Predicting Weather Is Not Like Predicting Donations

I understand — "predictions" just feel uncomfortable for many people. While not meaning to take on the weather experts, I just wonder if the reason I don't trust weather predictions is that I don't understand how to predict weather. Therefore, is it really that not understanding something makes us uncomfortable, which, in turn, makes us not believe? I get it. But it just doesn't make any sense.

I spoke with folks from a nonprofit the other day who absolutely were not interested in trying modeling. When I asked why, they said they were pleased with their current segmentation. I'll go on record saying that modeling has a place in every fundraising program, and if you don't believe it, perhaps you just don't understand it.

Now, for anyone out there admitting, "I don't understand how modeling will improve my program," please know that you don't need to understand all the details to benefit from the use. And there is tremendous benefit from predictive modeling.

Predictive models look at traits that influence the likelihood of future behaviors. In the old days of mass marketing, organizations would drop their messages down on everyone and hope they would stick to a few. The key word there is hope. It was an imprecise approach based on reaching the largest possible pool to spark the largest possible response. The problem was every drop that didn't stick cost the organization marketing dollars.

These days, marketing must be smarter for a couple reasons: (1) In our cluttered culture, people do not have time or tolerance for irrelevant messages; and (2) in an increasingly crowded and competitive landscape, nonprofit organizations need to make it a point to get the very best return on their marketing investment.

That's where predictive modeling helps. Modeling helps better target your marketing efforts and achieve a greater ROI.

4 types of nonprofit predictive models that deliver results
Predictive modeling is the process of creating statistical models to determine the likelihood of future behaviors. Predictive models take into account a number of factors that are likely to indicate how an individual will respond or react. Some examples of predictive-modeling factors include gender, age, income and giving history.

Today's philanthropic landscape is more competitive than ever — with more charities fighting for an even greater share from a declining donor universe. For nonprofit organizations, it's also become increasingly important to maximize ROI because of the escalated scrutiny on nonprofit marketing spending. To put it simply: There are a lot more nonprofit options today, and people want to know they are giving to ones that use their money wisely and effectively.

So how can predictive modeling help your nonprofit more efficiently target donors and volunteers to boost your bottom line? Here are examples of four different predictive models that can be created to help you better reach people interested in your cause, increase the value of your donors and maximize your marketing expenditure:

1. Current donor: Predictive models can help you get more value from your existing donors. You can create models to identify donor populations ideal for major upgrades or to help you target the right donors for specific asks or appeals.

2. Donor acquisition: Acquisition is an area where data modeling can have a big impact. Your nonprofit can create models to identify non-donors that most closely resemble your current donors. These models help you better target your acquisition efforts to maximize your marketing spend.

3. Monthly sustainer: Monthly giving provides a reliable, low-cost income stream for nonprofits. It also enhances the loyalty and value of donors. By developing a predictive model, you can target individuals most apt to become monthly donors based on demographic and psychographic attributes.

4. Lapsed-donor reactivation: When targeted properly, many lapsed donors renew their support and even become high-value donors. Predictive modeling helps you identify the lapsed donors with the greatest propensity to return to your organization and assess their potential lifetime value.

Predictive modeling is a powerful tool for helping your nonprofit streamline your upgrade, acquisition, monthly and lapsed-donor marketing efforts. Predictive models can help you spend your money more wisely, while also increasing your response rate. They can also help you cut through the crowded marketplace to connect with donors mostly likely to be interested in your cause and the work you do.

One of the keys to future growth and success for nonprofit organizations is getting the best return for your marketing dollar. And one of the best ways to do that is by incorporating more intelligence (aka data) into your marketing. Smarter marketing means less waste and better results. The days of mass marketing are over.

The nonprofits that will survive and thrive from here on out are the ones that most effectively target and scale their efforts.