Nobody likes shopping for a new car, at least at a traditional dealership. From the slick salesman with entirely too much product in his hair to the pressure cooker negotiating tactics and hidden fees, there’s a reason that “used-car salesman” is a euphemism for slimy dishonesty.
For a long time, there was no other choice. If you wanted a car, you had to go to your local dealerships unless you wanted to wade through used car classifieds. But the fact that most people dreaded the experience opened the door to changes in the industry: increased use of Kelley Blue Book values by consumers, CarFax reports to sniff out lemons, and CarMax, a dealer chain advertised as a completely transparent, no-haggle experience. Traditional dealers are still around, of course, but today it’s a lot easier to get a fair deal that you can be confident about.
In the nonprofit world, we’re long overdue for a similar revolution when it comes to direct mail. For too long, direct mail companies have been taking advantage of nonprofit leaders with empty promises, underhanded tactics, and confusing contracts that serve their interests rather than the nonprofit’s.
Here are five big red flags that indicate that a direct mail firm is trying to sell you a lemon:
Nonprofit leaders usually don’t have a lot of free time or a ton of cash lying around in their budget, so it’s tempting when a salesman says that they can begin with no cost whatsoever and with little to no investment in staff time in the mailings. The mail firm will produce and print the mailings, and eventually send the nonprofit a check for the proceeds after deducting their costs and fees. It’s like free money!
But you must ask yourself how the firm could possibly afford this, since direct mail prospecting almost always loses money upfront. The answer is that their agreement will contain long multiyear terms and other shady provisions, such as:
Many direct mail firms that promise free or low cost prospecting will require that the donors they acquire through prospecting belong to the firm. You will not have permission to mail them, call them, or talk to them for up to two or three years after they have been acquired. This is because the mailing firm is making up for the costs of the prospecting mailing by mailing new donors repeatedly after their first gift, making money from donors that would have ordinarily gone into your current donor list.
It should be obvious why this is terrible for your development program. Not only is it dishonest to donors (who are padding the bottom line of a direct mail firm rather than your mission), but it also prevents you from taking the donor communication and cultivation steps that you need to be making to bring the donor into the life of your organization and upgrade their giving. And if you can’t do that, then the lifetime value of those donors will be dramatically reduced. The agreement may have been billed as “free”, but rest assured you are paying through the nose over time.
If you hired an individual to write letters or grants for your nonprofit, and they left for a new job, do you think they’d be able to sue you if you continued to use material that they wrote while you employed them? Of course not.
Unfortunately, many direct mail firms sneak provisions into the agreement specifying that they have sole ownership of the written material that they produce. This means if you later decide to do your mailings in-house or hire a new vendor and you want to test older material that performed well, your old direct mail firm might come after you.
Direct mail firms have a tendency to produce mailers that somehow look both cheap and complicated. Cheesy drawings or messages on a brightly colored outer envelope, with tacky trinkets packed inside (or worse yet, a nickel or dollar bill taped to the top of the letter). Unless the vendor can share data with you to show that these tactics work empirically, you should steer away.
They will also suggest or order huge numbers of mailers even when the situation doesn’t call for it, such as dropping hundreds of thousands of pieces per year for an organization that has never done prospecting mail before. They’ll want to mail your lapsed donor file from 18 years ago six times per year.
If these tactics don’t improve your results, then why does the firm suggest them? Because they are usually getting huge kickbacks from printers they work with. Huge numbers of complicated envelopes and tchotchkes help the mail firm’s bottom line, not yours.
Because the direct mail firm’s interests lie in getting as much money from donors as quickly as possible instead of cultivating long-term value for your organization, they frequently use underhanded tactics to juice returns temporarily. Appeals that come across as threatening (we’ll close shop unless you donate now!) or rely on trumped-up urgency (we’re in a summer slump of giving!) may indeed increase returns in the short term, but they destroy the long-term value of your donors, who get very sick of these messages very quickly and lose all confidence in your organization.
I’m not suggesting despair: direct mail is an extremely important way to cultivate your donors, and it remains the single most cost-effective way to acquire new donors. But it only works if your interests are aligned with those of the vendor. If you are approached with terms like these, run in the other direction.