From the Non Profit Times… A Study: Online-Acquired Donors Switch To Mail, Not Vice-Versa
Multichannel giving has become popular for fundraisers as a way to build constituent support. But, the large majority of donors on file give through only one channel and use only direct mail as their vehicle for donations. The only donors who do significant multichannel giving are new donors acquired online, who switch in large numbers to direct mail giving in subsequent years.
That’s among the findings of the 2011 donorCentrics Internet and Multichannel Giving Benchmarking Report for Target Analytics, a Blackbaud company based in Cambridge. Mass. Authored by Helen Flannery and Rob Harris, the report shows “ It is the ability of online-acquired donors to become multichannel donors — that is, to start giving through direct mail — that significantly boosts the retention and long-term value of this group of donors far beyond what they would be if online giving were the only channel available.”
According to the report, “ the presence of past multichannel giving for steady donors already on file, however, is far less predictive of higher value and retention than the traditional recency, frequency, and monetary giving amount factors that direct marketers have used for decades.”
It is difficult to make a simple statement about whether multichannel giving always correlates with higher donor retention or higher long-term value, according to the report. The subsequent giving behavior of donors can only be determined by looking at a large number of factors, including the channels they use as well as their giving loyalty; recency, frequency, and monetary giving amounts; and demographic profile. Comparing the behavior and value of multichannel donors to that of single channel donors is particularly difficult to do accurately because multichannel donors are, by definition, multiple-gift donors as well, and the effects of higher gift frequencies must be accounted for in any analysis.
Among the findings are:
• For the large direct marketing organizations participating in the online benchmarking groups, the majority of gifts are still received through direct mail.
• Although direct mail remains the dominant channel for new donor acquisitions as well, it has become increasingly common for new donors to give their first gift online.
• Online-acquired donors are significantly younger and tend to have higher household incomes than mail-acquired donors.
• Online-acquired donors tend to give much larger gifts than mail-acquired donors.
• However, online-acquired donors tend to have slightly lower retention rates than mail-acquired donors.
• In aggregate, online-acquired donors have much higher cumulative value over the long term than traditional mail-acquired donors.
• However, long-term value varies depending on the donor’s original gift level. The substantially larger gift amounts given by online-acquired donors can mask issues with retention.
• Multichannel giving is not ubiquitous. The majority of multichannel donors are those who are acquired online and then subsequently start giving direct mail gifts. This is the only situation in which there are significant numbers of cross-channel donors across all organizations.
• Every year, large proportions of online-acquired donors switch from online giving to offline sources — primarily to direct mail. The reverse is not true, however; only a tiny percentage of mail-acquired donors give online in later years.
• When online-acquired donors move offline, they tend to do so soon, in their first renewal year. They then continue to give offline in similar proportions in subsequent years. Eventually, just under half of all online-acquired donors convert entirely to offline, primarily direct mail giving.
• Robust direct mail programs drive up the retention and long-term value of new donors acquired online. Without the ability to become multichannel givers by renewing their support via direct mail, this group of donors would be worth far less. Other than monthly recurring giving programs, established direct mail programs are the best method for gaining repeat gifts from online- acquired donors.
• When online-acquired donors move offline in subsequent years of giving, it does have some negative effect on their value in the renewal year. The higher the donor’s original gift level, the less they upgrade and, in fact, the more likely it is that the donor will actually downgrade if they move offline. However, these lower gift amounts are far outweighed by the higher retention of online-acquired donors provided by the direct mail channel.
• For the consistent givers who comprise the majority of donors already on file, the presence of past multichannel giving is generally not a significant factor in predicting future retention or long-term value. Traditional RFM factors are far more predictive.
The complete analysis, including a list of participants in the 2010 online benchmarking groups, can be found at http://www.blackbaud.com/multichannel. From the Non Profit Times.