ACQUISITION MODELS AND MODELING

Transcription

1 2010 WASHINGTON NONPROFIT CONFERENCE January 28-29, 2010

2 ACQUISITION MODELS AND MODELING Don Austin 2010 Washington Nonprofit Conference 2

3 20 th Century Predictive Models Models were based primarily on demographic data Age Income Household Composition Some lifestyle information was available on a small portion of the database Pet Owner Sweeps participant Coin collector 2010 Washington Nonprofit Conference 3

4 20 th Century Predictive Models RESULTS For most Nonprofits models were driven primarily by age. For Nonprofits there was little differentiation from one organization to another except in age and income. The target markets were not well defined and the models often performed poorly Washington Nonprofit Conference 4

5 21 st Century Predictive Models Consumer databases are information rich in demographic and behavioral elements. Behavioral data is augmented by transactions from catalog, retail, and online purchases. These databases are smaller but contain highly qualified households. Purchases are rolled up into broader categories and include: Recency Number of purchases Overall spend amounts Number of retailers 2010 Washington Nonprofit Conference 5

6 General Model Types RESPONSE MODELS Use respondents and non-respondents from one or more acquisition campaigns. This method seeks to find prospects like those who recently responded to an acquisition campaign. But 50% of newly acquired donors never make a 2 nd contribution. GOOD CUSTOMER MATCH MODELS This method finds prospects who are similar to higher dollar, multi-gift donors Washington Nonprofit Conference 6

7 Examples These are some of the variables from a model created for a community based nonprofit: + Age 53 plus and $100,000 or more income + Least likely to have credit card balances + 20 or more merchandisers + $1,000 plus 12-month spend + Travel purchase + Golf purchase - 2 or fewer merchandisers in the past 12 months 2010 Washington Nonprofit Conference 7

8 Examples These are some of the variables from a model created for a national health related nonprofit: + Age 70 to 79 (no income criterion) + Health/beauty purchase in past 12 months + 10 or more merchandisers + $100 plus spent in the past 12 months + Catalog purchase only (no retail or web) - Catalog recency 25+ months - Less than $50 spent in the past 12 months 2010 Washington Nonprofit Conference 8

9 21 st Century Predictive Models RESULTS The models developed from these databases are: Better targeted with regard to demographics and lifestyles Include purchase frequency as a measure of disposable income Include recency of activity Often include product specific in formation These factors result in better performing models that produce on the front end as well as the back end Washington Nonprofit Conference 9

10 Lapsed Donor Reactivation Recency data from the transactional variables increases response rates significantly. Spend amounts can further qualify prospects. Lapsed donor match rates average about 30% depending on how lapsed the donors are. Lapses as great as 10 years have been tested. Responses rates can increase by as much as 100% for matched versus unmatched names Washington Nonprofit Conference 10

11 Case Study ACQUISITION MERGE OPTIMIZATION Mike Vcelik 2010 Washington Nonprofit Conference 11

12 In 2006 Boys Town s goal was to improve prospecting results. Modeling is the final piece of our incremental strategy to improve results. Starting in 2006 through 2008, Boys Town started with: Creativity, Copy, Ask, Art and Package Boys Town isolated and tested those elements to improve and establish a solid control before moving onto modeling Washington Nonprofit Conference 12

13 Boys Town s Goal for Modeling Improve our Return on Investment (ROI) and Cost to Raise a Dollar (CTRAD) by an additional 5 to 10 % 2010 Washington Nonprofit Conference 13

14 Boys Town s Model Approach Enlarge the initial universe of gross names exchanged or rented based on an estimated number of prospects to be eliminated Washington Nonprofit Conference 14

15 Model Objectives Recover 80% of the revenue while removing the fewest number of donors from the mailing Washington Nonprofit Conference 15

16 Key Points to Generating the Model. 7.8 million records from the two acquisition mailings (Sept., 08 to Feb., 09) 143,000 responders were identified Singles, multi-buyers and packages were identified Renewal and lapsed donors were made available. Responders and Non-responders were modeled to validate results Model broke the universe in 20 segments with a non-matching group Washington Nonprofit Conference 16

