I recently had the chance to read through and communicate with the team at NewSci, a "Big Data" company with solutions for nonprofits. I found NewSci through a thought-provoking discussion on LinkedIn titled "NewSci Redefines Donor Retention After 5 Year Study."
I imagine anyone who saw that title clicked through to see what it was all about.
The discussion and resulting conversation with the team was very interesting. NewSci calls into question whether retention measurements that only look at the financial (i.e., donations) engagement are really an indicator of whether a donor is low- or high-value. For years, all of you know that I have been pushing organizations to place a level of value on the non-financial engagement. I think the approach described by Jay Goulart, co-Founder and chief data artist at NewSci, can be a great step toward understanding value.
The hypothesis is, says Goulart, "By identifying people who are engaged even when donations stop, fundraisers can develop strategies to continue nurturing the relationship knowing at some point there is a high likelihood giving will resume and perhaps at higher levels. Also by identifying relationships in trouble early, work can be done to rebuild it before it is too late. We believe Big Data's ability to look across silos and incorporate unstructured data from sources like social media makes this type of relationship monitoring possible and practical."
Frankly, I love this concept because at minimum it starts to build a conversation around the non-financial activity that happens. I've led many conversations with nonprofits around assigning value, and speaking from history, it always gets hung up in the definition of value. Frankly, the fundraisers don't want anything to compete with their hard dollars and cents approach. In reality, we are not trying to imply an advocacy engagement (as an example) is worth a specific financial value — we are simply trying to say that an advocacy engagement is a part of the formula for understanding the long-term value (LTV) of a constituent.
NewSci takes it one step further and says that monitoring of this non-financial engagement can lead to strong indicators for what is happening with the relationship. And, even better, it could help predict what might happen in the future with a donor and his or her future financial engagement.
While Goulart and his team have a lot to say about this and their study, I want to offer a few simple things to at least get you started down this path:
- Do you know what non-financial transactions occur with your donors?
- Do you measure LTV in your organization?
- Have you looked at the value of a donor (even if only using financial transactions) and compared the value of those who are engaged outside of just fundraising to the ones who have only financial engagement on file?
- When you think of retention of your donors, do you look at anything other than the year-over-year renewal to your fundraising program?
While the NewSci folks indicate that there is much more to the picture than just looking at data (i.e., looking at your acknowledgment process/experience and understanding any inbound call-center experiences), if you answer "no" to all or even some of the four questions above you may be in jeopardy of not really understanding what is happening with your donors.
Perhaps one of my favorite quotes from the NewSci team is this: "While year-over-year renewal is an interesting metric to track, it fails to capture what is driving Long-Term-Value (LTV). In fact, the deeper we explored the data the less relevant transactional activity became. Measuring retention based on a donor's transactions reminded us of Einstein's brilliantly simple observation. ['We cannot solve our problems with the same thinking we used when we created them.']"
Clearly, as fundraisers and marketers we need to get outside of our comfort zones and ensure we ask tough questions of ourselves, our agencies and our fundraising teams about LTV and how to better predict it.
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.