Direct Mail Label Programs Help Nonprofits Raise Money

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Labels are a great way for nonprofit organizations to improve fundraising results. Many direct mailers, however, have pigeonholed label programs as seasonal events. There are two problems with this approach. First, nonprofit direct mailers are missing out on good opportunities with a proven marketing vehicle. Second, program managers don't learn how to purchase and administer them efficiently.


Mailing professionals who buy a lot of the same direct mail components become skilled at squeezing good results out of small investments. However, infrequent purchases don't attract the same scrutiny as other programs and tend not be bought as efficiently. Opting for the easy purchase route may cost you more than you realize. But first, let's examine why labels are effective as promotional items.


Labels work. Historically, nonprofit organizations have been the main users of label programs because their target audiences appreciate the functionality of the labels themselves and are eager to display their affinity with the soliciting organization.


Labels are desirable premiums because production can be highly automated and final product can be easily delivered through the U.S. Postal Service. Many competing specialty products (i.e., pens, small calendars and coffee cups) can't be manufactured as easily and cost more to mail without necessarily producing better response rates. Sheets of labels can be designed as just another insert in a direct mail package. Since they are so automation-friendly, labels are very appropriate for high volume mailings.


Lessons from the for-profit world. Although nonprofits have been the traditional users of direct mail label programs, for-profit companies have taught the old dog some new tricks. For example, some financial institutions advise their customers to attach labels imprinted with theft protection information to their credit cards before initial use. If a consumer's cards have protection labels affixed to them and are stolen, the theory is that thieves will be deterred from using them. As this decade closes out, security is no longer just for commercial sector companies. Nonprofits can and should benefit from security uses of labels too.


In addition, some commercial organizations use a part of the label sheet as stickers for windshields, phones and membership cards. Nonprofits can do the same. Labels are an inexpensive way to disburse useful information in bite-sized doses and are appreciated as a timesaving device.


Design flexibility. Direct mail labels can follow traditional formats or may be designed to be as unique as fingerprints. The following features can be added or changed to meet your special marketing needs:


* Size of the sheet


* Number of ink colors


* Foil stamping


* Size and position of folds and panels


* Label paper stock and color


* Intricate die cuts


* Label size and shape


* Number of labels per sheet and per recipient


* Graphics


* Sheet orientation (landscape/portrait)


Design options are unlimited. When designing your label sheet, allow a margin for pin feed holes on each side of the paper. Some label manufacturers can print, foil stamp, die cut and strip away waste inline before imprinting, inserting and drop shipping or mailing. If you're straying from standard label formats, get advice early in the design process because some designs can't have waste stripped automatically, which dramatically increases costs.


Don't forget about mailing discounts. Since labels can be inserted just like any other mailing component, you can benefit from most postal savings programs. For example, commingling and drop shipping together can save prudent label direct mailers up to $47 per thousand pieces in postal discounts.


Technology's role. Historically, label companies have relied on 16 web presses for production, but now, larger web sizes are more common, saving a lot of money because of multiple-up layout flexibility. Also, high speed, high quality, eight-color printing plus inline foil stamping (or nine-color printing without foil stamping) is a reality in many parts of the country. In addition, the quality of high-speed, 300 dpi continuous laser printing is terrific. Rapidly advancing technology has spurred the formation of strategic alliances between label printers and direct mailers, giving their mutual customers better access to one-stop solutions.


According to Tim Roberts, president of ROI Technologies, Baltimore, foil stamping has been shown to increase label program response rates by at least 1 percent. If cost reduction is a top goal, you may be able to use magnetic dies instead of hard metal ones, saving up to 80 percent.


Buying expertise. Nonprofit direct mail professionals have a lot of options when purchasing label programs. As I mentioned earlier, most people don't buy label programs often and this may result in comparatively low levels of buying expertise. Outsourcing direct mail label programs to professional fundraising companies is attractive to some people because it's easy. In exchange for a healthy portion of the net proceeds, a professional fundraising company will handle the entire program for a client, soup to nuts. Essentially, all a nonprofit administrator has to do is hand-off a mailing list, wait a few months and receive a check for a portion of the funds raised.


However, if a nonprofit wishes to maximize net revenue, it should consider buying the label program direct. In exchange for a little more hands-on management, a nonprofit can significantly increase its fundraising net revenues. For example, if a label program costs $50K to produce and administer and generates $100K of funds, the contribution margin is $50K. If a professional fundraiser is involved, this $50K will be split between the fundraising company and the nonprofit. Professional management companies may not take advantage of the latest manufacturing technology, and since the client has little direct involvement, production and administrative costs tend to be very high. A scenario in which the nonprofit receives less than half of the normal net proceeds (in this case, $25K) is certainly possible.


Label program managers in this situation should ask the question: Does the ease of working with a professional fundraiser offset the lost $25K?


Label programs work because they shout, "I'm a member." This is good for both the label giver and the end user because they enter a symbiotic relationship whereby both parties benefit. Buy direct mail label programs smarter and more frequently. As the old commercial goes, "Try em! You'll like em." Once you do, you'll label labels a winner.


<I>Ken Boone is president of Direct Marketing Associates Inc., Baltimore, a subsidiary of Harte Hanks Inc. His e-mail address is kboone@dmamail.com. <I>
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