Sean Triner is co-founder and “chief evangelist” of Pareto Fundraising, a direct marketing firm working in Australia, Hong Kong and New Zealand exclusively with nonprofit organizations. Sean is a frequent speaker and consultant at international fundraising events. The interview was conducted by Don Akchin, a principal of Nonprofit Marketing 360 and a regular contributor to the MKCREATIVE blog.
MKC: How is your direct marketing model different from the U.S. model?
SEAN: The key difference is volumes. The whole population of Australia is about 20 million. Also, the costs of things are extraordinary. Cars are 40%, 50%, even 60% more here. Petrol is 50% more than in the U.S. With such small populations and such extraordinary costs, to get a direct-mail package out costs literally three times as much. The printing is three times as much. The postal stamp is three times as much. The mailing-list purchase prices are up to three times as much.
Consequently, when we do get donors, we have to make sure − with all respect to those lovely people who are giving up their money − we have to wring every penny out of them. We have to be focused on maximizing lifetime value.
We have an outbound phone agency and spend most of our time trying to figure out who not to call. My whole phone-agency business is built on data targeting because we are trying to get exactly the right people to make the work efficient and cheaper.
You can’t just rely on sending out packages and getting the money in. You have to follow up; you’ve got to have good relationships with high-dollar donors. We have a kind of hybrid of the ‘churn-and-burn’ U.S. model and the relationship/fundraising model in the UK.
MKC: Are the Australian charities feeling as challenged as we are in the States to keep the revenue coming in?
SEAN: The challenge is there to keep the revenue coming in, but the only charities that have gone down in the present economy were the ones that have worried that the poor economy will lower their fundraising, so they cut their fundraising budgets − and fundraising stopped. We call it “Recession Suicide.”
I did some research a little while ago in which I looked for the biggest variables for success for any charity − this applies to the U.S. as well. Is it the length of time the charity has been around? Is it a type of fundraising? Is it a type of organization? I found that the single biggest variant was how much they spent on fundraising. The more you spend on fundraising, the more you raise. After that come things like the type of charity: a young offenders charity is going to be tougher to raise money for than kids with cancer.
MKC: Are you a copywriter?
SEAN: Yes, though I’m originally a mathematician. I became a copywriter simply by learning. My partner is much more of a data geek, so what we had right from the beginning was a big data team. We don’t work with charities unless they supply their data for analysis at the beginning. We don’t think you can give proper advice until you mine the data. So we’re ridiculously data rich.
MKC: You’ve mentioned monthly givers. Is that an area that is growing in Australia?
SEAN: We are streets ahead in that market here in Australia. If you look at the top fundraising charities, a third or so of their entire incomes comes from regular, usually monthly, automatic debits. Compare that to the U.S., which is much lower. Interestingly, in Southeast Asia 90% of individual fundraising growth comes from monthly giving. The main tactic is people on the street signing you up for monthly giving. That’s the single biggest driver of growth in Asia, Australia and Europe.
MKC: One of the things that is often talked about but hard to do in the U.S. is engagement with the donor, or ‘relationship building.’ It seems that mass emails and phone calls do not lend themselves to that kind of relationship building with the average donor. But you seem to say that wasn’t your model.
SEAN: Right. It’s all about developing your predictive model or targeting. Because of the size of the market here, I don’t have many 100,000-name lists to go to, so we apply the Pareto Principle [80% of revenues come from 20% of customers, donors, etc].
I’ll give you an example. Let’s say it’s a campaign for Amnesty International. We might do a survey in which we ask “Why do you support AI?” and we have five tick boxes: Death Penalty, Violence Against Civilians, Violence Against Women, etc. Those who reply are already probably slightly more valuable donors anyway. Then of them, I might change my copy − what Mal Warwick called “hyper-personalization” − so we take that group of people and make all copy appeal directly to them and their interest in the organization. If the campaign is about child soldiers, I might write copy thanking a donor interested in violence against women with some links between child soldiers and the violence of their being removed from their mothers or the violence they commit to women.
We also do what we call Pareto Squared, which I’ve never seen written about or discussed anywhere else. If you look at a large number of campaigns you’ll see that 80% of the money comes from 20% of the people. But if you do Pareto Squared on that group, you’ll see that 80% of that income comes from 20% of that 20%. So 64% percent of total revenue may come from just 4% of the donors! It does start to break down a bit on smaller volumes, so we say that half your money will come from 4% of your donors. It’s not so true at acquisition, but if you look at the lifetime giving of your donors, you’ll see that half of your money comes from 5% of your donors. With these top, top donors I want to quote back to a respondent of the questionnaire (for example, “Like you, I think that …[whatever they wrote on their survey].”
MKC: That’s ‘hyper-personalized’ all right. Can you do hundreds of one-off letters that way?
SEAN: The beauty of it is that it’s self-defining. If I’ve got a 100,000-donor database and I get a 20% response rate, of that lot 20% will give me 80% of the money over a period of time. Of them, just 800 of them will be giving half our money; but not all will have responded to a survey. So if I have time or resources only to do 50 such letters, that’s fine. Combined with personal thank you calls and other donor care – pulling out the stops on just 4% of responders, I could increase their donations. An increase of 50% would actually allow me to raise my target before I have even mailed the other 96%!
MKC: Is direct mail dead?
SEAN: No. We are actually getting our best results from direct mail in our ten years, right now. Looking at 45 charities who recently pooled their data for analysis, 150,000 of the 240,000 new appeals donors they acquired in 2011 were through direct mail. Nearly 50,000 came from phone programs.
You can follow Sean on his blog or on his company website.
Guest blogger Don Akchin writes frequently about marketing and philanthropy at donakchin.com.
This interview series is produced with the generous support of the Nonprofit Marketing and Fundraising Zone.
© MKCREATIVE, LLC 2012. All Rights Reserved.
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