How to reduce mail without reducing net income | npENGAGE

How to reduce mail without reducing net income

By on Apr 12, 2011


With the postage increase looming, you may be looking for opportunities to reduce your mail stream without reducing your net income.  You might say ‘impossible’ but I am here to tell you that through the use of data analytics, nonprofit professionals can improve their segmentation strategy, reduce mail, increase return on investment and improve relations with donors.

In January of this year, Convio acquired StrategicOne, a leading provider of data analytics, predictive modeling and campaign management services. Those that know us at StrategicOne might say we are data geeks, I beg to differ.  I like to think of us as having inquisitive minds and most of the time the answer to our questions are right there in the data (with a few advanced math solutions thrown into the mix).  But I digress.

Many nonprofits use the RFM selection strategy in order to identify whom to mail for a certain appeal.  If you are unfamiliar with RFM, it’s an acronym for Recency, Frequency and Monetary.  This means selection decisions are based on a donor’s last gift date, how often he or she gives and at what monetary level.  While this selection strategy has been around for more than 30 years, it unfortunately runs the risk of fatiguing donors.  The RFM method normally ‘over mails’, because more recent donors are rarely, if ever, excluded from the segmentation stratetgy.

With a business intelligence tool, (like StrategicOne’s InsightOne), more informed selection decisions can be made.  Business intelligence solutions analyze giving performance not only based on results from the same campaign last year, but on a donor’s total giving within 30 days of the drop date, and then again 6 months from the mail date. This advanced method of analysis identifies segments that require continued mailings in order to be profitable as opposed to looking at each campaign separately.  In addition, theme analysis can be incorporated so that not only do we consider how a donor responded to the May appeal last year, but how did they respond to this same theme appeal that dropped in August.

Then, based on package cost and the current available universe, forecasts are calculated for response and revenue for the potential campaign. The business intelligence tool graphically identifies profitable versus unprofitable segments based on ROI (green is profitable, yellow is marginal and red is unprofitable).  Selection decisions can be made based on desired profitability of each cell as opposed to the entire campaign.

It has been proven that this solution provides more lift than using traditional RFM segmentation alone.  For example, in the first month of using InsightOne, a Convio client reduced their mail quantity by 16% and saved 4.6% in printing and postage costs.  Because the donors with the greatest predicted response were solicited, there was also a 66% increase in the response rate and an increase in net revenue per piece of 92%.  Overall net revenue increased by 34% in just one campaign.

Subsequent appeals continued to perform.  Over the course of eleven campaigns, the intelligence gained from InsightOne reduced the mail quantities by 10%, increased gross revenue by 13% and increased net revenue by 18%.  If you are interested in how this solution can work for you, please click here


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