Which prospects are you contacting?
“Don’t ever increase your marketing budget because you want to be more aggressive. Increase it because the numbers tell you there’s more opportunity there.”
TRG’s Will Lester prescribed this strategy and other valuable prospecting tactics in this webinar on direct marketing strategy for arts organizations. Find below the most important points, next steps, a recording of the webinar and more.
Watch this webinar
To watch this webinar and access the slides, complete the form below:
Why does Response Analysis matter?
- Most of your revenue comes from a small part of your database. On average, 10-15% of the people in an organization’s database supply most of its revenue. If you don’t work hard to build deeper loyalty among the remaining 85-90%, you’re losing a big opportunity. It’s cheaper to get existing patrons to return, than to recruit new ones who don’t know you.
- Arts organizations are over-prospecting and under-retaining their customers. On average, 50% of audience arts audiences are new every year—they’ve never come to your organization before! It is key to do a better job of retaining first-time attendees, while prospecting at a lower cost.
- The right mailing list is your #1 controllable success factor. After the artistic product, the right offer and the right mailing list account for 80% of your success. Creative is only 20%. If you’re spending more money on creative than good data, consider a change.
The big ideas
1. Track every segment on every campaign. If you cut corners on response analysis, you’re going to keep making the same mistakes. Analyzing your list segments—whether they’re from your database or trades—will help you make smarter decisions about follow-up campaigns and future mailings. Budget for a Response Report every time, or add source code tracking.
2. Think deeper than total ROI. Knowing your total ROI doesn’t tell you where you have untapped potential or where you wasted money. Once you know the ROI for every segment you mailed, you can re-mail the non-responders from the best ones, while leaving off the low performers.
3. Mail twice on the same budget. A rule of thumb is that, on a follow-up campaign, you’ll get 70% of the response rate you had for each segment on the first campaign. Instead of using your entire budget to mail everyone once, it’s smarter to remove bad leads at the beginning and use the same budget to mail good leads multiple times.
4. Balance ROI and a Full House.
If you only send postcards to your 10 best customers, you’ll have a great ROI on the mailing—but your turnout won’t be so good! Be sure that you don’t narrow your prospect pool so much that you get a high ROI at the expense of a half-empty house.
What you can do right now
- Run a Response Report on your last year’s campaign(s) to analyze your in-house segments, as well as those you purchased or acquired via trade. This will give you a baseline for this year.
- Build your budget to include Response Reports for your upcoming campaigns, or plan to add source code tracking. Consider running the report mid-way through to inform subsequent mail pieces in the same campaign.
- Run a Campaign Target Model to score your entire database in order of likelihood to respond to a given campaign.
- Use a Patron Loyalty Index to analyze what how your patrons move from one-time attendees into subscribers/members, donors, and advocates—and plan your campaigns accordingly.
- Segment – a portion of the whole mailing list you are contacting. Segments can be you’re your own or from traded data. Examples include “2012 Nutcracker Single Ticket Buyers” or “2013 Flex Subscribers”.
- Source Code – a specific set of numbers and/or letters applied to a segment, which can be used to track a purchase to that segment. Typically, the buyer enters this code at the point of sale to redeem an offer from the associated mail piece.
- Response Report – a report that cross-references an entire mailing list with a list of responders, to identify ROI for the mailing. TRG’s Response Report includes ROI by segment and many other helpful metrics. For a sample, email
Some FAQs from the webinar:
More questions are addressed in the webinar itself. Scroll down to the recording and go to the 37-minute mark to hear the questions addressed in the webinar.
"When you offer a Choose Your Own or Flex package, how far into the season do you suggest mailing (assuming you've received good response rates on previous mailings)?"
At TRG, we really like to delay the on-sale for these flexible packages as long as possible. If you offer them too early in the sales cycle, some of the fence sitters who are contemplating your packages will find these packages more appealing that the full seated subscription options. We will often look at sales pacing for the full subs and look for points where the campaign beings to stall before introducing these into the market officially. You will probably be able to see that in your sales pacing and experiment with "what if's" of offering them later and later.
This webinar mainly addressed marketing mailings. Do you find that the same principles apply to fundraising direct mail when the "offer" is a good feeling, ability to help, tax deduction?
In the webinar, we talked about the “40-40-20” rule where we shared that 40% of success is your list 40% is your offer and 20% is creative. I think in fundraising that LIST is super critical and the copy you use is equally important. When you look at list going back to those that saw the vision of your organization and wanted to invest in you through donation is a key indicator of willingness to do it again. List and offer are #1 in importance. Creative takes a back seat.
My organization is starting a totally new product and I would venture to say that 95% of our mailing list contacts have yet to hear about it. How would you recommend gauging responses for clients that are being introduced to the product for the very first time?
If this new product has some kind of connection with products you already offer, I would start with the most recent data that you have available and work your way backwards through your list, adding older and older data until either you max out your budget for the first campaign or you begin to lose confidence that the lists will respond…whichever comes first. Be sure that you keep good segmentation on your lists, and that you either source code your pieces or plan for a response report. Test the results like crazy and measure BOTH, who got a piece that responded, and who did not get a piece that responded (if that's possible). Without tracking you will fly blind on any future campaign, and risk two things: A) Over-spending on unproductive parts of your list; B) Overlooking the lists that are highly productive that you can justify spending more generously against.
It depends on what this new product is and how closely it aligns with your other programming, but if you start with your biggest fans and work out from there, you can probably expect to get response rates that are at least in the ballpark of your past history.
How would you approach individuals who appear on multiple lists? For example, if someone is on an in-house list but also on an outside list?
Multibuyers are gems among the database. We frequently will test the responsiveness of people that show up on multiple lists against those households that only appear on one, and "most" of the time, they have a higher response rate and average order size. Finding multi's in the data happens when you de-duplicate your lists. They are oftentimes a great way to filter and refine your mailing lists. If you have put together a mailing database that is larger than your budget to mail, you can start trimming down your list by removing older leads, and people who only appear on a single list (from the least qualified lists).
There is a little bit of an art to how you set up your deduplicated lists. You always want to sort your segments in descending order of importance or value or responsiveness so that when multi's occur between lists, these households stay on the lists that are most valuable to you, and are de-duped out of the lists that are less valuable to you. For instance, if you have a current single ticket buyer, who is also bought a single ticket 3-years ago, they are a multi. You want them to be labeled as a current year single ticket multi and NOT a 3-year lapsed single ticket multi. That happens by prioritizing the merge so that the current lists trump the old lists.
Having lent an ear to hundreds of organizations in 20 data network programs over the years, TRG’s Will Lester has heard some great stories about contacting prospects to build new audiences. There’s the one about the helicopter drop (massive mailings), and the MacGyver maneuver (source coding), and a personal favorite that’s the title of this webinar (data-informed contacts). Some of these activities work beautifully, others fail miserably, and all provide a foundational understanding of the state of the art in smart targeting to find new patrons.
In this one-hour session, you’ll hear how those stories can help you develop contact campaigns that get response and great return on your time and money. Take back to your desk inspiration and some great ideas for testing, measuring and getting in touch with the best prospects for your upcoming campaigns. There’ll be plenty of time to ask questions about how to make the most of your database and your budget. You’ll learn:
- Basic tools that can test and measure results as well as diagnose prospect responsiveness.
- How best to maximize the “awesome,” optimize the “pretty good,” and eliminate the "awful" prospects.
- Why and how to apply the 40-40-20 rule to your direct contact campaigns.