A sometimes overlooked, but essential, element of a nonprofit’s direct mail program is data analysis.

Simply put: direct mail, done right, relies heavily on analyzing data.

Your nonprofit may love the way your package looks, or the story told inside, but data tells you if your package is a winner. And setting up valid tests — and being able to properly analyze them — helps to increase the effectiveness of your direct mail.

A new digital resource from the National Catholic Development Conference (NCDC) — Using the Right Ruler: Measuring Results in Direct Mail — reviews key metrics of data analysis to help nonprofits better evaluate their direct mail program.

A particular focus of the NCDC resource is guidance for nonprofits on making decisions based on ROI (return on investment) and LTV (long term value of donors): “While both tests [ROI and LTV] provide insight into a charity’s mailing strategy, a test analyzed with one method may be better suited for the organization based on their needs.” The report continues:

For example, focusing on long term value offers you a smaller pool of donors with a long life and a good dollar average and is best if the charity is concerned with identifying the lowest cost of fundraising.

Whereas focusing on return on investment gives you donors with a shorter life, but a larger impact because you have a larger pool of donors, a higher percentage return on renewal, and loyalty in a down economy. ROI helps calculate the break-even point and is best if the charity has concerns over cash flow.

Next, NCDC offers timely guidance on interpreting attrition rates, offering a case study that sheds light on decision-making based on the interplay of ROI and LTV considerations. These considerations always involve questions of organizational goals and strategy: What do you really want this particular mailing to do, and how does this fit into our goals as an organization?

As the resource points out, even with all of the advances in technology available to gather and record data, there will always be a subjective element to analysis and decision making: “Interpreting statistics is both an art and a science.”

Both ROI and LTV play a role in strategic direct mail, and having test objectives in place prior to mailing is crucial. This ensures that the data gathered will actually be helpful. No single formula for decision making is “one size fits all,” however, since each organization’s goals provide the baseline against which such decisions are made.

You can download the NCDC resource here.

For help with developing — and analyzing — your next direct mail campaign, contact LDMI today.

[LDMI is a Corporate Partner of NCDC.]