Consumer Trend Report 2012 Direct Marketing from the Charity Sector

Consumer Trend Report 2012 Direct Marketing from the Charity Sector Introduction The 2012 Consumer Trend Report on Direct Marketing from the Charity Sector reveals current consumer attitudes to the marketing activities of non-profit organisations in the United Kingdom. The report pinpoints key insights to help charities make efficient use of their marketing resources in the postrecession economy and meters changes in consumer opinion that have occurred since the release of our 2010 Consumer Trend Report on Direct Marketing from the Charity Sector. Research Summary Unless you have been on Mars for the last two years, you cannot have failed to notice the global economic maelstrom that has affected commercial and nongovernmental organisations operating across multiple sectors. For organisations in the UK lucky enough (and robust enough) to emerge from the wreckage relatively unscathed, the landscape is forever changed and many are facing a host of new challenges when it comes to marketing their products and services to consumers in the post recession economy. enquiries@

With corporate restructuring and job losses across the UK, consumer spending is not surprisingly at an all time low and even the least thrifty are scrutinising everything they spend. As an upshot, many consumers are taking a fresh approach to selecting the commercial and charitable organisations with whom they wish to do business. The days of lifetime custom is gone and marketers need to work extra hard to justify their budgets, increase awareness of their brands and attract new sources of revenue. Better targeting and a reduction in the amount of unsolicited DM certainly struck a chord with respondents in the 2012 Consumer Trend Report on Direct Marketing from the Third Sector. This suggests a growing need for charities to develop more streamlined database marketing systems that will help them to not only deliver campaigns that consumers want to see, but that will encourage them to engage more meaningfully rather than alienating supporters. While recent reports from the World Giving Index suggests that the British are giving more time and money to charities despite the economic slowdown, many UK charities and NGOs have experienced a significant drop in local authority funding while others have seen it completely withdrawn. So what can be done internally to redress the balance? That said, public perceptions of charities in respect of their data management remains high, which was reflected in our research when asked about the sector s treatment of personal data. The research shows that while charities are getting it right, other sectors are becoming increasingly negligent. In recent years, charities have managed to shake off some of the negative attention they have received in respect of them being negligent direct mailers by adhering to best practice guidelines and adopting better database management techniques, which has helped them to see a return on their investment and improve consumer relations. However, the results of the 2012 Consumer Trend Report on Direct Marketing from the Charity Sector suggests that charities and NGOs have a way to go when it comes to reducing their costs and improving their fundraising potential. With more technological advances than ever before, there are now multiple direct marketing channels and tools available to help charities extend their budgets and increase their outreach. The following report aims to help charities and other not for profit organisations by furnishing them with outstanding and impartial consumer attitudes research on the sector that could make all the difference to their beneficiaries and to their continued success. A recent case study by Macmillan Cancer Support indicates that the charity has made 80,000 of savings by employing a well thought out strategy that hinges upon first class database management techniques. This has made their direct marketing more effective and, as they are not sending stuff to people who don t exist, means their data processing is effectively cost neutral. The environmental impact of their Direct Marketing campaigns is negligible and they have increased their fundraising income by being more targeted and reconnecting with lost supporters. Click here to read the case study in full. enquiries@

Background As a leading Data Management company, REaD Group commissioned DMA (Direct Marketing Association) endorsed research company fast.map to carry out primary research with consumers as part of their on-going commitment to helping charities manage their database marketing and increase their supporter revenue. The Survey Data is at the heart of all marketing practice these days. Indeed, some might say it underpins the very fabric of modern society. Regardless of whether Government or financial institutions hold data; a supermarket chain via a loyalty scheme or a trusted local vendor, the simple fact of the matter is that without data, commerce would flounder. Charities have come under scrutiny in the past for the way in which they have handled their supporter and prospect data. While much has changed in the last ten years, stories regarding data losses and data related infringements still prevail in the minds of consumers so it was important that the research established the level of confidence that consumers have in charities regarding the way they treat and manage their supporter data in comparison to other organisations. The resulting statistics from the 2012 research indicates that 6 of consumers place high levels of trust in the way charities handle their personal data, which is in stark contrast to financial institutions who were least trusted by 40% of consumers (see fig 1a). This is identical to the statistics derived from the 2010 research on the part of charities, which suggest a constant consumer perception of their data management. Fig 1a. How much do you trust these institutions with your personal data? Charities Financial Institutions Commercial Government 0% 4 2 2 8% 24% 1 24% 3 18% 30% 2 2 13% 33% 23% 3 20% 40% 60% 80% 100% 1 - Most trusted 2 3 4 - Least trusted Fig 1b. (Comparing most trusted 1 and 2 from 2010 and 2012 results) Charities Commercial Government Financial Institutions 40% 40% 48% 4 44% 5 6 6 0% 10% 20% 30% 40% 50% 60% 70% 80% Aug 10 Apr 12 enquiries@

