Analytics in Plain English: 3 Top Techniques Every Fundraiser Should Know

Transcription

1 Analytics in Plain English: 3 Top Techniques Every Fundraiser Should Know

2 Good Afternoon and Welcome! Our Analytics Topics and Speakers: Top Technique #1: The Missing Link: The Search for Mid- Level Giving Prospects Lawrence Henze Managing Director Target Analytics, a Blackbaud Company Top Technique #2: Who Are My Donors? What You Need to Know About Donor Profiling Don Austin Director, Analytics InfoGroup Nonprofit Top Technique #3: Lapsed Donors: Using Analytics to Improve Reactivation Rates Bryan Terpstra VP, Fundraising LW Robbins

3 Data Mining and Predictive Modeling: Analytics and Analysis for Mid-Level Giving

4 Reality Check

5 Building the Middle of the Pyramid: New Strategy for Success Mid-level or Transitional giving focus Focus on individuals transitioning from lower annual giving amounts to middle level giving clubs Using data mining or predictive modeling to identify individuals on a transitional trajectory Implement high touch cultivation and solicitation strategies to interact with these prospects So, for purposes of discussion, Let s assume that for this organization is defined as $500-$2500 All the necessary shareholders have been engaged There is a rough plan for the strategy following the results

6 Data Mining On Your Own Years of Giving Number of Mid-Level Donors Years of Giving Mid-level donors make an average of 9 annual gifts prior to reaching major donor status (also check mode or median) Establish a threshold, such as 6 annual gifts, to identify potential midlevel prospects Change stewardship efforts to cultivate better relationships with these prospects at earlier stage (i.e.- personal thank you program)

7 Donor Profiling/Predictive Modeling Long used in the social sciences & by business Assumption: donors have some characteristics in common Discover those characteristics (demographic, financial, behavioral, transactional) Screen the entire database against those characteristics Predict giving or membership

8 Mid Level Donor Profiling Internal Data Look for internal and transactional data to tell us donor/non-donor characteristics Gender Length of time on file Number of years giving Response vehicle (direct mail, , etc.) Relationship to organization (donor, member, volunteer) Special event attendee

9 Mid-Level Analysis External Data Data to append to your file: Census Cluster data Equifax Niche data Acxiom s PersonicX Nielsen s PRIZM Wealth Summarized credit data

10 Donor Profiling External Data (Experian Niche Clusters) Applications of cluster data Append cluster codes to your entire database Segment donors and non-donors by dominant clusters Analyze the distribution of codes For example, 77% of donors are described by 9 of the 26 clusters 39% of the non-donors are also described by the same 9 clusters Concentrate on this group

11 Donor Profiling External Data Niche Clusters Further application of cluster data Determine solicitation frequency or aggressiveness by cluster performance Craft messages by cluster Use clusters to segment responders by channel: Direct mail Telephone Personal solicitation

12 Predictive Modeling and Segmentation Accurate and reliable methodology for segmentation of prospects by likelihood and ability to give Scores based on characteristics of current and past donors For broadest application score the entire database available for solicitation

13 Identify the Action to be Predicted

14 Building the Profile

15 Scoring the Database

16 Predictive Modeling Results TGR TGR TGR TGR TGR $1-$250 $251-$500 $501-$1,000 $1,001-$5,000 >$5,000 (1,2,3) (4) (5) (6,7) (>=8) TGL >= 851+ (Excellent) TGL (Very Good) 2, TGL (Good) 6,828 1, TGL (Average) 9,583 1, TGL <= 450 (Below Avg.) 19,714 1, TGL = transitional giving likelihood (predictive score of likelihood to make this gift) TGR = target gift range (amount that each prospect is predicted to give)

17 Our Goal

18 Strategies for Success: Communication Audit Refining your cultivation, solicitation and stewardship plans How many times do you: Solicit? Thank? Inform? Invite? Make sure you look at the entire extent of organizational communications All communications media: Print Voice Electronic

19 Strategies for Success: Communication Audit January February March April Development Membership Special Events Stewardship Information Athletics Cultural Other Media: Print (P); Telephone (T); Electronic (E)

20 Strategies for Success Apply mid-level donor profile to database Segment best prospects Create different solicitation strategies High touch annual fund Personal contact Combination? Couple best solicitation techniques with fewer solicitations, more cultivation and information sharing Thank and steward

21 Who Are My Donors? What You Should Know About Donor Profiles

22 WHO ARE MY DONORS THIS QUESTION INEVITABLY ARISES IN EVERY CHARITABLE ORGANIZATION AT SOME TIME Curiosity Finding Affluent Donors for Major Gifts Campaigns Planned Giving Prospects Marketing Messaging, Corporate Relationships, etc. HAVE A PLAN FOR USING THE INFORMATION!

