allows for more frequent contacts throughout the year Provides convenience to members (―click here and join today!‖) Reaches a younger donor base Provides collateral lift in results when used in conjunction with DM and TM campaigns and higher donor valueChallenges of using EFR/EM Hard to capture email addresses, so universes are small Response rates are still weak compared to DM and TM Data segmentation can be challenging due to the small universe, so statistically valid results are often not possible Perception that it is free – and it’s not! Online-only donors can have lower retention rates Can get caught in spam filters and never reach recipientsIsn’t EFR/EM the next big thing in fundraising? Not yet. Industry studies have shown that while EFR/EM revenuesare growing, they still represent only 5-20% of overall organizational revenue. Avalon Consulting Group, Inc. 9 All rights reserved, 2011
  • 10. Why Use Your Website for Acquisition?Benefits of using your website for acquisition At least 50% of online traffic is driven to the web by some other marketing material (direct mail, word of mouth, ad in the paper), so it serves as a great counterpart to other fundraising efforts • Want to make sure you’re prepared to capture this traffic as it comes to your website! Easy to add dynamic content such as videos, surveys, petitions, donor testimonials, recent press coverageChallenges to using your website for acquisition Often competing goals for the same homepage space Not always managed by the Development staff To be effective, forms must be simple and clear – often a challenge given existing organizational software and competing interests Not always kept up to date!Don’t overlook your website traffic as valuable prospects! Even if people are not giving a gift, areyou still trying to capture their information in order to engage them later? (Easily visible newsletter orexhibition alert sign-up, engagement tools like quizzes, etc.) Avalon Consulting Group, Inc. 10 All rights reserved, 2011
  • 11. Why Use Onsite Visits for Acquisition?Benefits of using onsite visits for acquisition Capturing people while they are engaged with your organization No cost to ask! Like TM, able to overcome objection responses and have a dialogueChallenges to using onsite visits for acquisition Human element – can’t control what your representative will say – or if they’ll even ask! Avalon Consulting Group, Inc. 11 All rights reserved, 2011
  • 12. Importance of Source Codes Direct marketing is only effective if you can learn from it and improve upon your next campaign. All campaigns should include source codes – a code that allows you to track the results by segment as they come in. Determine the source code logic that works for you, and then USE IT and make sure it is captured in your database at gift entry! Variables to track with source codes: • campaign type (renewal vs. appeal vs. acquisition) • List type (lapsed, rental list A, rental list B) • package A vs. package B Avalon Consulting Group, Inc. 12 All rights reserved, 2011
  • 13. How much acquisition should I mail? Answer: As much as needed to reach your goals! Acquisition should be positioned to achieve organizational goals – file stability? File growth? If growth, how much? Need to understand your current file retention rates. On average, how many donors do you lose each year? To keep your membership counts stable, you must replace at least as many people as you lose. Avalon Consulting Group, Inc. 13 All rights reserved, 2011
  • 14. Acquisition Program – Benchmarking Across IndustriesWhile arts groups get high average gifts in acquisition, the response rates are usually low. As a result, thenet loss per donor is the highest in the industry. Source: Avalon Client Stats Arts and Culture – Includes both Performing Arts and Museums. Note: This data represents only a small sample of organizations from each market and is not a comprehensive reflection of each market; however, the trends reflected here are consistent with Avalon’s industry experience.Avalon Consulting Group, Inc. 14All rights reserved, 2011
  • 15. Renewal Program – Benchmarking Across IndustriesRenewals are where arts organizations recoup the acquisition investment. Average gifts remain high, andresponse rates are also strong -- as a result, the net per donor is the highest in the industry. Source: Avalon Client Stats Arts and Culture – Includes both Performing Arts and Museums. Note: This data represents only a small sample of organizations from each market and is not a comprehensive reflection of each market; however, the trends reflected here are consistent with Avalon’s industry experience.Avalon Consulting Group, Inc. 15All rights reserved, 2011
  • 16. Acquisition Program – Critical Elements for Success List Selection – it doesn’t matter what you say if you say it to the wrong people. Offer – What are you offering and what will members receive in return? Messaging/Case for Support – How do you represent yourself and your offer? Format and Design – Do you stand out? Timing – Does it make sense to send the campaign at particular times of year? (Prior to large exhibition opening, calendar year end, announcement of next year’s programming, etc.)Avalon Consulting Group, Inc. 16All rights reserved, 2011
