Are Fundraisers Really Ready for Insight? Do You Have a Story?
I often start my blogs with "I must be honest …" — and this one is no different. There are multiple reasons I write this blog, and believe it or not, one is because of my inability to find nonprofit marketers who can speak to me about how they leverage insight in their programs through time and testing. In fact, if you work for a nonprofit and feel that you have a story, email me now! We can stand together in Washington, D.C. in a few weeks to share my stories and yours for the hundreds of nonprofit fundraisers that will be at the DMA Nonprofit Federation's Washington Nonprofit Conference.
I must be honest, I had two fantastic speakers lined up (hence "my stories" that I can tell), but for unplanned reasons both of them are now unable to join us in D.C. But the part that shocks me is the number of people who have said, "I would love to do this with you, but I don't think I have a story."
Arghhhhhh … does that mean that everyone is really still using RFM? Does that mean that the data scientists at the agencies are not helping their clients understand how "insight" is truly being used outside of RFM?? Of course I'm bummed about my session falling apart, but I'm super worried that I can't find other stories and what this really means.
Let me be clear: I'm not talking about acquisition modeling using third-party/external data. I know the industry is very effective at using acquisition modeling, and I'm very supportive and downright excited to know that has almost become a mainstream business practice. What I'm talking about is the concept of using insight outside of RFM to understand who your current (and/or lapsed) constituents are and how you can segment them better and market to them more closely. That's right — I'm talking about external data like extended demographics, buying behaviors, attitudinal clustering and much more.
Folks, the data is out there and available — so why is it not being used in more strategies? Below are my thoughts on the answer to this question AND some solutions to the "problems":
It’s not in my comfort zone: I'm calling everyone out on this. It's not just something that affects industries — there is a bit of human nature playing into things here. You HAVE decent results with small increases every year in the key metrics. Why change? Why take on something that really seems to confuse your meetings every year to develop strategy? Let's face it — getting outside of our comfort zones is just something people don't like. Trust me, in 2003 I took a job to lead the customer relationship management initiative (from a marketing perspective) of a major nonprofit. This caused me great discomfort, but in the end I was curious about this thing called relationship management. I didn't know that it wouldn't work, so who was I to stick my head in the sand and act like it might not work? Well, as I read the agendas of some of today's top conferences and learning experiences, the words "integrated" and "relationships" are in almost every description. In other words, just because we don't understand something or know that it works doesn't mean that it is the wrong direction.
- My solution if you are an agency leader: I want you to appoint someone on your team to dig in to the external insight environment. If you already have access to external insight and use it with your clients, call me because we can present together (or your client can present with me). But my guess is there are a lot of agencies out there that use expanded RFM and modeled RFM. There is much more to the picture. There are personality clusters to create, as well as buying behaviors and attitudinal data points that can help you understand donors, members and volunteers much better. I believe our industry is just uncomfortable when we get outside of RFM. I am willing to give blog space to any agency that can tell a story of using true external data to drive new thinking, better messaging and deeper segmentation. To break down the discomfort, we must get the stories out. I have plenty but don't want to be self-serving with my own agency so let me hear from yours!
- My solution if you are a nonprofit: I get it. Trust me, I do. I've been in your shoes. I haven't wanted to rock the boat. I certainly haven't wanted to take on more expenses when my budget was tight. But things are changing. While I know most nonprofits still use direct mail as their primary mass market touch, the digital world is changing how consumers interact and what they expect. They are already telling us a nonpersonalized experience feels bad to them. What if you could understand more about your donors by looking at their buying behaviors and attitudes about certain life issues — things that you cannot understand by just looking at recency, frequency and monetary amounts? To add further complication, I understand that many agencies are not really comfortable outside of RFM or modeled RFM plus they know how tight your budget is. You must push the issue. If you have a long-standing relationship with your agency, tell it you want some pro bono work done to help understand if there are any opportunities to consider. If your agency doesn't have direct access (meaning it doesn't have to pay to get its hands on this data), find a marketing intelligence agency that does. If the agency has the data, costs should be much lower for you and the ability to look into third-party data is easier. I'll make you a deal too — if you have truly explored third-party data and actually tested it in marketing and messaging, I'll give you blog space to tell your story as long as you don't mind me picking apart your story. There are too many success stories in the commercial world for this to be just something that doesn't apply to nonprofits.
Understanding ROI: Let's just think about this for a moment. We wouldn't have major data firms collecting and compiling data on the hundreds of millions of people in the U.S. if the value of this data to marketers was not high. So let's suspend disbelief and talk about what I believe is a common misunderstanding: "External data raises my costs and eats into my net/ROI." There are multiple ways to look at this, but to assume you are just lumping on costs is not the right way. There are both short-term and long-term gains to using third-party data:
- Short term: Depending upon the challenge you are trying to solve with third-party data/external data, you could see a reduced budget and/or improved results. Many people often think of modeling external data for the purpose of reducing costs. Yes, this is one option. You can identify individuals who are less likely to be involved with you in the long run or even respond to your next campaign. But that is not getting you "closer" to your consumers who are committed to your brand. That is more or less using modeling as a "weed killer." By using external data to adjust your messaging and offers, you can improve response rate and average gift in an individual campaign. Now, if you are saying, "What if I spend $15,000 on this external data and my results for the campaign are only up $15,00? It wasn't worth it, right?" Wrong! And that is the long-term gain.
- Long term: Anything you learn in a campaign can easily be applied in future campaigns. It has been proved over and over again — a more personal relationship drives a more loyal customer, and more loyal customers have higher lifetime values. By understanding message and offer differences through the lens of attitudes, demographics and other psychographics, you start making your entire program more personalized. The long-term impact of this is seen throughout all your campaigns as well as annual and multiyear retention rates. Now, if you are saying, "But I have to keep spending money to overlay that external data on my file, and that's expensive," yes, you are right. It is an ongoing expense, but if you do this correctly and have a good data partner, this should not outweigh the benefits.
Trust me, I know getting outside of a comfort zone is not easy, but to not explore something (and take the time to do it right) is like admitting you cannot do any better. As an industry, we have to move more quickly in this direction. I simply cannot agree that "it doesn't work for us." For those who take the time to truly embrace the world of "external data" (and test it properly), success will come at a greater pace.
And in case you need another opinion, as I was looking for some studies to reference, I found a posting from December titled, "Knowledge vs. Inertia: Are Fundraisers Ready for the New Era of Insight?" Willis Turner makes some great points that mirror mine and also shares some studies that further drive this point home.
Vice President, Strategy & Development
Eleventy Marketing Group
Angie is ridiculously passionate about EVERYTHING she’s involved in — including the future and success of our nonprofit industry.
Angie is a senior exec with 25 years of experience in direct and relationship marketing. She is a C-suite consultant with experience over the years at both nonprofits and agencies. She currently leads strategy and development for marketing intelligence agency Eleventy Marketing Group. Previously she has worked at the innovative startup DonorVoice and as general manager of Merkle’s Nonprofit Group, as well as serving as that firm’s CRM officer charged with driving change within the industry. She also spent more 14 years leading the marketing, fundraising and CRM areas for two nationwide charities, The Arthritis Foundation and the American Cancer Society. Angie is a thought leader in the industry and is frequent speaker at events, and author of articles and whitepapers on the nonprofit industry. She also has received recognition for innovation and influence over the years.