Other telling changes include the rise in consumer s trust of the British Government moving them from the least trusted spot now occupied by Financial Services (see fig 1b). This confirms that the big consumer data losses that occurred in Government prior to the 2010 research had a real impact on consumer perceptions. More recently, Financial Services have been the recipient of unwelcome press relating to big data losses, which is reflected by their current fall from grace. Topline Results 2010 Consumers trust charities with their personal data. Men and women have similar levels of trust in charities. 35-44 yr olds trust charities more than any other age group. Consumers living in the North East of England are more likely to trust charities with their data. Topline Results 2012 Women trust charities more than men do. Men trust commercial organisations 1 more than the opposite sex, while women place higher levels of trust in financial institutions. 18-24 yr olds trust charities more than any other age group. Consumers living in N. Ireland / Eire / Channel Islands / Isle of Man are more likely to trust charities with their data, followed by consumers living in the West Midlands. Overall, consumers trust financial institutions least with their personal data (60%). In order to scrutinise the trust scores further, the next slides deal specifically with targeting and data management. Over the last 2-years, Government appears to have shed some of the negative opinions regarding the way they target consumers. One well reported example of poor targeting was seen in the lead up to the general election in 2010 when Labour were lambasted in the media and by the public for targeting 250,000 women in a tasteless direct mail campaign that criticized the Tory s policy regarding NHS cancer treatment. Unfortunately, this campaign resulted in high levels of brand damage for the Labour Party at a critical period in time. More recently, the press has been rife with stories about data losses in the financial services sector and companies like Sony have also come under fire for the fraudulent use of their customer data. However, it s not always the big issues that cause problems. Often simple, careless errors in the way that data is captured or maintained can lead to highly distressing situations for individuals, not to mention the money that is wasted enquiries@

on mailing obsolete records. This might include sending marketing mailings to the deceased or other forms of badly targeted marketing messages. When you apply this scenario to a charity, the consequences could have serious financial implications as well as causing brand damage, so we were keen to measure the mitigating factors involved in supporters ceasing their donations to a charity. Fig 2a. What would make you stop donating to charity? The frequency of contact - they are contacting me too much Badly targeted mailings - i.e. sending a prostate cancer campaign to a young female who can never get prostate cancer 47% 53% The results of the 2012 research indicated that 47% of adults in the UK would stop supporting a charity that sent them badly targeted direct mail (see fig. 2a). This is an increase of 18% on the same results in 2010 (see fig. 2b). With an increase of on the 2010 research, 20% of consumers would now stop donations to charities that used obsolete or inaccurate name and address details. In terms of the UK population, this equates to 20,210,000 adults and 8,600,000 adults respectively that would cut ties with a charity based on poor targeting. Most strikingly, 53% of consumers (that s 22,790,000 adults) said they would cease supporting a charity that they deemed to be wasting money on needlessly frequent communications, with a rise of 8% on the previous research. The money spent on marketing by charities 43% Over emotional marketing messages - the messages are trying to be too emotional 3 Topline Results 2010 Inaccurate name and address data - they got your name, title or address wrong Environmental impact of marketing activities undertaken by the charity 17% 20% 0% 10% 20% 30% 40% 50% 60% Fig 2b. (Comparing 2010 and 2012 results) The frequency of contact - they are contacting me too much 4 53% Consumers of 65+ are more likely to stop giving to charities based on the relevance of their DM than any other age group across each of the categories. Topline Results 2012 Badly targeted mailings - i.e. sending a prostate cancer campaign to a young female who can never get prostate cancer The money spent on marketing by charities Over emotional marketing messages - the messages are trying to be too emotional 29% 34% 3 47% 47% 43% Male and female respondents were broadly inline when it came to the reasons they d stop donating to a charity. Inaccurate name and address data - they got your name, title or address wrong Environmental impact of marketing activities undertaken by the charity 1 20% 14% 17% Aug 10 Apr 12 The 65+ age bracket are still the most likely to stop giving. 0% 10% 20% 30% 40% 50% 60% enquiries@

