A DonorTrends 5 Minute Guide to Effective Donor Scoring. All Rights Reserved.
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2 Why You Should Care The significant problems we face cannot be solved at the same level of thinking we were at when we created them. - Albert Einstein Contents What is a donor score? Why does my organization need scores? 4 The nonprofit fundraising sector is in trouble. Fewer donors are retaining; even fewer are joining; and costs continue to increase. Yet we continue to mimic, year after year, the tried and true strategies that have led us to this crisis. A new approach to donor segmentation and cultivation is uncovered in this 5 minute guide. Learn how to improve your bottom-line using a scoring system that predicts the future so you can act now to raise more money from fewer donors. Using donor scores to predict the future. 5 Using donor scores to increase net revenue. 6 Using donor scores to increase second gifts. 7 Donor scores summary. 8 Next steps. 9
3 What is a donor score? 0 -,000 A donor score serves the same purpose in the nonprofit sector as a credit score in the financial world. Just as a lender minimizes risk by making a decision based on a FICO score, fundraisers make campaign segmentation decisions based on a donor score to protect net income. A donor score is a numeric value between 0,000 that signifies how likely a donor is to take a certain action. This ranking is derived through a scientific predictive modeling process that analyzes your donors behavior and predicts future actions that they are likely, or not likely, to take. A donor score identifies those most likely to take an action so you can raise more money from fewer donors. Organizations are using donor scores to select the donors they communicate with in the following campaigns: Appeals & Renewals Second Gift Conversion Monthly Donor Conversion Lapsed Reactivation Mid-Level Upgrades Major Donor Identification Planned Giving Identification
4 Why does my organization need donor scores? Stop Guessing. How much time and money is spent testing your packaging, messaging, and premiums? Now consider how much attention you give to selecting the audience for your campaigns. If you re like most organizations, your fundraising audience selection is routine and donors are chosen based on three basic indicators RFM: R = Recency of Last Gift F = Frequency of Gifts M = Monetary Value The challenge with this strategy is that you have to cast a wide net to catch the few that will respond. This approach limits your control and ends in an overly complicated data pull with hundreds of useless sourcecodes and segments. Today, organizations are using proven science in the form of donor scores and donor clusters to plan their annual fundraising communication strategy and target an audience based on specific campaign goals. The result is increase net revenue, improved retention, and decreased costs. Myths About Scoring You need to have a large file. FALSE. Files with 5,000 donors or more can benefit from donor scores. Predictive models are too expensive. FALSE. donor scores are affordable to all size organizations. Understand the ROI before purchasing. You can prove that scores work before you use them. TRUE. The effectiveness of a score can be proved through a backtest. Always request one before executing scores.
5 How others use donor scores to... Predict Future Donor Behavior Healthcare Organization Analyze donor database. Objective: Create a fundraising strategy based on a donor s predicted future actions. Action Steps: Analyze the entire database. Predict future donor behavior. Develop a fundraising strategy to target likely action. Score donors to predict the actions they are likely to take. Develop a targeted fundraising communication strategy based on the predicted future actions. Fast track these new donors to an upgrade ask. Increase communication. Raise more money from the Committed donors. Outcome: Increased revenue, retention, and upgrades. Less time spent on complicated data pulls and analyzing hundreds of sourcecodes. Decrease communication. Suppress from underperforming appeals and renewals. Ask to become a monthly donor (Sustainer)
6 Human Services Organization Objective: Increase Net Revenue How others use donor scores to... Increase Net Revenue Evaluate old segmentation practices that were based on arbitrary RFM cut-offs. Action Steps: Evaluate and restructure how the active file is selected for Appeal and Renewal campaigns. Use donor scores to group donors into three actionable clusters: Committed, Casual and Episodic. Develop a communication plan that increases frequency to the Committed cluster; and strategically suppresses communication to the Casual and Episodic donors. Outcome: R 0- months F + gifts M $ HPC R -4 months F + gifts M $ HPC Implement new approach using proven science to score and group donors. R 5-60 months F + gifts M $00+ HPC Committed Casual Episodic 5 7 campaigns campaigns campaigns 4 7% increase in net revenue. 4 million less pieces mailed. $,000 additional revenue.
7 How others use donor scores to... Increase Second Gift Conversion Environmental Organization Score single gift donors. Objective: Increase the number of donors who give a second gift. Action Steps: Score all new donors for their likelihood to make a second gift. Multi-track cultivation strategy based on donor score. Develop a multi-track communication strategy based on how likely a donor cluster is to give a second gift. Upgrade Outcome: % increase in conversion rate and donor value. Investment Protection Retention 0,000 additional donors gave a second gift.
8 Donor Score Summary Use science to predict the future behavior of donors. Develop cultivation/solicitation strategy based on a group of donors called clusters. Advantages of Donor Scoring Targeted segmentation. Stop casting a costly wide net. Use donor scores to target the right donors with the right message. 4 5 Increase frequency and value of communication to the most productive clusters. Decrease communication to the risky clusters. Donor scores can be used to improve performance in the following fundraising programs: Appeals & Renewals Second Gift Conversion Monthly Donor Conversion Lapsed Reactivation Mid-Level Upgrades Major Donors Identification Planned Giving Identification Increase Revenue. Increase communication to committed, loyal donors on your file. Increased frequency to this segment will generate additional revenue. Decrease Cost. More than 0% of your file generates a very small percent of your revenue. Strategically suppress the Episodic donors from costly underperforming mail campaigns.
9 Next Steps Analyze your entire database. The Masterfile Audit and Action Plan (MAAP) is a free audit of your entire donor file that serves as a guide to understanding how to apply donor scores to your file. Define fundraising objectives. What are your goals for this year and where do you need help? Develop a plan to achieve your fundraising goals using smarter segmentation strategies like donor scores. 4 Evaluate your performance against your goals. FREE audit of your donor file will show you how donor scores can improve your fundraising results. Visit or call ext. 06 to get started.
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