On Agency Direct Mail Benchmarking Report

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2 INTRODUCTION At a time when many charities are increasing their telephone and digital activities, direct mail still remains the main investment in donor development for most non-profit organisations. As part of our commitment to developing datadriven direct mail fundraising strategies we have worked with eleven of our clients to undertake this benchmarking project. The aim of this benchmarking is twofold. Firstly, we aim to provide external context to results and answer the questions many charities ask us: How are we performing? How does our return on investment compare to other charities in our sector? How does our average gift compare to other charities that have a similar mailing program? Secondly, the results of our benchmarking allow us to work with our clients to develop plans to improve the effectiveness of their direct mail appeals by sharing our findings from other clients. To allow us to do this we devised a number of key performance indicators to assess the performance of each charity s direct mail appeals. The results of our benchmarking relate only to direct mail appeals which were sent to warm donors that asked specifically for a gift during the financial years and Once we had calculated each key performance indicator we ranked each charity s performance, assessed their year-on-year performance and identified trends in the data. The following pages contain selected findings from the On Agency Direct Mail Benchmarking The results contained within the following report have been anonymised and rather than using each charity s name we have assigned a unique identifier to each charity. On Agency Direct Mail Benchmarking Report

3 Charity ID Charity ID SELECTED RESULTS Figure 1 shows the average mailing volume per appeal which was calculated by dividing the total volume of mailings by the number appeals sent during Charity has an exceptionally large average mailing volume of 569,000 and the other charities range from 73,000 down to 9,000. FIGURE 1: AVERAGE MAILING VOLUME PER APPEAL ( ) * Charity : 568, , ,000, ,000 Figure 2 shows the average response rate over the course of the year. It was calculated by dividing the total number of supporters mailed by the total number of responses during The response rate varies from 17.8% down to 5.7% which gives an overall average response rate of 9.8% in FIGURE 2: AVERAGE RESPONSE RATE ( ) 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Figure 3 shows the average gift for each charity which was calculated by dividing the gross income for by the number of responses. Overall, the average gift to warm direct mail appeals during was but each charity s average gift ranged from up to On Agency Direct Mail Benchmarking Report

4 Charity ID Charity ID Charity ID FIGURE 3: AVERAGE GIFT ( ) Figure 4 shows the average cost per pack of each charity surveyed which was calculated by dividing the annual cost of warm direct mail appeals by the total number of supporters mailed during the year. FIGURE 4: AVERAGE COST PER PACK ( ) Figure 5 shows the return on investment of each charity surveyed and was calculated by dividing annual gross profit divided by annual cost. FIGURE 5: RETURN ON INVESTMENT ( ) On Agency Direct Mail Benchmarking Report

5 KEY PERFORMANCE INDICATORS The table below shows the key performance indicators we devised for the direct mail benchmarking and shows how they compared to the results. These results show that by investing more in donor development charities have, on average, seen a growth in net income in Key Performance Indicators Variance Total Supporters Mailed per Annum 263, , % Average Mailing Volume per Appeal 90,956 82, % Average Response Rate 9.8% 10.7% -8% Average Number of Donations per Annum 26,653 24,816 +7% Average Gift % Average Cost per Pack % Average Return on Investment % Average Net Income per Annum 478, ,534 +4% We have seen an increase in the number and volume of direct mail appeals to warm supporters this year. On average, the charities surveyed mailed their donors seven times throughout the year and increased the number of donors mailed by 12%. As we would expect, the increase in average total mailing volume has seen the average appeal cost rise although the average cost per pack has reduced due charities benefiting from economies of scale. Whilst the average cost per appeal has increased 8% this year to 38,180, the average cost per pack has been reduced by 10%, from 0.70 in to 0.63 in The increased mailing volume has resulted in the average response rate dropping from 10.7% in to 9.8% in The number of donations per annum has increased by 7% and almost half of the charities surveyed experienced an increase in their response rate. The average gift amount has decreased slightly which is due to charities widening their selection criteria and mailing more low-value or deeply-lapsed supporters in an attempt to increase their value or re-engage with them. Even though the overall average gift has decreased, two-thirds of the charities improved on their average gifts during On Agency Direct Mail Benchmarking Report

6 YEAR-ON-YEAR COMPARATIVE ANALYSIS As part of our benchmarking process we also compared and ranked the performance of the charities who participated. The following charts show some of the results from our comparative analysis. Figure 6 shows that four charities increased the number of mailings in , two reduced the number of mailings and four had the same number of appeals as : FIGURE 6: YEAR-ON-YEAR CHANGE IN NUMBER OF MAILINGS Change in Number of Mailings Whilst not all charities increased the number of mailings, figure 7 shows that six charities have increased the volume of their mailings in : FIGURE 7: YEAR-ON-YEAR CHANGE IN VOLUME OF MAILINGS -75% -50% -25% 0% 25% 50% 75% Percentage change in volume of mailings On Agency Direct Mail Benchmarking Report

7 Figure 8 shows that only one of the four charities who increased the number of mailings (Charities,, and ) saw a positive impact on their response rate in FIGURE 8: YEAR-ON-YEAR CHANGE IN RESPONSE RATES -3% -2% -1% 0% 1% 2% 3% Percentage change in response rates The next chart shows the year-on-year change in net income per donor. Only four charities were able to improve their net income per donor mailed during Three of these charities did so by increasing response rate (charities,, ): FIGURE 9: YEAR-ON-YEAR PERCENTAGE CHANGE IN NET INCOME PER DONOR MAILED -80% -60% -40% -20% 0% 20% 40% 60% 80% Percentage change in net income per donor mailed CONCLUSION The results illustrate that different approaches work for different charities and you don t need a huge database to return excellent results. Excellent results are the result of in-depth segmentation, selective targeting of supporters, an appropriate ask strategy and compelling creative which really connects you and your supporters. On Agency Direct Mail Benchmarking Report

8 SAMPLE PRESENTATION Each of the charities that participated were presented with the results and an in-depth interpretation of the findings. A sample of this presentation is shown below: HOW DO YOU COMPARE? For more information on the On Agency Direct Mail Benchmarking Report or if you would like to see how you compare to the charities included in the report please contact: Sarah Bryan sarah@onagency.co.uk Daniel Stenning-West danny@onagency.co.uk On Agency Third Floor, Huntingdon House, 20 North Street, Brighton, BN1 1EB On Agency Direct Mail Benchmarking Report