Know Your Donor Through Analytics
Analytics is an overused buzzword. Ask three people and you’ll get three different answers as to what analytics means to them. To some, it’s about reporting on key metrics and projecting impact on the ability to achieve budget. To others, it refers to models used for the selection of individuals to include in a fundraising campaign. Both view analytics as a narrowly defined set of tools.
Analysis Requires Asking the Right Questions
Simply put, analysis provides data-centered insight to your critical questions. In that mindset, the questions asked are more important than the tools and techniques used to answer them. Many organizations spend considerable effort and resources answering the wrong questions. Whether reviewing reports focused on a single channel or selecting the highest response prospects from the same, shrinking universe, dogmatically answering the wrong questions leads to smaller donor files and declining revenue.
Asking the Right Questions Requires a Paradigm Shift
Most current paradigms select the channel and fundraising offer and then consider who best to target.
- Send a direct mail renewal in March
- Ask for a single gift with an ask string based on highest previous contribution
- Select names via RFM segmentation
This paradigm leads to a cycle of contacting the same individuals within the same channel, making them the same offer with the same case for giving. While doing this well enables organizations to achieve this year’s budget, it creates long-term challenges.
The future paradigm must focus first on the donor, then on selecting the right offer or appeal and delivering it through the channel most likely to reach them.
- Choose to engage your moderate future value portion of the “benevolent boomer” segment.
- Split into groups most likely to give monthly and one time.
- Deploy a mix of direct mail, email and paid social, based on individual preference.
The future paradigm bases your decisions on what you know about donors and their personal preferences, instead of what it is scheduled to deploy. Don’t get me wrong, you can schedule this type of campaign structure just as easily, but it requires the answers to a few key questions.
What Are the Right Questions?
If you shift your thinking to the future paradigm, then the questions shift as well. The critical questions focus less on campaign performance (though it’s still important) and more on getting to know your donors.
I propose four critical questions that can be answered via analytics based on good data, without major investment in data, technology or organizational change. The answers to these questions will lead to immediate improvement in fundraising revenue and donor experience.
Question 1: What is the expected future value of this donor or prospect?
Answering this question leads to smarter investment decisions, both in renewal cadence and in prospect targeting. The analysis must be forward looking, consider actions across all channels and be supported by multi-year budgeting.
Question 2: Who are my donors and how have they engaged in the past?
Answering this question enables better message targeting, ask-string personalization and journey/cadence development. The analysis must go beyond traditional RFM or demographic segmentation. A multi-dimensional, model-based segmentation is the right tool.
Question 3: What motivates my donor to give?
Answering this question develops a personalized case for giving and enables a focused, affinity-building engagement. The analysis must be based on actual donor opinion (not our expectation of their opinion) and be mapped to individuals versus broad, non-targeted categories.
Question 4: What offer will appeal to them?
Answering this question allows for personalization of the fundraising program [e.g. monthly versus one-time] and of the ask string. The analysis must independently assess an individual’s likelihood to respond to a given offer and use that assessment to create an expected value of sending the individual that offer.
Would answering any or all these questions help you build a better journey and raise more funds for your organization? Knowing this information is not as daunting as it may seem, and I encourage you to start with the answering the first question using whatever data you have today. If interested, follow me along an analytic journey over the next few months, where I unpack the techniques to answer each of these questions.
At Merkle, Chris is a senior leader in the Quantitative Marketing Group and leads a team of talented analysts leveraging advanced predictive techniques to drive net revenue and build donor pipelines for some of the leading nonprofits in the country. He strives to drive insight into donor data across all fundraising programs, use this knowledge to build constituent engagement that maximizes long-term donor value and ensure his partners thrive today while building a foundation to advance their mission over the long term.
Chris brings to Merkle over 10 years of experience in nonprofit marketing, analytics, and thought leadership, having previously served on the executive committee at the leader in higher education marketing. Chris has had the opportunity to partner with some of the largest and most recognizable institutions in the country to leverage personalized marketing to achieve their enrollment and advancement goals. Prior to his time in higher education, Chris held various analytic positions in financial services. Chris holds a BS in Systems Engineering from the University of Virginia and an MBA from the Darden School of Business.