Beware of address label mailings

Does everyone hate address-label fundraising mailings?

Apparently not quite everyone -- but it's getting close.

There's a feature story making the rounds in the papers (read it here) that allows donors to sound off on how annoying they are while quoting a few nonprofits that use them:

The labels cost so little to produce and distribute that even a small response more than covers the costs.

 And the nonprofits say their real goal is to establish loyal, steady supporters, not one-time donors.

But do they? Rule of thumb: Address labels (and similar up-front, low-end premiums) are an easy way to boost response in acquisition mailings. But they push down average gift, sometimes catastrophically. And donors acquired with labels tend to have much lower gift frequency and retention rates.

My mother-in-law might be a typical address-label donor. When she gets some in the mail, she keeps them. But it gnaws away at her conscience, so she eventually sends of small gift -- typically $5 or less. There's no connection at all to the cause. She often doesn't even read enough of the package to know what the cause is. (I've told her she shouldn't feel guilty about receiving and using them, that each sheet of labels costs a few cents to produce and that more than 98% of the people who get them don't send gifts; these are not persuasive arguments.)

There are some notable exceptions to the pattern, where premiums bring in high average gifts and involved donors. The Lance Armstrong Foundation is one I know of.

On the whole, though, you're far better off resisting the temptation to use address labels. They are a drug. They'll quickly addict you to their high-response highs. And kill you with their low-value donors. (If you're already addicted, see Five steps out of stupidity.)

Relevant, cause-oriented mailings that actually win donors' hearts and minds are a lot harder to produce. But it's worth it.

Here's more on premium mailings: Too much mail, or too little relevance? and an article in The NonProfit Times, Show Me The Premium.

(Thanks to the Don't Tell the Donor Blog for the tip.)

Technorati Tag: direct mail

Comments

[Scott Lee]

Hi, in a former career I wrote the software to print charity fundraising labels for a company in Iowa that mails around 1 million packages a day.

I wanted to correct the incorrect statement that 98% of people don't respond. The reality is that address labels were increasing response rates to as high as 35%. An average package with postage costs less than 30 cents in 2002. This is a cost of $300 per thousand. Average mail order response rates are 2%. If a charity got that response rate, it would cost them $300 to mail to receive $100 if the average gift was $5. No one would get free address labels if the response rate was that low. (I don’t know the average gift amounts; charities do not share that information!)

In 2007, postage has gone through the roof for large mailers with the changes that went through. There is a lot of concern in the industry that the postage rates will make the fundraising appeal process unsustainable.

As an aside, the postal carrier for my business (www.superiorlabels.com) says that since the postage increase, mail volumes have dropped dramatically. For us it doubled our postage costs and forced us to increase our shipping fees, for the first time since 1995. I know people in the publishing industry who are scared out of their minds what the postage rates will do this Christmas for catalog mailing. Some odd size items actually tripled in postage cost.

So, we don’t know yet what the impact will be, but the post office may have killed off the majority of fundraising mailing.

Scott Lee
President
Superior Labels Inc.