Spending Money to Make Money

High-dollar packages: spending money to make money

Apparently, there's an interesting trend currently in vogue among certain direct mail fundraising professionals: segment out a small group of your best donors, put together a unique direct mail package with a high cost per piece, and then watch the money roll in.

In our July 1997 issue, we featured one strategy that successfully incorporated the use of genuine handwriting to make the package stand out from the crowd. At a cost per piece of $2.16, that seemed like a lot.

Now, on behalf of Hale House (New York NY)- a social service agency which cares for babies born with AIDS or an addiction to crack cocaine - the folks at Newport Creative Communications (Duxbury MA) have taken this concept to a new level.

According to Newport's Mary Hutchinson, it's been an evolutionary process of "doing something special for the major donors" at the end of the year.

Typically, they would receive something along the lines of an oversized package with an attractive card - which would generate about an 8% response rate with an average gift in the $150-200 area. But, says Hutchinson, "we really thought we could do better."

In 1995, a brass ornament was included as part of the year-end mailing. At a cost of $3 per piece, this garnered a 12% response with a $150 average gift. And yet what concerned Hutchinson was that the brass ornament didn't "capture the character and flavor of Hale House."

How an idea gets hatched

Hutchinson had heard stories of how Mother Hale, the founder of Hale House, used to make Christmas toys for the children out of whatever happened to be lying around. Then, when Hutchinson saw a "spool doll" at a crafts show, she realized that was exactly "the kind of thing Mother Hale would have made."

So for the 1996 year-end appeal, 1,200 spool dolls were commissioned, made, and sent to the major donors to give them a handmade, special treat "with love from Hale House."

The package

The mailing itself arrived at holiday time in an 8 x 9" box (2-1/2" deep) decorated by children and put together by a group of special-needs adults. The box was hand-addressed, hand-stenciled, and hand-adorned with Christmas rubber stamps - "decorated," notes Hutchinson, "as only a kid could do." The package mailed with eight first class commemorative Christmas stamps, individually and unevenly applied.

The 6" tall doll (complete with a wooden heart on her dress labeled "Hale House '96") was inside, laying on a bed of red shredded paper. A generic Dear Friend letter told the story of what Christmas used to be like at Hale House. The letter was written in a "very colloquial, homespun style. Nothing flashy." An additional copy point, ironically enough, was the cost-effectiveness of the package due to the work provided by the home for special needs adults (thereby helping another charity to boot).

The simplicity of the reply device was deliberate. By design, it was not personalized - even though a source code was handwritten in the same gold pen as on the box's label. Instead, the recipient was asked to write in her own name and address.

In addition, the line "Enclosed is my gift of $____" was used in lieu of a gift string. (Though Hutchinson admits that when a gift string has been used for this audience, she's found that the average gift falls. "So that wasn't a risk.")

Overall, as Hutchinson explains, "We spent a lot of money making it look like someone designed this on their kitchen table. Because that is the image of Hale House."

The results

The package was mailed to 1,178 major donors, defined as people who have made a single gift of $250 or more at some point in their giving history and who have given in the past year. The response rate was 26% with an average gift of $368. Total revenue came to $112,608, a whopping 71% more than the previous year-end appeal garnered. Based on a cost of $11,191 (or $9.50 per piece mailed), the mailing netted an impressive 10:1 return on investment.

What's next

For year-end 1997, the plan at presstime was to expand some variation of this winning concept to additional segments. Tests were conducted in the 1996 drop on two other groups of donors: a $100-249 segment and a three-year lapsed $250+ group. The former got nearly a 29% response rate with a $94.30 average gift. The lapsed donors responded at close to a 15% rate with almost a $100 average gift. Based on these data, both groups will be included in 1997.

Hutchinson was even thinking about pulling out $1,000 donors and devising a $50 cost per piece package just for them.

Reprinted from the newsletter Successful Direct Mail & Telephone Fundraising, [date]

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