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Creative Sources of New List Revenue

With consumer confidence on a roller coaster, personal debt at high levels, the economy showing signs of stagnation and postage rates and other direct mail costs rising, fundraisers are feeling the effect on the revenue needed to sustain everyday programs.

As most nonprofit organizations know, having their list available for rental or exchange is one way to cushion the blow in difficult times. But list managers for nonprofits often face different rules than their commercial list counterparts.

When renting to other nonprofits, a list manager must be aware of blackout dates, house mailings and other calendar restrictions, the number of turns of a donor segment or file in a given period, and not renting to two like-cause nonprofits in the same mail period. Generating new list revenue sources for nonprofits requires creative thinking by the list manager and the organization.

One area to look at is list rental revenue. By putting their lists on the market, fundraisers can capitalize on potential money earned from out-of-category mailers. Gift mailers, apparel mailers, insurance mailers and others can use fundraising lists based on the demographics and psychographics of the donors.

“We sat down and took a realistic look at where our future growth potential would come from and realized it was not with finding other NPOs to use our file, but with exploiting our file into the consumer mailer arena,” said Mark Briggs, database manager at the Eastern Paralyzed Veterans Association.

Customizing your fundraising lists with enhancements greatly expands the number of viable mailers who can use your file. These enhancements are the catalysts that make commercial mailers want to test your file and eventually roll out, thus increasing your revenue.

“We have found it beneficial to enhance large donor databases to allow us to diversify list usage into secondary markets,” said Len Zargo, vice president of Atlantic List Co. “We have always believed that donors do more than just donate to charities. They are direct-mail-responsive consumers with a variety of interests, and by identifying them through these enhancements you can strengthen your case to the consumer mailer.”

How can enhancements help? Is it really that simple? Enhancements provide information about the donors on your list rental file. By segmenting age, income and presence of children, which are a few of the more common enhancements, you help potential mailers target their selected audience and find the segment most likely to work for them. For example, insurance mailers who gravitate toward the mature marketplace would be attracted by an older age select. A children’s catalog is more apt to look at a file that has a presence of child by age select, or maybe even a mature market age select to target grandparents.

By testing, testing and testing again, mailers can find a fresh source of names and provide fundraising list owners with a new source of revenue to fuel their causes. It’s really that simple.

Another important area untapped by nonprofits is the building of statistical models for potential mailers. Typically, one of two choices is offered. The more common model is a good customer match, which finds the common attributes between the mailer’s house file and the NPO’s list. The more preferred, but also more costly, choice is a regression model. After a mailer tests a segment of the nonprofit’s list, this model analyzes respondents to the offer vs. non-respondents.

The advantage of either of these processes is that it identifies a qualified universe of names with a propensity to respond to the prospective mailer’s offer. By narrowing and ranking, it does not require the mailer to test a multitude of segments that “should work.” As a result, it keeps the mailer’s costs down by eliminating much of the test and retest cycle. It also has financial advantages for the NPO as it can set a price to build the model, charge a scoring fee on top of the base rate or set annual or per-order minimums.

The downside to both of the above is they work best for large nonprofits.

The list industry is a one-to-one sales environment in which new list rental revenue ebbs and flows from the manager selling the property to a broker who will include it in a test recommendation to the mailer. A list manager is on the front lines acting as a liaison to the mailers and the brokers.

If you haven’t already, ask your list management firm how it taps into the out-of-category mailers. Lend your support – perhaps it doesn’t make sense to have a data enhancement done on your file, but what about surveys conducted to create a donor profile? What marketing insight can you give your list manager about your donors that can be used to open the eyes of commercial mailers?

As Jackie Lemke, media planner for The Domain Group, a direct mail agency, noted, “The reality is many NPOs are successfully prospecting to a mix of donors, members, catalog buyers and subscribers. We select these files based on the lifestyles and purchase habits of our donors. There is a natural synergy between all audiences that commercial mailers should be tapping into.”

Additionally, smaller nonprofits can seek list management firms with existing networking relationships and a strong presence in the commercial marketplace. It may mean going outside of the nonprofit’s comfort level, but as Debby Cedrone, list manager for EPVA, said, “We’ve come to rely on list revenue rental not as ‘gravy’ income, but as ‘bread and butter’ to keep our programs running.”

By using some, or all, of these strategies, fundraisers can yield more profitable list rental results. This can help their revenue stream and fundraising efforts. Keep your options open, be flexible and be willing to explore all viable avenues. n

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