Direct mail is a crucial channel for many (if not all) nonprofits. In fact, in 2021, standard direct mail open rates can reach nearly 90%.¹ However, larger economic and supply chain issues are inflating the cost of reaching prospective donors. The expense of postage, handling, creative, and list rental all add up. We aren’t advocating giving up on direct mail – we believe nonprofits need to approach direct mail more strategically in order to make sure their campaigns are reaching their most valuable donors. But there are several market factors at play that mean you need to focus on those who are more invested in your cause.

1. The U.S. Postal Service slow down

The U.S. Postal Service has said that they are slowing down service in order to save money.² They officially began slowing deliveries of first-class mail nationwide on Oct. 1, 2021. While this isn’t a death knell for those who depend on direct mail marketing tactics, it does mean that more meticulous planning is in order to get mailers to potential donors in a timely fashion.

2. The rising cost of postage

In August 2021, the price of a stamp rose from 55 cents to 58 cents. To add insult to injury, temporary holiday price increases for packages and other mail are now in effect.³ Priority Mail Express will see an average rate increase of 2.2% during the 2021 holiday period, Priority Mail will see an average rate increase of 6.3% during the 2021 holiday period and First Class Package Service will see an average rate increase of 8.0% during the 2021 holiday period.

3. An unprecedented lumber shortage

The lumber shortage is causing a ripple effect across the industry, from housing to furniture to paper, consumers have experienced price increases, shortages and delays in the lumber-based goods they need. This also affects marketers, as the price of cardstock and envelopes has risen – and they are in short supply. Boston and New York City both reported problems with their recent elections, due to envelope shortages.⁴ “There’s just not enough paper to go around,” said Chris Wells, executive vice president for DS Graphics/Universal Wilde, a print and mail company. “In 20 years, I’ve never seen anything like this,” he said.⁵

Target smarter with informed segmentation

The solution to these problems isn’t to cut back on direct mail. Instead, we are urging nonprofits to target smarter as they plan their direct mail campaigns by looking at how donors respond by package.

What is informed segmentation?
Informed segmenting is taking your audience universe and slicing and dicing it into smaller target audiences in order to create more compelling messaging with informed ask arrays and personalized communications. For example, a data-driven segmented campaign can personalize ask amounts, in order to best speak to what that prospective donor is comfortable giving. This kind of personalized ask can increase overall donor LTV in the long-run, as well as boosting your current fundraising campaign.

Here are some tips to make sure you aren’t wasting your direct mail marketing dollars.

1. Consider who you are mailing and what you are mailing them

Not all paper stock is created equal. For your less expensive direct mail campaigns, consider testing deeper into your audience to limit spend while expanding reach. If you have an analytical actionable understanding of your acquisition file, you can reach a large audience with an inexpensive campaign without potentially leaving money on the table. Digital campaigns are an inexpensive way to reach out to a large audience and learn what type of messaging will move the needle.

2. Spend more only when it moves the needle

Look to models to inform your offer – co-op partners are able to access mass amounts of demographic, transactional, political and nonprofit giving data to create models to best identify prospects who are most likely to respond to premium or non premium offer and who is most likely to respond with a larger gift.

If you take anything away from this article, let it be this, save the premium stationery for the segment where it’s going to count. Through our analysis working with our clients, large nonprofits are segmenting smartly and seeing awesome results in their files.

For example, the Data Axle team can take a house or acquisition file, run it through a rigorous discovery process by initiating a comprehensive data analysis designed to identify, size and prioritize growth opportunities. The results from the analysis can include:

• Total lifetime donations (how much and how often donors give)
• Lifecycle stage (new, dormant, reactivated, or repeat donors)
• Identifying donors who give to other nonprofit organizations, outside your own

A custom framework such as this can help nonprofits identify high-priority and high-performing customer segments to dramatically impact your marketing ROI and campaign performance.

Fun (and cost intensive) mailers such as stickers should be reserved for high-value segments

3. Test, test, test

Here at Data Axle, we are big believers in testing. Changes from the simple and cosmetic, like a call-to-action change or switching up colors, to large changes like interactive or premium mailers, are good candidates for testing. Nonprofits need to explore what options they have in order to get potential donors the information they are looking for in a way that they are receptive to it. Testing can move the needle on conversion rates as it can identify any barriers to conversion. Breaking down these barriers can, in turn, pay off exponentially. Test your audiences with structured mailings in order to uncover who your best prospects are, so you can focus on them for your more complex mailings.