Big Data. Its impact in the Fundraising World

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1 Its impact in the Fundraising World

2 2 Introduction In case you hadn t heard, we officially live in the age of. Companies like Amazon, Google, LinkedIn and Facebook are not only the leading portals for creation and collection, but are also the leading thinkers in productizing the data into some very familiar engagement offers like Other Customers Liked, People You May Know and Companies You Should Follow, to name just a few. These products are derived from click-throughs, abandoned shopping carts and other items a person has Liked. is defined as vast volumes of unstructured, fast-moving data from many resources. * We are all in part responsible for creating it at least, those of us who are wired up and in, multi-tasking and multi-screening every day. For the most part, the nonprofit world is behind in applying to our marketing programs, due in part to: Technology requirements that can be cost-prohibitive to nonprofits with budget limitations The relative lack of need as compared to the commercial marketplace, particularly as it relates to online constituents and revenues: Per Charity Navigator, $2.1 billion was donated in 2012 Per Inquisitr website, $39 billion was spent on commercial holiday sales alone in 2012 Nonprofits are not fully integrated operationally, financially and from a marketing perspective, and in many ways are still not fully focused on the donors and constituents experience *Thomas H. Davenport, Analytics 3.0 Harvard Business Review, December 2013

3 3 Getting Ready for There are many things we should be doing as using becomes financially viable, and as donor behavior dictates: Clean up our database(s) Set and adhere to business rules regarding data storage and maintenance Ensure smart source coding structure Consolidate marketing data into an accessible, flexible warehouse and reporting system Collect/append more donor-centric information like interests, affinity and demographics. This will help build comprehensive donor profiles, and better understand potential value. Become not only data-savvy, but data-creative. By data-creative, we mean transforming what may seem like routine pieces of information into ways to better know and engage your donors. Companies like Amazon and LinkedIn do this with information you as a member have intentionally or inadvertently provided them.

4 4 Three Information & Products Must-Dos The following are recommendations for must-dos to implement as soon as possible, as well as ideas for turning smaller data you are likely routinely storing on your database into strategies and tactics with big results. Age Maybe a single demographic does not qualify as, but we have found age to be extremely valuable in mapping offer, messaging, ask amounts and channel mix to optimize response, engagement and value. Consider the following applications beyond the traditional Planned Gifts prospects approach: For one organization, we found that donors aged were not only the most valuable donors, but also the most active, meaning the majority had multi-channel and multi-action engagements. Although the segment size was not the largest on the file, our findings show there is considerable opportunity to strategically versus organically engage these donors in many offers, events and actions (advocacy and others) to increase overall retention and value. Another organization we work with wanted to attract younger donors by testing their messaging to Gen Xers versus Baby Boomers. We tapped into our Heart of the Donor research findings to create custom messaging for both audiences. We know that while Boomers and older donors are best engaged by emotion and a straightforward, informational approach, Gen Xers and younger donors respond more instinctively to an overall impression of an irreverent, unexpected approach. Our messaging test reflected these findings, and so did the results. Both packages performed well, and the innovative, unexpected messaging approach had a higher response rate and nearly four times the net revenue among Gen X and Older Millennial donors.

5 5 Cooperative Models Many organizations remain reluctant to join so-called co-ops because of potential issues with privacy, or fears about having donor names overused by enabling them to be mailed by other nonprofit organizations. To the first point, reputable organizations that have developed cooperative databases at considerable expense will follow the latest rules on privacy to the letter, or risk being put out of business by competitors, the DMA and the industry at large. Secondly, your donors are likely giving to several organizations already, and are being contacted by many other nonprofit groups. There is a considerable upside to leveraging all the data available in large cooperatives. Information you can capture includes the following: The number of organizations a donor is giving to, and by market How much a donor is giving to other organizations in comparison to yours a wow or ouch moment Whether a donor is more loyal to you in terms of years on file, versus other organizations. If so, are you thanking and praising accordingly? Basic demographic statistics such as age, gender and income, along with rankings or clusters based on donor giving behavior toward you and others. This is a treasure trove for segmentation and messaging strategies.