In terms of data management, charities face the same issues as commercial organisations, Government and NGOs with one exception: Dissatisfied supporters still don t like complaining to a charity and may withdraw their support or cease making financial donations if the situation does not improve, which gives the charity little scope to rectify problems. In order to confirm this we asked the sample which organisations they would be most likely to complain to if they were unhappy with a marketing communication they received from a charity. With an increase of 4%, 5 of those surveyed said that they would not complain, which equates to almost 22 million potentially unhappy supporters that charities could alienate (see fig. 3a). Fig 3a. If you were dissatisfied with a communication from a charity, whom would you be most likely to complain to? I would not complain 5 which supporters can register complaints. This suggests that consumers might not be sure of how best to address a complaint against a charity s marketing or perhaps they feel their complaints are falling on deaf ears. Fig 3b. (Comparing 2010 and 2012 results) I would not complain The charity directly MPS - Mailing Preference Service FRSB - Fundraising Standards Board ASA - Advertising Standards Authority 8% Royal Mail 4% DMA - Direct Marketing Association 3% Aug 10 Other - please specify Apr 12 2% IOF - Institute of Fundraising 0% 2% 0% 10% 20% 30% 40% 50% 60% 13% Topline Results 2010 30% 37% 47% 5 The charity directly MPS - Mailing Preference Service FRSB - Fundraising Standards Board ASA - Advertising Standards Authority Royal Mail DMA - Direct Marketing Association 3% 30% As age increases, the likelihood of complaining decreases! If people are going to complain, they are more likely to contact the charity directly. Other - please specify 2% IOF - Institute of Fundraising 2% 0% 10% 20% 30% 40% 50% 60% Topline Results 2012 Interestingly, the 2012 research shows a decrease of 7% in the number of people who would complain to a charity directly (see fig. 3b) and MPS, the ASA and the DMA also show a decrease in popularity as a route in Next to complaining to a charity directly, men are more likely to complain to Royal Mail. enquiries@

Drilling down into the analysis a stage further, we asked regular charity donors how they would react if they received something through the post and their details were incorrect. In the 2012 research results, only 19% of regular donors said they would be less likely to donate or would cancel their donation if their personal details were wrong compared to 18% in the previous research (see fig. 4a & 4b). While the difference is negligible in percentage terms, this equates to an additional 430,000 people who are less likely to donate than in 2010. Fig 4a. If you are a regular donor to charity and you received a mailing through the post with incorrect person details, how would you react to it? Fig 4b. (Comparing 2010 and 2012 results) I would notify them of the error and ask them to change it I would do nothing I would be less likely to donate to them in the future I would unsubscribe and cancel my donation Aug 10 Apr 12 0% 10% 20% 30% 40% 50% 60% 70% 80% Fig 4c. (2012 gender comparison) I would notify them of the error and ask them to change it 13% 19% 17% 18% 6 63% 40% 39% I would notify them of the error and ask them to change it 63% I am not a regular donor to charity 32% 42% I would do nothing 19% I would do nothing 10% 1 I would be less likely to donate to them in the future 18% I would be less likely to donate to them in the future I would unsubscribe and cancel my donation 3% 4% 13% 10% Female Male I would unsubscribe and cancel my donation 0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50% 60% 70% 80% enquiries@

Topline Results 2010 20% of 18-24 yr olds would be less likely to donate to a charity that sent them an inaccurate mailing. Scottish people are the most vocal when it comes to communicating problems with the charities. Topline Results 2012 18-24 yr olds are still less likely to donate to a charity that sent them an inaccurate mailing than two years ago. Active charity supporters over the age of 55 are the most likely age group to contact a charity directly if their details were incorrect in a mailing. People living in N. Ireland/Eire/Channel Islands/Isle of Man have replaced the Scots as the most vocal when it comes to communicating problems with charities. With all of the different channels available to marketers, it s difficult to know exactly how to allocate precious marketing budgets most effectively. For this reason, the next slides were aimed at helping charities to gain additional insight into the specific needs and requirements of their audience. We asked consumers about their preferred method of marketing communication from charities and Direct Mail still remains the nation s favourite in the 2012 research, which is closely followed by Email (see fig. 5a). Social networks were the third preferred method of marketing communication for consumers and six times more popular than in 2010 (see fig. 5b). Fig 5a. What is your preferred method of marketing communication from charities? Postal - Direct mail Email Would prefer not to be contacted at all 1 34% 17% 33% 5 30% No preference Online - Social networking websites Advertising 7% 8% 4% 4% 3% Telephone 2% Charities you do not have an existing relationship with SMS message 2% Charities you have an existing relationship with Mobile phone call 0% 0% 10% 20% 30% 40% 50% 60% Fig 5b. Charities you have an existing relationship with Would prefer not to be contacted at all 3 30% Postal - Direct mail 2 34% Email 24% 33% No preference 1 8% Online - Social networking websites Advertising 2% 3% Telephone 2% Aug 10 Mobile phone call SMS message 0% 2% Apr 12 0% 10% 1 20% 2 30% 3 enquiries@