  • 17. Acquisition Prospects Because acquisition response rates tend to be low, a wide net must be cast. • Mail to internal core internal prospect audiences: — Ticket Buyers — Lapsed Members — Event attendees — Lower dollar donors (under minimum membership level) — eNewsletter/web names Note: whenever possible, you should make every effort to gather as much information about these prospects as possible (name, address, email, phone) • List market exists for acquiring names of other like-minded individuals — Organization may rent or exchange names Avalon Consulting Group, Inc. 17 All rights reserved, 2011
  • 18. Acquisition Program – Rental vs. ExchangeMaking the decision whether or not to rent and/or exchange yourmembership file. While the decision to rent vs. exchange only varies based on the organization, many groups find that list rental revenue provides substantial income and can help offset the investment in acquisition. Your names are not unique to you – if you are not extending them, another organization surely is! Many organizations (especially cultural groups) only make their list available on exchange. If you do not have a reciprocal list to offer, these strong prospect lists will be unattainable Most files charge more if a reciprocal list is not available Exchange lists are cheaper than rental lists, allowing AFI to return the investment faster Most organizations only share donors names under $100 – no one is sharing their best donorsAvalon Consulting Group, Inc. 18All rights reserved, 2011
  • 19. Acquisition MessagingAvalon Consulting Group, Inc. 19All rights reserved, 2011
  • 20. Acquisition Messaging – Balancing Benefits and Mission Arts messaging must balance philanthropy with benefits, while making a sophisticated case for “general unrestricted funding” Benefits-Based Mission-Based Membership Model Membership Model Arts Organizations Messaging is based on benefits and ―what’s in it Institutional messaging focuses on mission for me?‖ Tangible need drives the philanthropic case To be successful, benefits must offer real value for support More dependent on key benefits for upgrading to More investment in educational materials higher giving levels required to inform Members on need Results in a more transactional Benefits still support—but don’t drive—giving relationship, especially at lower giving levels Results in a stronger Member relationship Tends to result in more marginal commitment and and higher retention rates lower retention rates Avalon Consulting Group, Inc. 20 All rights reserved, 2011
  • 21. Overall Messaging Strategy Messaging should lead with benefits but also include compelling education and community outreach programs and future plans – and explain how Members help make it all possible. Use of ―Member‖ and ―Membership‖ have been shown to produce stronger response rates. It is important to use these words frequently in benefit descriptions Arts organizations often battle against patrons’ incorrect assumption that ticket sales cover the full cost. Member communications should state, ―Ticket sales only cover 60% of our operating costs – we need your Membership support to help cover the gap!‖ in all requests for support. Use ―Plain English‖ – write in a conversational tone, use the first person. People give to people! Consistency of messaging is also crucial – once the messaging strategy has been determined, it must be repeated in all communications and across all channels. Incorporate testing to be sure you are always learning and improving your approach Avalon Consulting Group, Inc. 21 All rights reserved, 2011
  • 22. Direct Mail AcquisitionAvalon Consulting Group, Inc. 22All rights reserved, 2011
  • 23. 4 Critical Components of a Direct Mail Acquisition Package 1.Outside Carrier 2.Letter 3.Reply 4.Reply Envelope Avalon Consulting Group, Inc. 23 All rights reserved, 2011
  • 24. 4 Critical Components of a Direct Mail Package: Carrier1. Outside Carrier Include organization name and address (as registered if mailing 1st class) Postage treatment? Teaser? Window or closed face? Avalon Consulting Group, Inc. 24 All rights reserved, 2011
  • 25. 4 Critical Components of a Direct Mail Package: Letter 2. Letter If personalized, donor name and address correct? Easy to read? (Eighth grade level) Johnson Box? Ask on page 1? Who signed it? Frequent use of the word ―You‖ and ―Your gift‖? PS? PROOFREAD!!!!!! Avalon Consulting Group, Inc. 25 All rights reserved, 2011
  • 26. 4 Critical Components of a Direct Mail Package: Letter Avalon Consulting Group, Inc. 26 All rights reserved, 2011
  • 27. 4 Critical Components of a Direct Mail Package: Reply3. Reply Donor name and address correct? Easy to complete? Source Code? Payment information? Avalon Consulting Group, Inc. 27 All rights reserved, 2011
