Mar/Apr 2007

Integrated Marketing: The Power of Combining Online Marketing with Direct Mail for Extraordinary Results

by Vinay Bhagat, Founder and Chief Strategy Officer, Convio

Today, a vast majority of nonprofit organizations conduct and measure their online and direct mail programs separately. Online marketing performance is generally measured solely in terms of dollars raised online; direct mail performance is measured solely in terms of dollars raised compared with dollars spent on postal mail. The reality, though, is that each communications channel influences the other's performance.

Traditional nonprofit donors are now moving online in meaningful numbers. For example, more than two-thirds of boomers in the U.S. are online. Also, nonprofit constituents are increasingly operating in a multi-channel mode. For example, even if a direct mail piece asks for a response by mail, a constituent may elect to first do further research on the organization's Web site, and also may prefer to make an online gift. Organizations savvy to this trend have started promoting specific URLs or Web page addresses to donors so that the organization can more easily track the source of the gift.

Increasingly, donors who have traditionally given via direct mail have signed up for email communications and marketing programs. If donors continue to give via the mail but are influenced to continue or expand their support because of email updates and online engagement, how should the revenue credit be allocated?

Studying the phenomenon

Believing that this phenomenon was very important to measure, Convio partnered with integrated marketing analytics firm StrategicOne to study the issue in-depth with one of our clients. We chose a regional client versus a well-branded national organization to avoid the possibility that brand recognition was driving the behavior.

The research uncovered many interesting insights. Most importantly, we found that donors engaged through multiple communication channels have higher long-term value (give more each year), retention and lifetime value. Specifically, we found that direct mail donors who were engaged online but continued to give solely through the mail renewed at much higher rates than those not engaged online — almost 10 points higher for multi-year donors. They also gave about twice as much per year, primarily driven by a lift in giving frequency.

The most valuable donors are dual-channel donors — donors electing to give both online and in the mail. These donors gave the most per year and renewed at the highest rates. The retention rate of dual-channel donors was 20 points higher than direct mail only donors not engaged online. The lifetime value of dual-channel donors (cumulative giving since inception) was almost three times as much as direct mail only donors not engaged online. We also observed that online giving by direct mail donors was incremental, i.e., did not cannibalize the revenue from direct mail.

Lastly, we conducted a longitudinal analysis of donors who converted from one channel to another, i.e., became dual-channel donors after solely giving in the mail or solely giving online. We found that adding a donation and solicitation channel is responsible for increased 12-month donor value. This is the case if donors start as direct mail-only donors or as online-only donors. In our study, the increased value of adding an online donation and solicitation channel for donors acquired offline is $44.71 (a 39 percent increase) per donor over 12 months.

Best practices for integrated marketing

To optimize the potential for integrated marketing, it is essential to collect as many email addresses as you can for current direct mail donors so that you can engage them online. Ask for email addresses through all forms of communication, including direct mail reply devices, online registration, special events and telephone contacts.

In addition, actively encourage direct mail recipients to go online to donate. Direct mail campaigns can drive donors to specific landing pages or micro-sites that coordinate with the theme of the direct-mail campaign. Radio and telemarketing campaigns also can champion the online medium by reminding constituents of the wealth of information available on an organization's Web site. Driving offline donors online is important not only because online gifts are generally higher, but because you collect their email address and are able to solicit and engage them across both mail and online thereafter.

In our study, we found that direct mail donors converted to dual-channel donors also exhibit much better retention and annual value. Conversely, online acquired donors also should be sent direct mail appeals unless they expressly opt-out of mail communications. In this study, we found that online acquired donors in general are mail-responsive, too, and that converting them to dual-channel donors improved annual value by 100 percent.

See the full results of this study (15-page report, PDF)

Integrated Marketing: The Power of Combining Online Marketing with Direct Mail for Extraordinary Results | Convio