Those of you that know me know that this statement has nothing to do with my political orientation. LOCO stands for the Law Of Channel Orthodoxy.
Well, it’s a theory actually. A theory I made up. But I call it a law because it makes a better acronym and because people take laws much more seriously. It’s also good to keep in mind if you want to increase your nonprofit fundraising results.
Anyway, the Law of Channel Orthodoxy goes like this:
The time and expense necessary to deliver a fundraising message (Resources) is positively correlated to the potential success of that message (Response Rate)
For example, let’s consider face-to-face fundraising. It is most definitely the most time-intensive, and expensive fundraising method. But it is often the most successful. If I were to fly around the country and ask each of my donors to give a gift, then I could expect a response rate of 40 to 60 percent or more
Then, let’s hop down to direct mail or telefundraising. Is it as expensive to call or mail all of our donors? Absolutely not! But will I get a 45% response rate– probably not. Typical response rates for a successful direct mail and telefunding campaign would be between 6% and upwards of 20%.
Now, consider email. Is it as expensive to send an email as it is a direct mail package? No way! But are you going to get a 20% response rate on an email appeal? Not likely. According to the 2012 Convio Nonprofit Online Marketing Benchmark Report, the average response rate for a house file email appeal continues to hover around 0.15%.
So, in each of these examples, it seems that the Law of Channel Orthodoxy seems to hold up. Still with me?
Okay, so the question we must ask then is, “how do we beat the Law of Channel Orthodoxy?”
Answer? Well, there are actually two ways:
When we develop a way to achieve the same results while at the same time reducing the time and expense investment, we call this an innovation. Believe me, there are many ways that we can innovate in the nonprofit space. But the problem is that too often nonprofits feel they need to play it safe. We go for the guarantee, instead of taking a risk on something that could either go big, or be a big bust. But what I think many organizations fail to realize is that there is a risk associated with the status quo. If we fail to test and try new things, we are pretty much guaranteed to become obsolete.
But there is another way that we can beat LOCO.
When we increase our response rates or improve results without proportionally increasing the amount of required resources, we call this optimization. Optimization begins with the belief, as Peter Drucker once said, that “adequacy is the enemy of excellence.” It forces us to never be satisfied. It teaches us to interpret a 10% response rate as a 90% non-response rate, and inspires us to develop better ways to communicate so that we can get those non-responders to join us. Optimization can transform the culture of an organization by changing the conversation from “if only…” to “what if…” Optimization is synonymous with perpetual improvement and is essential to success.
So, in order to beat the Law of Channel Orthodoxy, we need to find a way to live left of LOCO. I’m telling you, once you get used to it, you wouldn’t want to go any other way. Here’s a few questions that you can ask yourself to help break free from going completely LOCO. It might be a good idea to ask your staff these same questions and compare your answers with theirs.
Am I LOCO?
- My fundraising calendar is really solid because we have been doing things the same way for the past few years and have received good results. (T/F)
- I don’t typically try new fundraising techniques because they can be risky and we owe it to our donors to only invest in sure winners. (T/F)
- I’m very happy with our fundraising results. I don’t see how we could possibly do any better. (T/F)
- I’m convinced that if we just implement best practices, then we will receive optimal results. (T/F)
- I’ve been doing this a long time, and my experience and intuition is what I lean on when I evaluate a new fundraising program. (T/F)
So, How Did You Do?
If you answered true to one or more of the above statements, then you may be going LOCO! But don’t worry, it is curable…