Corner Office: Big Data and Analytics for Nonprofits
Data has long been at the heart of direct marketing. In the nonprofit world, data allowed us to rent lists of people who had shown a propensity toward giving to causes similar to ours. On the cultivation side, data permitted us to choose which donors to mail based upon previous history and tailor messages to their interests. This smart use of data let us provide donors what they wanted rather than cluttering up their mailboxes with irrelevant offers. And it allowed nonprofits to raise more dollars at a lower cost to more efficiently and effectively feed hungry children, cure life-threatening cancer and support our wounded veterans.
In the current millennium, "Big Data" has become a buzzword that gets thrown around a lot, often without a healthy sense of its emerging place in shaping strategy and designing good tactics. Big Data has been defined by author Thomas H. Davenport as "vast volumes of unstructured, fast-moving data from many resources."
But just the adjectives "vast," "unstructured" and "fast-moving" tend to convey a sense of hopeless randomness, an entity not even entirely safe, let alone useful. Perhaps for this reason, among others, the nonprofit world has fallen behind in applying data to marketing programs. In doing so, we have left valuable information about our donors on the table and watched the for-profit world take advantage of efficiencies we can only dream of.
In reality, data and analytics are just another expression of storytelling, one that helps draw a picture of how best to approach and elicit responses from your audience. And data is no longer just an add-on or a window dressing in the fundraising world; it's a foundational and essential building block for success.
When used appropriately and masterfully, data is much more than endless strings of numbers … it becomes the container for urgent, compelling and sometimes quite personal information about your donor. And analytics is the process by which those numbers become a valuable story, guiding your action and your investments.
Not surprisingly, one of the rationales for resistance to the use of Big Data is the concern over privacy. And nonprofits are especially sensitive to the perception that they will use private donor information in invasive or manipulative ways. While these concerns are understandable, the truth is that targeted marketing to consumers by use of the very information they offer can work to the distinct advantage of those consumers. Without data-driven targeting, consumers wade through random advertising that offers them little benefit for their valuable time.
Of course, the more complex the data, the more essential it is that it be defined and distilled with a clear view to your fundraising goals. The data may be a container, but it needs to be one that is shaped like the donor. Part of the function of analytics is stripping away the extraneous and concentrating on just the elements that keep your organization focused on your donors and the mission they care about.
How can we increase the usefulness of the data available to us?
In the increasingly challenging acquisition arena, it's crucial that we maximize data to refine Web attribution. Giving via the Web has grown dramatically, especially in the past three years. However, most online growth is not new growth, but likely channel migration from non-Web channels to the Web. You need to know how much and how that should drive decisions on allocating your next investments. So, if your radiothon or direct mail campaign lifts online giving, it would be a grievous and expensive mistake to credit the Web for raising the money and cut future radio and mail budgets in favor of digital — when, in this example, these offline vehicles are what drove the online contributions in the first place.
One of the challenges in direct mail fundraising is how to differentiate cultivation treatment among donors in your database. In many cases, you may have only one or two gift transactions to steer decisions. However, if you can use data to determine the "share of wallet" that your organization is likely to receive, how your donor's dollars are split among several charities or whether the donor has an affinity for catalog giving, it would definitely help determine your cultivation strategy.
So embrace Big Data! Listen closely, and you will hear the messages shouted, and even whispered, by your donors.