Monday, February 18, 2013

BIG’s Blog: It's All Local Now...

Local vs. National Constituencies

If your organization is a local one, (for example a rescue mission or food bank) where your mission and your supporters are local, you can play big in your local area. The American Red Cross or the Salvation Army have nothing on you in your local area. In fact, on a localized basis your organization may be many times larger than the local affiliate of these national organizations.

If, however, you are a charity with a very specific mission or ministry (your organization for example) and must seek out those with a heart for your specific mission or ministry on a national basis to gather a large enough constituency to support your organization, it has been a long and expensive growth path. In fact, many charities like yours have built up their base of support over decades.

What then to make of these Johnny-come-lately new-ish organizations (Charity: water for example) that didn't even exist five years or a decade ago and are out-raising your organization by double, triple or more?

Oh sure, they don't use expensive direct mail like you, where you are constantly reaching out to potential new prospects of whom (according to recent Target Analytic benchmark studies) only three out of ten give a second gift. Yes, these new-ish charities and their fundraising organizations are sinking their fundraising budgets into videos, social media and everything is online.

You say that your Development strategy is bequests and growing annual revenue from your direct mail donor base, and insofar as your strategy generates increasing amounts of revenue year after year (growth) ... great.

So what's up with these new fundraising charities?

Well, one could argue that they have figured out that by using the Internet as their communications platform the way that you use the postal service as your communications platform, their fundraising model is more akin to the local charities in your city. Why? Because they are connecting personally with their constituents. And where you are spending tens of thousands, hundreds of thousands or millions of dollars through your platform (the Postal Service), their Internet platform budget isn't even 1% of your direct mail budget.

Do you think that makes a difference?

Maybe this example will help clarify things in your mind.

Lands End, the Wisconsin-based catalogue retailer was founded in 1963. When they sold to Sears in 2000, their sales were a bit over $1 billion dollars. That's impressive! So, it took 37 years to reach a billion dollars in sales sending out catalogues and building up a base of customers.

You can visit Lands End and take a tour. They will tell you they are a catalogue merchant. You would actually feel a lot in common with Lands End. They mail catalogues, you mail appeal letters. They process orders received through the mail, you process donations received through the mail.

Visiting Lands End would be like going to your family or high school class reunion. You are all the same clan and it is very comfortable.

But maybe you should visit the online merchant instead.

Zappos was founded in 2000. Zappos is an online merchant; they have never produced and mailed a single catalogue. From the time they were founded, eight years later...yes, I said 8 years...they were doing $1 billion in sales - and that was just shoes - and have since diversified.

If you visit Zappos (like we do in our Program with our clients) they will tell you they are an online merchant. You would probably feel you had very little in common with Zappos; unlike how you would feel visiting Lands End. All their sales are online - no catalogs. They process no mail orders - all their orders are processed electronically online.

Yes, you would probably feel out of place, as if you were attending someone else's family reunion or high school class reunion.

But let's go back to the numbers. $1billion in sales using catalogues took 37 years for Lands End but for Zappos with no catalog ever...only a Web site online...Zappos hit $1 billion in sales in 8 years.


When you visit Zappos (like we do in our program - oh sorry, I already said that) they will tell you they have a very defined strategy to be as personal and feel as LOCAL as possible.

In the world you are fundraising in today, who do you think you should be modeling your fundraising organization after? Lands End or Zappos?


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