Monday, May 12, 2014

How Do You Scale Without Mail? (Part 1)

The greatest innovation that helped nonprofit charitable organizations develop a consistent annual base of financial support (as well as a growing base of supporters) came on the scene about 80 years ago ... and that was direct mail.

Direct mail had the ability to scale. This means that once you have created the unique design and copy for a direct mail package that proved it could generate a profitable response rate, that package could be replicated over and over again. And the really good news was that the more packages you produced, the cost per package actually declined. In fact, direct mail was so productive that in the early years, the only problem was finding enough names to mail to.

Direct mail really began to grow in the 1960s when a number of enterprising individuals created a business around nonprofits sharing each other's list of donors. They were known as list brokers and managers. This list rental business combined the donor files of all nonprofits and made them available to all other nonprofits. Within a few years, the organizations mailing hundreds of letters before list brokers were now mailing thousands, and those that were mailing tens of thousands were now mailing hundreds of thousands, and those that were mailing hundreds of thousands were now mailing millions.

Almost without exception, the nonprofits that were the first to develop significant direct mail programs many years ago are the largest nonprofit organizations today.

But that is all about to change.

Direct mail, the engine of new donor acquisition and significant annual revenue for the last 80 years, is in decline.

In fact, the only ones who continue to sing the siren song that direct mail will never die (Direct Mail Is Alive and Well) are those printers, list brokers, and direct marketing agencies and their in-the-tank, sold out Direct Marketing Association with its Executive Director who rakes in a $700,000 a year salary by spouting misinformation about the decline of direct mail even as costs escalate and response rates decline. They are fighting tooth and nail to keep the fundraising sector from believing that their historic engine of growth is declining.

But then if direct mail is dying, what takes the place of direct mail?

Actually, you already know the answer.

The answer is, of course, the Internet.

The only question is "How does the Internet replace dollars generated today by direct mail?"

We'll cover that next time in Part Two of: How Do You Scale Without Mail?

Drip, Drip, Drip.

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1 comment:

  1. Direct mail still has the potential to grow.