As with the 2010 research, SMS wasn t popular with respondents however, in the free text element of the research, fundraising SMS appeals resonated highly with the group across all ages showing an increasing trend towards SMS/mobile giving. 1.08 billion people use smartphones to access the internet and SMS donations are increasingly providing charities with a highly effective giving channel that complements their existing routes to market. SMS and mobile allow charities to benefit from impulse donations that are triggered by emotive content in TV programmes, news stories or on the web. Topline Results 2012 5 of adults in the UK do not like being contacted by charities they do not have a direct relationship with. Email is an increasingly popular method of communication for consumers that do not have an existing relationship with a charity. Topline Results 2010 59% of adults in the UK do not like being contacted by charities they do not have a direct relationship with. 18-24 yr olds have almost completely turned their backs on SMS as the preferred method of communication from charities and online social networks are now the preferred method in the age category. Women and people in the 55+ category would rather receive direct mail. 18-34 year olds are the most responsive to SMS. People in Wales prefer to receive email from charities they do not have a relationship with already over other forms of communication. enquiries@

In order to ascertain what aspects of marketing consumers felt charities could improve upon, we asked respondents in the 2010 and 2012 research to tell us their opinions in their own words. The aim of this was to arm charities with as much additional information as possible about what consumers like and dislike. Chuggers are increasingly considered a menace and often consumers sign up just to get away from them, cancelling their donations with the charity shortly after (see fig 6). Failing to target the right individuals in direct marketing campaigns also appears to be a recurrent bugbear for consumers. Fig 6. What aspects of charity marketing do you think could be improved upon? The only way charities could improve is if they stop annoying people with unrequested communications. The more personal the message the better. Targeting is important as people have less money to donate and will be more careful with their donations. I am also put off by charities being pushy, trying to get me to commit an amount a month for example. They could stop sending chuggers to my door. Stop using Chuggers - I worked for a company who did and they had to employ one person whose job was just cancelling Direct Debits - there must be more cost effective ways of targeting your marketing. I ve tried mailing unwanted mail shots back to charities asking them to take me off their list but it was just a waste of my time. Text donate - one off payments work so well for me. Some charities contact me too often - I prefer regular but infrequent contact - not more than 4 times per year. enquiries@

The final question in the 2012 research was aimed at discovering how the current economic climate has affected consumer expectations of charities. The following graph reveals that 33% of adult consumers (over 14 million) in the UK expect more innovative and/or cost effective communications, while 37% thought that charities doing similar work should merge (see fig. 7). This suggests that consumers want charities to work more efficiently with their hard-earned funds, which could be achieved by taking more care with how they market their campaigns. Fig 7. Does the current economic climate mean that you have different expectations of charities? Conclusion REaD Group believe that effective direct marketing is built upon strong data management principles. The fact of the matter is that good management encompasses data security; it is mindful of ID Fraud, it adheres to best practice guidelines and above all else, it is responsible. Furthermore, for consumers to have confidence in the organisations using their personal data, it needs to be treated with the respect it deserves! We are committed to promoting best practice by providing industry with insights and knowledge that will help them to better their working practice, execute more effective marketing campaigns and increase ROI. I think they should merge with other charities that do similar work I expect more innovative and / or cost-effective communications I expect more feedback / justification on how they re using my money 24% 33% 37% For case studies and bright ideas on how to manage your data please visit www.thedataagency.co.uk I expect more choice in how my money is spent / what specific projects it funds 2 I expect less feedback on how they re using my money 14% Other (free text) 8% 0% 10% 1 20% 2 30% 3 40% Topline Results REaD Group is the trading name of The REaD Group Ltd, a data management company that has worked with many of the UK s best known consumer brands for over 20 years. Consumers in N. Ireland/Eire/Channel Islands/Isle of Man expect more feedback on how charities use their money. Londoners and people in the North of England expect more innovation and/or cost effective communications. enquiries@