17 Model Description Model Variable Effect Data Source Less Internet Savvy & Early Adopters to New Technology + Consumer File Household Length of Residence - Consumer File Household Personal Check Payments in the Last 12 Mo. + Purchase Behavior Catalog Orders in the Last 12 Months + Purchase Behavior Web Purchasers - Purchase Behavior Most Credit Need Households + Consumer File Household Total Dollars Life to Date - Purchase Behavior 2010 Washington Nonprofit Conference 17

18 Validation and Back Testing Model Assumptions Model was applied and back tested to September 2008 and February 2009 results. Model was applied to June 2009 mailing but not used for selection (Validation test). First used with September 2009 acquisition mailing Washington Nonprofit Conference 18

19 Fall 2009 Model Results Description Rate Avg. Gift Cost Per $ Segments 1 & % Segments 3 & % Segments 5 & % Segments 7 & % Segments 9 & % Segments 11 & % Segments 13 & % Segments 15 & % Segments 17 & % Segments 19 & % Model NoMatch Names 1.84% Washington Nonprofit Conference 19

20 Fall 2009 Acquisition Benefit Analysis Performance of Replaced Names $122,708 (340,000 x 1.82% x $19.83) Performance of Eliminated Names ($73,654) (340,000 x 1.04% x 20.83) Model / List Cost* ($28,900) Net Gain $20,154 *Eliminated 340,000 names at a cost of $25 per thousand = $8,500 List cost for 340,000 names at.06 each = $20, Washington Nonprofit Conference 20

21 Donor File Impact Number of Donors from Additional Names (340,000 x 1.82%) 6,188 Number of Donors for Eliminated Names (340,000 x 1.04%) (3,536) Net Increase Due to Modeling +2, Washington Nonprofit Conference 21

22 Boys Town Findings Package did not make a difference in scoring Card Package vs. Max Flat Scores and results held up in smaller mailings Model is top heavy, not equally divided among segments 10% to 20% quantity difference between segments 1 & 2 vs. 19 & 20. Model is used to remove bottom 10% of single buyer names. 2X multi-buyers perform about three segments higher than singles. 20th segment of 2x multi-buyers roughly performs the same as 17th segment for singles Washington Nonprofit Conference 22

23 Modeling Advantages Improvement in response rate and ROI on a list that require a lift in performance Better manage name volume to hit predetermined mail quantities, print components and expense budget 2010 Washington Nonprofit Conference 23

24 Modeling Risks Run the wrong model Attributes are weighted correctly Create test cells with each mailing to verify model is working correctly Spot check names for unique sequence number after merge/purge and model Compare model scores and quantities with prior history/experience in segments Distribution of singles based on prior history/experience 2010 Washington Nonprofit Conference 24

25 Next Steps Determine if further gains can be achieved by looking at the model on a list by list basis Explore using lapsed donors from other list sources. Test names from compiled data bases Test model on lapsed donor in house file 2010 Washington Nonprofit Conference 25

26 MODEL WHO, MODEL WHAT, MODEL WHY? A List Broker s Perspective on Modeling Lists for Acquisition and Some Easy Steps to Get You Started. (along with a few choice ideas you may want to test if you haven t already.) Lauri Simone 2010 Washington Nonprofit Conference 26

27 MODEL WHO??? Model any out of category lists that work for your organization Publishing Lists Individual titles and masterfiles Catalog Lists Individual lists and masterfiles Consumer, Compiled and Transactional Databases Cooperative Databases (gotta be in it ) 2010 Washington Nonprofit Conference 27

28 And who would those be? A few examples Publishers that offer modeling Bonnier Corporation DRG Meredith National Geographic Society Newsweek Rodale Time, Inc. TV Guide 2010 Washington Nonprofit Conference 28

29 A few more Catalogers Collections Etc. Eddie Bauer Harry & David Omaha Steaks Orchard Brands Redcats 2010 Washington Nonprofit Conference 29

30 Who else??? Consumer, Compiled and Transactional Databases AAA Consumer Database ALC Consumer Database AmeriLINK Consumer Database Datamatch Consumer Database Equifax Consumer Database Experian Consumer Database MGen Consumer Database TargetSource 2010 Washington Nonprofit Conference 30

31 Cooperative Databases Abacus Donorbase Target Wiland 2010 Washington Nonprofit Conference 31

32 Model What?? Their data using a sample of your own. Before proceeding do your due diligence. Define your goals Discuss them with your broker Talk it out with the list manager and analysts building the model Take the course of action that best suits your needs 2010 Washington Nonprofit Conference 32

