Following a strong response to its first test ever of premiums last fall, the Salvation Army will drop 5 million prospecting pieces with premiums inside this holiday season to combat falling donation rates.
“In the past, the Salvation Army has not had to rely on premiums,” said Chip Grizzard, president of Atlanta-based direct marketing agency Grizzard, which works with the organization. “They have mailed what we call straight appeal packages to generate their support.”
However, with donor acquisition rates declining in recent years, the organization knew something had to be done to bolster prospecting efforts.
“Over the past two to three years, in general, most nonprofits have experienced declining results, and the Salvation Army is really no exception to the trend,” Grizzard said. “We think that's primarily due to increased competition for the dollar, 9/11, a struggling economy and lower interest rates, which have really hit retirees on fixed incomes who are the primary direct mail donors.”
To counter the downward trend, Grizzard devised aggressive test packages last fall, including 500,000 pieces with labels as a premium. The mail pieces with a premium had a response rate 37 percent better than the other test packages.
The 5 million-piece rollout began arriving in homes last week. It includes two premium campaigns, one with address labels and a personalized notepad and the other with a personalized planner. Grizzard would not give details on the split in quantity between the premiums. Names came from various list rentals and exchanges.
The Salvation Army is also sending 7.5 million non-premium mail pieces this holiday season.
The organization used predictive models to decide how to split the premium and non-premium packages among the prospects.
Results for last fall's campaign were better than for many acquisition efforts offering premiums, Grizzard said. For example, though average gift size was lower than for other prospecting mailers, it was down just 9 percent — a smaller drop than expected.
“Normally a [donor responding to a premium offer] is acquired in the $10-15 range, and our average gift for the premium donors has been $30-35,” Grizzard said. “We've seen significantly more names come onto the file with only a slight drop-off in the average gift.”
What's more, donors acquired through last year's premium campaign are not dropping off the file, though Grizzard would not provide numbers.
The Salvation Army has had a strong gift size and small drop in retention rate, he said, because the donors are not typical premium donors who feel obligated to give something after receiving a gift.
“One thing we think is part of the reason for all of this is what we term heart-driven donors,” he said. “If you have a donor giving $35 and $40, they are giving because they have a passion for that organization. When you have a premium donor that's giving $8-12, it's more a guilt-driven donor.”
Meanwhile, the cost to acquire a donor dropped about 50 percent in the fall campaign. The premium mail pieces cost slightly more than a straight appeal, Grizzard said, but the premium offer brought in many more donors for just a fraction of an increase in the cost. He would not discuss the cost of the premiums or specific acquisition costs.
Though the premium packages are not unique from a fundraising standpoint, the strong name recognition of the Salvation Army helps, he said. Plus, fall/holiday mailings always go out this time of year as the Salvation Army's holiday kettle program begins.
Both holiday premiums include the same letter highlighting the Salvation Army's history of helping those in need, but with no mention of the premiums. Also included are a reply form and return envelope. The only mention of the included premiums is on the front of each mailer.
If the rollout succeeds, the Salvation Army will continue to test and use premiums. Grizzard said final results would be available in March.