Even so, Mathers still thinks that using a broker is more practical: "We have only worked with two list brokers and thus have built up a good relationship with them."
Mailing the right material to the wrong person is as bad as getting your message wrong in the first place. Alex Blyth investigates how to build the best mailing list of prospects
Charities rely on accurate lists of potential donors. Though important, face-to-face and telephone fundraising are still a long way from replacing direct mail as the most effective way of recruiting committed givers, one-off donations and legacies. Its importance varies between charities, but for most it is still responsible for the majority of donated income.
The not-for-profit sector has learned the importance of list-building through experience. Early issues involved sending material to the wrong people, including high-profile instances of mailing the recently deceased, which alerted fundraisers to potential reputational damage. Irate letters from former donors who had been asked to rejoin only two days after cancellation further emphasised the complexities involved.
The realisation that vast resources were being wasted in mailing individuals who had moved house was the final spur to action. Larger charities now have highly sophisticated systems to ensure that they do not make these mistakes.
Good direct mail is a combination of engaging creative and accurate profiling.
Saying the right things to the wrong people works just as poorly as saying the wrong things to the right people.
An effective tactic is to mail again people who responded to a previous mailing and are now donors. They, or people very similar to them, are most likely to respond to future mailings, and so charities now invest heavily in profiling existing donors, to build up a picture of the optimum target audience for future mailings.
The not-for-profit sector excels in this area. As Neil Morris, deputy chief executive at the Institute of Direct Marketing, says, "Charity fundraisers face really tough targets compared with those faced by commercial marketers, and they do a really good job in achieving them."
That success is all the more striking given the budget restraints under which they operate. This is relevant because profiling is not the end of the story. Once you know the type of person you want to mail, you still have to find that person, his or her name and contact details. That sort of information has never been cheap, but the Data Protection Act has caused its price to rise significantly.
Charities are frequently approached by organisations offering lists of companies that will provide them with good response rates and significant long-term income. However, most of those approaches go unanswered because, though charities may be crying out for these lists, they tend to prefer to buy lists through brokers.
John Turner, donor recruitment manager at the NSPCC, says: "Even though we do more mailings here than most charities, we still do a fraction of the number managed by brokers. We rely on their expert knowledge to ensure that we have an objective view on what lists we should be using. A good working partnership with a broker ensures that we spend our budget efficiently and wisely, and are able to take advantage of any new developments in the marketplace."
In its last mailing, the NSPCC used around 40 different lists. "Acquiring and co-ordinating something on this scale requires resources that we do not have ourselves," says Turner. "In circumstances like this it's vital that we use the experience of a broker."
This is not to say that there are not some concerns about the practice.
The first is the belief that it must cost more to buy through a broker than going direct. However, everyone involved, charities and brokers alike, is clear that using a broker costs no more, and in some instances costs less, than buying direct from a list owner. This is because the broker's cut of the deal is in the form of a commission or a cost reduction from the list owner, rather than a charge to the charity. And, because they buy in bulk, they are sometimes able to pass on significant cost reductions.
In such a commission-based business, charities worry that brokers will push lists that reap the most commission, rather than those that will produce the best results for the charity. But according to Suzanne Lewis, director of list broking services at HLB, a division of direct marketing agency WWAV Rapp Collins: "It would be incredibly short-sighted of us to recommend a list that wasn't right. We aim to build long-term relationships with our charity clients and the only way we'll ever do that is by providing them with lists that get results. Sure, there might be opportunities for us to make greater one-off profits, but taking that route over time would simply put us out of business."
A question of trust
A charity must trust a broker to sell the right lists and to do it in a way that won't compromise existing donor relationships. The market is reasonably small and the key players are well-known, so the risks are small too. Most charities seem to stick with one broker, backing Lewis's argument about the importance of a good relationship: "You should be as open as possible with your broker. Share all of your targets, such as revenue, donor numbers, the type of donors wanted, and donor longevity.
This will help your broker to give you exactly what you need."
Get it right and you can reap the benefits. When Guide Dogs for the Blind wanted to start selling raffle tickets, it needed some new prospects.
Based on conversion projects, the charity had only half the number of names it needed, so it went to a broker for help.
Analysis of existing donor data identified three core categories of donor.
Lists were compiled containing individuals that fitted into those three groups. The results were impressive - 18 out of 20 test lists proved successful; ticket sales exceeded targets by 146 per cent; and overall income increased by 18 per cent. Perhaps most importantly, the amount of effective data has increased by 595 per cent, and so the foundations for successful future campaigns have been laid.
As well as bespoke broker services, there are other, more standard products on offer to charities. In March 2004, Experian launched Canvasse Selections.
This is an attempt to help direct marketing professionals move away from traditional, lifestyle-based profiling, which the company claims has led to certain lists being over-mailed, thus making them unresponsive. Canvasse Solutions uses investor and credit-based data to offer charities lists of individuals that Experian claims are less frequently mailed, have a high propensity to donate to charity and can afford to do so.
For charities that are trying to raise funds from businesses, Cheltenham-based list provider Blue Sheep is offering its Businesstracker database of 1.3 million UK workplace records free to UK registered charities until the end of the year. Joint managing director Ian Lovatt says: "We receive so many calls from charities for donations that it's impossible to support them all. We decided that we could help by offering free data for charities to use to boost corporate giving."
Despite these innovations and giveaways, the most popular and highly-praised product in terms of building lists for fundraising remains Reciprocate.
Set up in 1993 as a mechanism by which charities can swap data, it now contains details of around 13 million individuals.
Liz Moss, senior list broker at Occam, the company that runs Reciprocate, says: "A charity will give us its lists and we then work out how many new names it is giving us. Next we identify the most suitable swaps by looking at a combination of previous results, and the overlap with other files and profiles. The number of names a charity will get back depends on the number of names a charity has to swap and how many times they are prepared to swap them in a 12-month period." Occam is careful to limit the usage of each individual name and has conducted extensive research into the optimum usage of a name.
Name swapping works
Charities pay between £1,000 and £7,500 as a joining fee, and then £38 per thousand names. They report significantly better response rates using Reciprocate, simply because they are targeting individuals who already donate. Limitations are that charities must have at least 10,000 names to swap, and that some trustees have reservations about swapping data.
Reciprocate is used by more than 100 charities, and Moss boasts: "It now contains almost every single person in the UK who will support charities via mail."
It is becoming an ever-more accurate database of charity-givers in the UK, allowing even greater emphasis to be placed on profiling individuals, so that direct mail can be sent to people who are interested in it and will respond to it.
CASE STUDY: RNID
Amanda Mathers, head of individual fundraising at the RNID, is an advocate of reciprocal arrangements for list-building. She points out that the response rate at the point of acquisition is much higher than with lists from almost any other source. This leads to a very good return on investment on the costs of acquisition. However, for truly cold lists, the RNID uses a broker.
"We have in the past mailed up to 2.5 million names in a year," she says.
"Even though we now contact fewer, it would still be time-consuming for us to have to contact all the list owners individually.
"Also, brokers are working with many different charities and consequently have a very intimate knowledge of which lists are working well or not at a particular point in time. List performance can fluctuate monthly and we rely on our broker to advise us of this kind of information."
The RNID has been sending direct mail for almost eight years and has built up a comprehensive history of successful and unsuccessful lists.