Sunday, May 13, 2012

BIG’s Blog: Not Knowing

A recent story in Philanthropy Today, Disabled Veterans Group Loses Money on Direct Mail, illustrates what I find in too many fundraising groups. It isn’t that the finance people are not accounting for the revenue and expenses, but rather, there is very little cost analysis going on.

Do you really know how much money . . . if any . . . your direct mail programs are making?

If direct mail responses are falling and the costs to produce your direct mail are going up, this indicates that margins are collapsing and hence profitability is declining.

This isn’t your direct mail vendor’s fault. Frankly speaking, it also isn’t your direct mail marketing team’s fault either. Direct mail is in a long term decline.

In years gone by, with good direct mail response rates and lower costs to mail, direct mail program financial analysis was not such a pressing issue, although good financial analysis is always important. But the situation today is clearly different.

As the Disabled Veterans Group is finding, if you don’t have good financial analysis, you can be losing money and not even know it.

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