6 6 Income/Wealth Overlays Although it is true that income and wealth don t directly correlate with generosity, it is also true that for the most part we get what we ask for. Often because we don t know income and wealth information, we ask for roughly the same gift amount from virtually all donors on file unless they have migrated to the Middle or Major Gift segments. We suggest appending income and wealth information to your file so you can: Set more-aggressive upgrade strategies for regular donors ($10-$99.99) with incomes of $100,000+ Develop stretch giving levels for proven mid-range donors ($500-$9,999) with higher incomes/wealth ratings Begin cultivating for larger giving opportunities, usually high-impact, tangible offers typical for capital campaigns

7 7 Creating Within Your Own Donor File No budget? Still concerned about the value of, or protecting your file from cooperatives and compiled databases? There are many ways to improve program performance, donor retention and value from data likely captured on your own donor file. Here are three data points that alone would not technically qualify as, but if used correctly within your segmentation and messaging strategies will have a big impact on program results. First Gift Amount We ve known for years that first gift amount is virtually always an indicator of long-term donor value, as it tacitly reflects either a donor s capacity to give, or their affinity to a nonprofit s mission. With few exceptions including emergencies, high-profile events, special types of giving (such as memorials) and the like first gift amount trumps all other potential value indicators. This includes offer, packaging and channel of origin. If you are not using first gift amount to set donor investment and offer strategies within the first year of a donor joining the file, please start today. You will: Reduce cost by immediately right-sizing contact cadence Quickly define likely upgrade strategies, including sustained giving programs for lower-dollar donors, and mid-level stretch goals for higher-dollar donors Better manage overall long-term donor value by adjusting acquisition asks, channel and offer mix to determine the best blend and number of new donors with an optimized first gift amount distribution

8 8 Offer Responsiveness Ever wonder if you are sending the same offer over and over to the same donor and not getting a response? You are not alone, and the answer is likely yes. There are certain offers that in aggregate are so successful and affordable, that isolating chronic non-responders (CNRs) would not be worthwhile. However, there are categories of offers particularly premium and mission-based that do warrant the additional effort to analyze donor responsiveness at a detailed level. Ultimately, you can either exclude CNRs from a campaign, or target multiple offers within a single campaign to optimize overall net income, donor retention and value. This type of effort requires consistent coding structures, in addition to access to promotion and transaction information at the donor level. This information is likely readily available in your file. Gender Gender can be used for a lot more than simply building a proper salutation. Although your file likely has more females than males, it doesn t mean you shouldn t be optimizing the value of those males who are engaged with your cause. Consider the following: Males generally tend to be more valuable than females on a per-donor basis, though on the whole women are more responsive. Can you generate more income targeting a more aggressive ask to males? If you are considering premiums like labels or cards, there is a distinct difference in response to imagery based on gender and yes, it is just as you would think. Males will have a higher response rate to genderneutral or male imagery like cars, sports-related items, boats and the like, than to images of butterflies, puppies, kittens and flowers. Males tend to respond better to get to the point, tell me what is needed language, versus storytelling. There are many great articles and a wealth of information about, with more resources added every day. We recommend reading Thomas H. Davenport s article, Analytics 3.0, published in the December 2013 edition of Harvard Business Review. It provides some great context and historical perspective on and supporting analytics.

9 9 Conclusion Learn more To learn more about how Russ Reid is investing in technology and analytics to provide you with the very best in data-driven marketing strategies and results, please contact the following people: Rescue Missions Derek Torry Vice President, Group Director (626) Food Banks Andrew Olsen Vice President (626) National Nonprofits Mark Rhode Dama Montalvo Vice President Business Development Supervisor (626) (626) You want to transform more lives. Let s do it together. Russ Reid acquires over one million new donors for nonprofits each and every year. But we don t stop there. We engage those donors. Build relationships. Multiply donor value. We help create fresh new sources of revenue in exciting new ways. We call it innovation in fundraising. And it s how you ll grow beyond.

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