23 WHO ARE MY DONORS WHAT DATA ARE AVAILABLE TO DESCRIBE MY DONORS? Census Data The least expensive and least accurate Geodemographic Prizm for example Based on neighborhoods Compiled demographics and lifestyle Very comprehensive Purchase behavior Catalog, retail, and web transactions Social Networking Data Number of friends, etc.

24 WHO ARE MY DONORS WHAT DATA ARE AVAILABLE TO DESCRIBE MY DONORS? Census Data Applies to relatively large geographic areas and is not household specific Geodemographic Categorizes neighborhoods into many different segments generalizing on known household data. Compiled demographics and lifestyle Very comprehensive information on household demographics and interests

25 WHO ARE MY DONORS WHAT DATA ARE AVAILABLE TO DESCRIBE MY DONORS? Compiled demographics and lifestyle Very comprehensive information on household demographics and interests Age, Income, Household Composition, Wealth Interest in: TO BE ADDED

26 WHO ARE MY DONORS THE KIND OF DATA PURCHASED DEPENDS ON YOUR OBJECTIVES Planned Giving Prospecting Age and Income Major Gift Prospecting Age, Income, and Wealth Rating Marketing/Corporate Relations Age, Income, Lifestyle Donor Acquisition Age and Lifestyle

27 WHO ARE MY DONORS WHAT DO YOU INTEND TO DO WITH THE DATA? Simply describe characteristics of my donors Incorporate it into my database to use for donor selects Use it for simple donor segmentation Develop complex segmentation for marketing

28 WHO ARE MY DONORS I WANT A SIMPLE PROFILE OF MY DONORS Descriptions are usually provided as frequencies Household Income Percent Less Than $15, % $15,000 - $19, % $20,000 - $29, % $30,000 - $39, % $40,000 - $49, % $50,000 - $74, % $75,000 - $99, % $100,000 - $124, % $125, % Total 100.0%

29 WHO ARE MY DONORS I WANT A SIMPLE PROFILE OF MY DONORS Comparison to a reference sample is useful. Percent Household Income Donors Gpop Less Than $15, % 14.6% $15,000 - $19, % 5.2% $20,000 - $29, % 9.8% $30,000 - $39, % 9.9% $40,000 - $49, % 9.3% $50,000 - $74, % 21.0% $75,000 - $99, % 13.3% $100,000 - $124, % 6.3% $125, % 10.8% Total 100.0% 100.0%

30 WHO ARE MY DONORS I WANT A SIMPLE PROFILE OF MY DONORS An index helps assess the magnitude of the difference. Percent Household Income Donors Gpop Index Less Than $15, % 14.6% 62 $15,000 - $19, % 5.2% 44 $20,000 - $29, % 9.8% 48 $30,000 - $39, % 9.9% 108 $40,000 - $49, % 9.3% 128 $50,000 - $74, % 21.0% 95 $75,000 - $99, % 13.3% 116 $100,000 - $124, % 6.3% 184 $125, % 10.8% 135 Total 100.0% 100.0%

31 WHO ARE MY DONORS I WANT TO INCORPORATE THE DATA INTO A DATABASE What data do you need? Are fields available for the data? How will you access the data? For selects For analysis

32 WHO ARE MY DONORS I WANT TO USE IT FOR SIMPLE SEGMENTION

33 WHO ARE MY DONORS I WANT TO USE IT FOR COMPLEX SEGMENTION Developing clusters of similar donors Creating personas to characterize donors This allows more personalized messaging Better understanding of donor motivation and ability to donate.

34 WHO ARE MY DONORS CLUSTER ANALYSIS Creates clusters of like donors Should be driven by traits affecting donation behavior Cluster analysis provides no perfect answer Requires specialized analytical tools

35 WHO ARE MY DONORS For this client cluster analysis revealed the following five segments, and their proportion of donors:

36 WHO ARE MY DONORS Segment 1. Affluent Professionals This is the wealthiest segment; HOH average age is 51 and 62% of household heads are 45 to 64. Average income is $143,000 and all earn over $75, % are in professional or technical professions. 55% have children under 18 in the household. The average length of residence is about 8 years. The average donation is about $31 and 52% of them are $25+ donors.

37 WHO ARE MY DONORS Segment 2. Middle Class Families The average age is 52 and 63% of household heads are over 45 to 64. Average income is $67,700 and 56% earn between $50,000 and $100, % are in professional or technical professions. 76% are married. Average length of residence is about 5 years. The average donation is about $19 and 32% of them are $25+ donors.