  • 28. 4 Critical Components of a Direct Mail Package:Reply Envelope 4. Reply Envelope Correct return address? BRE (Business Reply Envelope) or RAE (Return Address Envelope)? Thank you? Avalon Consulting Group, Inc. 28 All rights reserved, 2011
  • 29. 4 Critical Components of a Direct Mail Package: ExtrasOptional Extras Lift Note Inserts – Brochures, Testimonials, Event Highlight, etc. Premium?Avalon Consulting Group, Inc. 29All rights reserved, 2011
  • 30. Acquisition Program – Direct Mail Member AcquisitionSuccessful Arts Membership Formula Consistent introductory discount offer on base level of membership (list all levels up to $3,000 on reply form) Personalized closed face carrier 4-page letter with expanded information on benefits balanced with a mission-based case for support 4-color benefits insert highlighting the membership experience, not just featuring what the benefits are Upcoming program insert/philanthropic mission insert Avalon Consulting Group, Inc. 30 All rights reserved, 2011
  • 31. Acquisition Program – Sample PackagesAvalon Consulting Group, Inc. 31All rights reserved, 2011
  • 32. Acquisition Program – Sample PackagesAvalon Consulting Group, Inc. 32All rights reserved, 2011
  • 33. Acquisition Program – Sample PackagesAvalon Consulting Group, Inc. 33All rights reserved, 2011
  • 34. TESTS: WHICH WON?Avalon Consulting Group, Inc. 34All rights reserved, 2011
  • 35. TESTS: WHICH WON?Avalon Consulting Group, Inc. 35All rights reserved, 2011
  • 36. TESTS: WHICH WON? Discount Offer Test Added discount to carrier teaser/ changed PS discount language from $3 to 10% discountAvalon Consulting Group, Inc. 36All rights reserved, 2011
  • 37. Telemarketing AcquisitionAvalon Consulting Group, Inc. 37All rights reserved, 2011
  • 38. Acquisition Program – Sample TM Script SAMPLE TELEMARKETING ACQUISITION SCRIPT INTRODUCTION: Hello, May I speak with Mr/Ms_____? Mr/Ms______, my name is (your first and last name) and I am calling on behalf of ORGANIZATION from TELEMARKETING FIRM. This call may be monitored or recorded for my quality as a professional fundraiser. I am not calling to sell you tickets or subscriptions today/this evening. SINGLE TICKET BUYERS: I wanted to first thank you for your patronage to the ORGANIZATION. (I see that you attended some of our ____ performances and I hope you’ve enjoyed your experiences with us.) SUBSCRIBERS: I wanted to first thank you for your patronage to the ORGANIZATION. I see that you are a season-ticket subscriber and I hope you’ve enjoyed your experiences with us. Same offer as DM WEB NAMES: (please read verbatim): I wanted to first thank you for your patronage to the ORGANIZATION. I see that you package. created an e-patron account on our website. This year, the ORGANIZATION has a spectacular season of performances including _______! No cold calling – (Highlight 2-3 performances based on prospect’s area(s) of interest.) only warm 2010/2011 SEASON - UPCOMING PERFORMANCES HIGHLIGHTS prospects (ticket SEASON PROGRAM LISTED HERE buyers, even attendees, lapsed members) Conversational CASE FOR MEMBERSHIP / FIRST ASK - $120 LEVEL ($80 tax-deductible): tone – ask what As you may know, bringing the world’s greatest artists and performances to the ORGANIZATION, as well as exposing millions of children each year to the performing arts requires substantial resources. they like about the Because ticket sales and subscriptions only cover half of our current program needs, we are extending a special invitation for you to become a MEMBER of the ORGANIZATION. organization When you become a Member, you receive benefits that make your evenings here more enjoyable, including the ability to purchase tickets for all ORGANIZATION presentations before they go on sale to the general public. And because our important artistic and education programs are dependent on support from the community, the _______Foundation has agreed to match $1 for every $2 you contribute at THREE asks! this time! Mr/Ms____, our first suggested level of membership is the $120 _________ LEVEL, which includes: access to our Member Lounges – which offer complimentary refreshments and a more private area to meet with your guests 45 minutes before curtain and during Pleasant close to performance intermissions. You would also receive 4 parking coupons, each good for a one-time $2 discount off the regular parking rate in our expanded garage! call (We understand that many of our patrons are concerned about parking prices so we’ve added this special benefit as thank you for your support at this level.) SYMPHONY PATRONS: You would also receive an invitation for two to attend one Symphony working rehearsal. THEATRE PATRONS: You would also receive an invitation for two to attend an exclusive backstage theatre event.Avalon Consulting Group, Inc. 38 Mr/Ms____, the ______ level comes with a gift of $120 -- and $80 of that is tax-deductible.All rights reserved, 2011 Considering these wonderful benefits, as well as the importance of keeping the performing arts and arts education strong in our area, may we count on you to join us as a ___________ with a gift of $120?
