Focus On: Data Mining: Hope is Not A Strategy
Donor and member attrition is an eternal challenge in fundraising. But in the past three years, the problem has magnified to the point that it’s causing hardships for some of even the largest nonprofit organizations.
It didn’t take long for development directors and direct mail fundraisers to realize they were facing a crisis, yet very few had the knowledge, tools and applications to make difficult strategic decisions that were in the best interest of their organizations. Many rushed to implement strategies, only to find they raced to the wrong place; others decided to wait and hope things would return to normal.
Both camps are waking up to a rude reality: New-donor prospecting response rates are declining, and attrition rates among active and lapsed donors are increasing. The result is that organizations have fewer active donors today than they did in 2000 — in some instances 20 percent to 25 percent fewer.
Fortunately, it’s not too late to react. Armed with the right tools and a desire to improve results, development directors and direct mail fundraisers can take steps now to begin to solve their attrition problem. There is no one solution, but fundraisers need to take notice of one important, yet frequently overlooked, source of “new” donors: lapsed-donor files.
To achieve and improve results, fundraising organizations must develop new database-driven strategies that involve winning back a larger percentage of this group. The key is to know who to try to win back and when, and there are several steps to consider in your donor-reactivation strategy.
Listen to donors
To most nonprofits, the lapsed-donor strategy is creative; they hope the design and message of a new “win-back” package will yield more reactivated donors. It might, but it’s not enough.
You must listen to what donors are telling you and then capture that in your database, much as you capture a special moment with your camera. By listening to your donors, you’re better able to pinpoint specific reasons that motivated the initial or last gift. And through your database you can create improved solutions that yield higher rates of success. The key is to ensure that you have the right database tools and solutions — that is, the data infrastructure and the expertise and capabilities to use the data effectively — to predict the future migration of your donors. By monitoring specific donor behavior, you can develop immediate reactivation strategies and increase the likelihood of a response.
Greg Fox is vice president of nonprofit vertical strategy at Merkle. He joined the company in 2000 to establish a data-driven, strategic fundraising agency group. Fox is a 30-year veteran of direct response fundraising, with expertise in developing innovative fundraising marketing strategies and solutions. He has helped raise hundreds of millions of dollars for many of the largest and most respected fundraising brands in America, and while he has broad-based fundraising experience, he is highly regarded as a leader in the national health-charity sector. Prior to joining Merkle, Fox was a founding partner in TheraCom, a leading provider of full-service specialty pharmacy solutions and marketing strategies that served the healthcare and charitable industries. He also served as vice president of direct response fundraising at the National Cystic Fibrosis Foundation, where he started his career and created the organization’s first national direct response program. Fox is an industry thought-leader, frequent speaker at industry conferences and an active participant in the DMA nonprofit federation. He graduated from Virginia Commonwealth University in Richmond, Va.