38 WHO ARE MY DONORS Segment 3. Large Settled Families The average age is 57 and 69% of household heads are between 45 and 64. Average income is $86,200 and over half earn between more than $75,000 annually. 41% are in professional or technical occupations. 84% have teenagers or young adults in the household. 94% are mail responsive; the highest of all segments. The average donation is about $21 and 32% of them are $25+ donors.

39 WHO ARE MY DONORS Segment 4. AARP Years The average age is 69 and 63% of household heads are 65 or older. Average income is $47,100; lowest of all segments. 38% are retired. 29% are single females. 21% live in MFDU s. The average donation is about $17 and 23% of them are $25+ donors.

40 WHO ARE MY DONORS Segment 5. Younger Couples and Singles The average age is 42 and 61% of household heads are under 45. Average income is $61, % are single females. 92% of households have only 1 or 2 adults. 28% live in MFDU s, the highest of the 5 segments. The average donation is about $22 and 37% of them are $25+ donors.

41 Lapsed Donors 1) Ways to motivate and engage lapsed donors and 2) Using data/analytics to improve lapsed reactivation rates 41

42 Lapsed Audiences Key Issues Who is lapsed how long have they been gone? Why did they leave? 3 big groups: Pre-lapsed (10-12 months with no gift) Lapsed: usually last gift within range of and months Long Lapsed: typically last gift at 37+ months 42

43 Topics I Will Cover Value of lapsed reactivation Motivating pre-lapsed and lapsed donors to give again Lapsed donor segmentation Modeling/analytics for lapsed donors 43

44 Why should I care about - mailing lapsed audiences? - improving re-activation rates? Because when comparing the pay off for reactivating lapsed donors vs. acquiring new donors Re-activating donors is less expensive Long term value of re-activated donors is typically much higher 44

45 Lapsed vs. New Donors -- Long Term Value Case Study The reactivated lapsed donors for Organization A have a higher annual renewal rate and a much higher average gift than new donors. This resulted in a life time value after five years that was more than double that of the new donors. Organization A Long-Term Donor Value New Donors Year Acquired 2005 Subsequent Giving TOTAL 1st Year 2nd Year 3rd Year 4th Year 5th Year # of Donors 9,784 3,010 2,442 1,968 1,180 9,784 % Renewed Annually 31% 51% 39% 31% % Renewed Cumulatively 31% 25% 20% 12% # Gifts Generated 12,617 6,837 5,267 4,487 3,045 32,253 # Gifts per Donor (Freq) Average Gift Size $83.49 $52.95 $65.38 $96.84 $94.55 $76.96 Revenue Generated $1,053, $361, $344, $434, $287, $2,482, Cumulative Revenue $1,053, $1,415, $1,759, $2,194, $2,482, Long-term Donor Value $ $ $ $ $ $254 Organization A Long-Term Donor Value Reactive Lapsed Year Reactived 2005 Subsequent Giving TOTAL 1st Year 2nd Year 3rd Year 4th Year 5th Year # of Donors 1, ,567 % Renewed Annually 41% 55% 45% 35% % Renewed Cumulatively 41% 34% 30% 22% # Gifts Generated 2,526 1, ,262 # Gifts per Donor (Freq) Average Gift Size $ $91.69 $ $ $ $ Revenue Generated $315, $104, $122, $190, $143, $877, Cumulative Revenue $315, $420, $543, $734, $877, Long-term Donor Value $ $ $ $ $ $560 New Donor LTV = $254 Reactivated Lapsed Donor LTV = $560 45

46 Lapsed vs. New Donors In fact, a recent study* of more than 20 direct mail charities showed that acquiring new donors is getting harder to do: Acquisition median cost per dollar raised has increased each of the last 4 years Total number of new donors acquired down almost 18% in 09 vs. 08 (June to July) Biggest Concern for non profits in the study = decrease in new donors and converting these new donors into loyal donors Now, more than ever increasing lapsed re-activation rates is critical *Trends in Catholic Fundraising 2001 to 2009, Brickmill Marketing Services 46

47 Pre-lapsed and Lapsed Donors Typical Treatment Strategies Pre-Lapsed (about a year since last gift, 10 to 12 months ago) In regular donor renewal stream Lapsed (typically last gift and months) May get less donor renewal mailings, may not get any special messaging or packages Long Lapsed (typically 37+ months) Some NFPs may not mail them at all! Most put certain long lapsed donor segments into acquisition 47