33 What are your goals? Response Rate Average Gift Expand Audience Create a fill pool 2010 Washington Nonprofit Conference 33

34 What s the flavor of the day?? Good Customer Match Model Finds prospects that look like your donors. Response Model Utilizes responders and non-responders from prior campaigns to determine your best prospects Washington Nonprofit Conference 34

35 Why Model? Incremental Growth Expanded universe Tap into segments previously unavailable Learn more about your donors 2010 Washington Nonprofit Conference 35

36 No really why??? Because the model offers the potential to increase response rate anywhere from 2.5% - 20% Straight select =.79% Model Nth of Segments 1-3 = 1% And the potential to increase average gift anywhere from 5-15% (w/out intentionally driving AG) Straight select =$19.80 Model Segment 1 = $23.37 And it is highly likely that the model will expand your universe Straight select universe = 220M Model universe (all deciles) = 1.3MM 2010 Washington Nonprofit Conference 36

37 Is that it??? You will tap into segments you couldn t make work for you in the past You will learn more about your donors And along the way you may even save a few bucks Washington Nonprofit Conference 37

38 Is that it??? Not really Here comes the BONUS round Reuse Lists Consider adding a hotline mailing Mail your multi buyers Don t get complacent with your continuation lists Take some time to revisit old results It will pay off. NOW THAT S IT!! 2010 Washington Nonprofit Conference 38

39 PROBLEM SOLVING A CONTROL PACKAGE WITH A MULTI-CHANNEL APPROACH Angela Guzman Deputy Director of Direct Marketing DCCC 2010 Washington Nonprofit Conference 39

40 The Package (Acquisition Control) 2010 Washington Nonprofit Conference 40

41 The Problem While the package performs well enough overall to remain the control, it yields high volume returns of No$ Responders; people want to share their opinions but don t have the $ to give Inflated BRE counts, depressing average gift per envelope Deducts postage from BRE account funds for no immediate return 2010 Washington Nonprofit Conference 41

42 The Solution: Part I DRIVE RESPONSE ONLINE!!! HIGHLIGHT URL In the printed Piece Drive Traffic Online! 2010 Washington Nonprofit Conference 42

43 The Solution Once they are online, collect all the info for Follow-up solicitations! 2010 Washington Nonprofit Conference 43

44 The Solution: Part II Track your no$ responders!!! Key/capture the information to track these returns; it is an audience with a vested interest in spite of not contributing the first round. Think of them as online petition-signers. They have taken the first step, and now you need to convert them to donors. Develop a follow-up strategy for conversion Washington Nonprofit Conference 44

45 The Multi-channel Solution Add these no$ responders into a subsequent prospect solicitation. Make them their own list to track! these responders if you have sufficient information; and/or do an append first Phone these responders to follow-up and potentially convert; reference recent survey and acknowledge receipt in script Washington Nonprofit Conference 45

46 Some encouraging results (in the mail -- DM) In treating these no$ responders as their own list in subsequent acquisition mail efforts (with same control package), we have seen some encouraging results, with response rates comparable to multibuyer lists (exceeding 1%!!) Average gifts are lower for this segment, BUT conversion is a success! 2010 Washington Nonprofit Conference 46

47 More encouraging results (on the phones - TM) Names Total Prospects Total Contacts % Contacts Check Pledges Credit Card Pledges Total Pledges % CC Pledges DM Survey Signers 2007 Data 11,937 5, % % Pledge Rate Average Pledge Check Pledged Dollars CC Pledged Dollars Total Pledged Dollars % CC Dollars Pledge/ Contact Cost/ Contact 12.99% $23.37 $12, $2, $15, % $3.04 $2.25 Projected fulfillment on these names was over $9K slight net loss But easily recoverable with subsequent resolicitation efforts! 2010 Washington Nonprofit Conference 47

48 A Multi-channel Donor is a MORE RELIABLE Donor. Remember that it is SMART strategy to cultivate multi-channel giving. Counter resistant culture. Realm owners can become possessive and protective of their channel, and sharing donors responsive to their channel. A huge hurdle with developing multi-channel giving is negating this culture of thinking. At the end of the day, all the money goes to the same pot/end goal, and your donors become more vested! 2010 Washington Nonprofit Conference 48

49 That s all folks! QUESTIONS??? 2010 Washington Nonprofit Conference 49