When I was but a wee lad, I played youth baseball. Or perhaps more accurately other kids played baseball at me. I excelled in three things and three things only:
- Getting hit by pitches, to the point that I once got hit by a pitch that was called a strike. I had to wait to get hit by the next pitch to take my base.
- Stealing signs.
This last was where my “talent” was. I would watch the third-base coach and when I thought a steal was coming from the signals, I would yell into the pitcher and catcher from my position in right field. (Of course I was in right field. There’s a chance someone might hit the ball to left field.) I probably caused more outs with catching signs than catching balls (though still far less than I caused by batting).
The trick to stealing signs is to look for what is different from the usual. The same is true for catching donor signals – the trick is to look for what is unusual and work from there. Some tips:
Seasonality: Most donors are season agnostic. They donate when an appeal touches them or strikes their fancy or they hear about you on the news or they found a $20 in a purse in the back of a closet. However, some will renew membership in January like clockwork. Others believe in end-of-year giving (this is prevalent among online donors).
Like everything else, there is a way of doing a sophisticated model to determine this. However, like only some things, there is also a fast, relatively easy, and free way to do it in Excel or similar spreadsheet:
- Pull all of the gifts at which you want to look. I would recommend donors with at least three years of giving history and at least four gifts, so you have a sufficient history to work with. You want the gifts labelled by a unique donor ID number.
- Label all of the gifts by month (1 = January, 12 = December, and everything in between)
- Run a pivot table that summarizes the gifts by donor with the min month and the max month.
- Subtract the min from the max.
(If you’d like a walkthrough of this in more detail, please email me at email@example.com)
Now look at the results. The majority of donors will likely have a wide spread of 9, 10, or 11 months. However, you will also see some 0-3 month spreads, meaning that over (at least) a three-year period and (at least) four gifts, they have given to you only in one quarter of the year. Thus, you can likely reduce your costs on soliciting them in the other quarters of the year (not eliminate, as you don’t want them to forget you exist).
If you want to be very thorough, add six to each month number and repeat to capture those few donors who may focus their gifting around both the end and beginning of the year, but not the middle.
Premium v non-premium: This is actually the same analysis as the months, except instead of coding your gifts by month, you need to code your communications by whether they required a giveaway to give. Some people will present as exclusively premium or non-premium donors.
This is powerful combined with seasonality analysis; if you find someone only gives at the beginning of the year to your membership campaign and has never given to a premium piece, you don’t need to send them address labels in May or the calendar in September or telemarket to them in June. Instead, you can use lower cost (and more cultivative) pieces like donor newsletters to maintain the relationship with them. Yes, this may only be saving $3 per year per donor, but if there are 10,000 of those donors on your file, you are talking about real money.
Out-of-place gifts: Someone has given you $10 times. They just make their 11th gift to you: a $173 check. What should you logically ask them for next time?
HPC says you should ask them for $173 (possibly rounding to $175). Common sense says that the person may not have turned from a generally smaller donor to a prospective mid-major prospect overnight.
Research indicates a better answer is to use average donation of giving for longer-term donors. Thus, you see the anomaly, take it into account, but don’t let it drive your decision making.
Another potential treatment is to use a continuous, rather than segmented, version of RFM. We’ll discuss that tomorrow.
In the meantime, if you are interested in more research on ask strings and amounts you should ask for, I’m working on a book/white paper/whatever it ends up being on just that topic. Newsletter subscribers will get a free PDF copy of it when it comes out, so if you would like one, please sign up for my free weekly newsletter here.