48 Pre-lapsed and Lapsed Donor Strategies That Work Test ways to motivate lapsed donors to give again: Seasonality history of giving once or twice a year in the same time frame? Then test again in that time frame. First appeal what prospect appeal did they respond to in the first place? Send them a similar appeal to remind/reactivate them. Affinity can you call them members, do they like supporter cards or decals? Make them feel like part of a group. Premiums testing name labels, note pads, tokens may increase response. Especially if they have a history of responding to premiums. 48

49 Pre-lapsed and Lapsed Donors Strategies That Work Community do they interact with you in other ways, do they volunteer, go to special events, give you memorial gifts? Then reference this other connection to your organization when you communicate with them. Urgency and/or emergency special programs that need immediate help usually work, use deadlines. More personal contact writing a handwritten note to lapsed donors, sending a year end thank you or holiday card can work. 49

50 Pre-lapsed and Lapsed Donors Strategies That Work Also, consider these ideas: Have you given them your best offers? Short fall, matching gift, year-end holiday, supporter card, emergency mailings can work. Do they know that they have not given in a while? Show them when they last gave and what they last gave works especially well with pre-lapsed. Do they remember your organization and what you do? Test packages that could remind them again who you are. Do you have a signature event or milestone event that is coming up? Like any donor, lapsed may react well to something big and special that is coming up for your NFP organization. 50

51 Approaches to Engage Pre-Lapsed Donors Try language like this It has been almost a year since we received your generous gift $XX. The last time we received a gift from you was in month of Please give again today. We need your continued help to Or show on the reply slip 2009 Annual Fund Gift Received: $20 in May Annual Fund Gift Request: $20 or $25 51

52 Approaches to Engage Lapsed Donors 52

53 Approaches to Engage Long Lapsed Donors 53

54 Lapsed Segmentation Lapsed (typically last gift and months) Test and measure results by 6 month time increments all different dollar ranges frequency, single vs. 2+ gifts or try 2 and 3+ gifts lifetime worth source (if you have different ways donors get on file or different prospect packages) Long Lapsed (typically 37+ months) Similar rules apply Best approach, however, is lapsed modeling or employing a hits strategy 54

55 Using modeling for lapsed donors is very effective! Co-operative Model Several large co-op databases in the industry Target, Wiland Direct, Abacus, etc Typically huge transactional database built from information from many participating organizations some co-ops non profits only, some non profits plus other participants Big amounts of info. about consumer or donor behavior across many organizations Statistical models are built to predict who will reactivate Your lapsed donors are ranked and given scores top 10% to 15% with high scores are identified as key prospects for your lapsed initiatives/mailings 55

56 Co-operative Models What you know Has given you 3 donations over 5 years Donates on average $25 Highest gift given is $40 What a co op might know Income = $60,000 Donates to 5 different organizations each year Has given 6 gifts this year Within past year: 2 clothes catalog purchases 1 garden catalog purchase Subscribes to: 1 home and garden magazine 1 quilting magazine 56

57 Co-operative Model Case Study Even for very small programs, like Organization A s program below, using a co-operative model made a big difference. With less budget in year FY09 (and therefore had to mail less lapsed volume in acq.), lapsed scores helped pinpoint the right lapsed donors and increased response rate by 50%! Organization A -- Acquisition Program Performance of Lapsed Donors report prepared Acq. Mailing Lapsed Mail Quantity Gifts Revenue RR Avg. Gift FY09 January - TAG scores 7, $3, % $17.65 November - TAG scores 7, $3, % $19.66 September - TAG scores 2, $1, % $17.56 rolled up FY09 16, $7, % $18.46 FY08 January - no TAG scores 9, $3, % $19.12 November - no TAG scores 9, $3, % $25.27 September - no TAG scores 10, $3, % $21.99 rolled up FY08 28, $10, % $

58 Using modeling for long lapsed Regression Model Typically not as robust as co-op models Ranking score based on historical info. on your own database Leading indicators tend to be transactional number of past gifts, largest gift, etc Some demographic overlays can help improve the model 58

59 If you can t afford a lapsed model, try this idea Employ a Hits Strategy in Acquisition Program Include long lapsed segments (usually 37+) in your acq. merge process Flag your long lapsed donor lists that hit against outside files These are your donors that are lapsed to you but for some reason are currently giving to a competitor Mail just these lapsed donor lists as hits response rate typically well above what you would expect in effect, you are running a simple model 59

60 Thank You! Questions and Answers

61 Contact Info Lawrence C. Henze, J.D. Managing Director Target Analytics, a Blackbaud Company Lawrence.Henze@blackbaud.com Link to Blackbaud white papers: Don Austin Director, Analytics InfoGroup Nonprofit donmaustin@sbcglobal.net Bryan Terpstra Vice President, Fundraising LW Robbins bterpstra@lwra.com ext. 663