  • 39. Email AcquisitionAvalon Consulting Group, Inc. 39All rights reserved, 2011
  • 40. SAMPLE eACQUISITION Look and feel is similar to DM package. Same discount offer carried through Message will also be carried over from the DM. Can be sent to in-house prospect listsAvalon Consulting Group, Inc. 40All rights reserved, 2011
  • 41. Web AcquisitionAvalon Consulting Group, Inc. 41All rights reserved, 2011
  • 42. SAMPLE HOMEPAGEAvalon Consulting Group, Inc. 42All rights reserved, 2011
  • 43. Web AcquisitionConsider creating a “Welcome Series” for prospects new to your e-list. Engagement Name and Direct Mail email (survey E-Newsletter email Targeted Email Fundraising of recent or captured welcome Fundraising Ask and/or experience Educational online or email Ask telemarketing and overall Piece onsite call interests)Avalon Consulting Group, Inc. 43All rights reserved, 2011
  • 44. Onsite AcquisitionAvalon Consulting Group, Inc. 44All rights reserved, 2011
  • 45. Onsite Acquisition Ticket envelopes used in fulfillment of exhibition tickets Patrons purchasing tickets should receive a Membership brochure at Ticket Office window Membership brochures should be readily available in all areas of the campus that visitors frequent, including refreshment areas and gift shops On-site sales incentives include discount certificates for use in venue refreshment areas or leftover promotional items Marketing materials distributed at special exhibitions should contain a Membership flyer or ―stuffers‖ with special offers or incentives Placement of Three Sheets can be employed to advertise the benefits of membership and current on- site sales incentives Consider Raffle Cards can be distributed to give a way a free year of Membership or exhibition tickets and allow for the collection of mailing addresses andAvalon Consulting Group, Inc. email for future prospect mailings 45All rights reserved, 2011
  • 46. Onsite Acquisition Membership Month Initiative can be executed in conjunction with online efforts, and allows for buy-in from PCT staff. Advertising can include promotion in newsletters and buckslips in mailings. Incentives are an important component of this promotion, as is a catch phrase, like ―March is Membership Month!‖ Sales Associates should attend regular briefings about the benefits of Membership, and ask all visitors ―are you a Member?‖ Incentives are also important to offer to staff as a reward for selling Memberships, and can consist of tickets to performances or gift certificates at local businessesAvalon Consulting Group, Inc. 46All rights reserved, 2011
  • 47. Final Thoughts Acquisition serves a valuable role in an organization’s growth plan – as well as additional marketing/PR outreach Membership acquisition programs can be a direct source of major donors and planned gifts – don’t forget to include higher giving levels and planned giving information on the reply form Acquisition should be implemented across multiple channels in order to engage the most people Remember: People give to people. Do your solicitations sound like they’re coming from a human being, or an organization? Have you said ―Thank you‖?Avalon Consulting Group, Inc. 47All rights reserved, 2011
  • 48. Thank you! Kerri Kerr Dara Rosenberg Igersheim Vice President Senior Program Manager Avalon Consulting Group 1150 17th Street, NW Suite 200 Washington, DC 20036 202-429-6080 darar@avalonconsulting.netAvalon Consulting Group, Inc. 48All rights reserved, 2011