Photos courtesy of STARS.
When critically ill and injured patients in Western Canada need emergency care and transport to a hospital, many turn to STARS—the Shock Trauma Air Rescue Society. Operating a fleet of 11 helicopters, STARS has flown more than 30,000 missions in Alberta, Saskatchewan and Manitoba since its founding in 1985. With less than half the population of Western Canada living in major urban centres, getting access to an air medical crew and state-of-the-art diagnostic and life-support equipment can mean the difference between life and death
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But it takes money to support STARS’ air ambulances—nicknamed “ICUs in the sky”—and the not-for-profit relies on donors to help fund its services. And in Alberta, only 25% of STARS’ budget comes from government sources. The remaining 75% is raised through fundraising activities like the STARS lottery, which annually brings in over million.
A history of DM success
One of the primary ways that STARS sells lottery tickets is through direct mail, which gives buyers an easy way to support the organization. Over the years, STARS has built up a sizable list of lottery ticket buyers. However, each year STARS uses unaddressed mailing to penetrate new markets, find new buyers and add to its ticket buyer list. In the past, the organization sent unaddressed mail to almost every household in Alberta—a total of 1.4 million pieces of mail.
But STARS administrators wondered if their mailings could be more targeted and cost effective. While the STARS Lottery had sold out for 21 straight years, reducing the lottery’s overall marketing costs would allow it to devote even more funds to its mission-critical work. Increasing response rates, reducing the time spent in market and implementing a lower cost direct mail strategy would eliminate the need for additional advertising and promotion to sell out the lottery. STARS’ approach, still novel to many fundraisers, sought to better understand its strongest ticket buyers using segmentation and marketing analytics, and then develop an unaddressed direct mail campaign targeting similar prospects.
“STARS has generally been successful because people love the brand and the mission,” says Moses Gabriel, executive director of community giving & operations at STARS. “But as the lottery program reaches maturity, we want to reduce expenses and capitalize on efficiencies.”
Introducing smarter direct mail
In early 2014, STARS contacted Environics Analytics (EA), the marketing services and data analytics company, about developing a more targeted direct mail strategy. EA analysts began by categorizing loyal STARS lottery ticket buyers from the previous three years using the PRIZM segmentation system, which classifies Canadians into 68 lifestyle types. They then combined the best performing segments into four target groups and, after mapping their locations on the ground, they profiled these groups using demographics, social values, media tastes, donation and lottery purchase behaviour. Research showed that the Albertans most likely to buy lottery tickets were middle-class families in exurban segments like New Homesteaders (rural, midscale couples and families), Fields of Dreams (midscale farmers and blue-collar workers) and Big Sky Families (middle-aged, midscale Prairie farmers).
The high concentration of ticket buyers in far-flung communities made sense to Gabriel and his team. “When the red helicopter lands on a farm or in a rural community, the impact is felt throughout the entire community because they’re likely familiar with the patient,” he explains. “In an urban setting, however, the incident can go unnoticed unless it is covered in the news.”
Using insights gained from profiling its loyal ticket buyers, STARS launched its unaddressed direct mail campaign in 2014, targeting the neighbourhoods with the highest concentration of top-performing segments. But rather than mail to all 1.4 million households in Alberta, STARS reduced the mailing by over 110,000 pieces.
For the direct mail piece, the STARS Lottery produced a colourful, 21-page brochure showcasing some of the lottery’s 3,217 prizes, including homes, cars and exotic vacations. Given Alberta’s wide-ranging households, the messaging was designed to appeal to broad values: community involvement, social responsibility, fulfillment through service. As one headline proclaimed: “YOUR SUPPORT WILL MAKE A DIFFERENCE IN MANY LIVES.” To prove that point, the mailer also included testimonials from people saved by STARS—men and women who could be the recipients’ neighbours, friends or family members.
Reaping the rewards
The campaign proved a resounding success. The response increased 127%—from 6.7% the previous year to 15.2%. Total sales rose by $1,205,000, even though the mailing volume had been reduced considerably. “In previous experiences, unaddressed mail has usually been a moderate but less cost-effective means of acquiring new supporters,” says Gabriel. “So it speaks highly of the brand and the targeting when you can see such immediate results. To jump from a six per cent to a 15% response rate is something to write home about.”
The new marketing strategy also helped to reduce the time needed to sell out the lottery tickets by two weeks, which saved the cost of additional media buys. Overall, the campaign decreased marketing costs by 27.9%.
But the impressive results didn’t end with the 2014 campaign. In the follow-up response analysis, analysts identified ways that STARS could enhance its targeting and further reduce the number of mailed pieces. Through the refinement process, STARS re-classified ticket buyers into different target groups for subsequent direct mail efforts. For instance, the analysis indicated that STARS’ top rural segment was very responsive to direct mail; its weaker urban segment preferred online media. “The findings shows that, to reach these urban donors, we need to employ new media like online and shift from more traditional channels like television, print or radio,” says Gabriel. The group could also use this additional insight to better align its prizes with the target segments: an ATV promoted to a rural group and a ski getaway to an urban one.
The insights gained through the lottery campaign analysis have also proved transferable to STARS’ donation programs. Last October, the group mailed 100,000 fundraising pieces as part of an unaddressed mailing campaign. STARS selected its best direct mail donors—in terms of value and response—and profiled them according to EA’s PRIZM segments. EA then identified postal walks where they were likely to find more donors like them. The initiative yielded nearly a one per cent response rate in one market and about a $72 average gift overall, resulting in a positive financial return. “It’s rare to break even with unaddressed mail,” says Gabriel, “but we’ve made unaddressed acquisition a relevant option for STARS.”
Looking ahead
With the success of these campaigns, STARS is now exploring other data-driven marketing strategies. The group has begun using behavioral and geo-demographic segmentation to better understand the characteristics and motivations of its major and monthly donors. And the additional insight will give STARS an opportunity to test and refine messaging in future promotions to increase ROI—allowing it to devote more funds to its life-saving work.
“Data lets you inform decisions across your organization,” says Gabriel. “It’s great to have intuition and experience, but when you have data to support and validate your assumptions and beliefs, you can sustain your growth and performance with greater certainty.” And when the objective is saving lives, there’s no substitute for data-driven decision making.
This article originally appeared in the March 2016 issue of Direct Marketing.
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