Attribution challenges for online and offline marketers

This week, we’ve been looking at the differences between online and offline direct marketing and how the specialists from these two different worlds can talk to each other.

This difference may be no more stark than it is for attribution.

With online attribution, you can follow a Web visitors journey through your site.  You can (and should) follow them through the site and say that someone we attract to the home page is worth X; if we get them to take an advocacy alert, they are worth Y; if they download a white paper, they are worth Z.  These steps toward donation each have their place in the donor journey firmament online.

With offline, attribution is usually applied with a sledgehammer — they donated to X mail piece, so X gets the credit.

Having run a quasi-membership program, I’ve seen the absurd joy of watching donations spike to last year’s membership pieces the moment this year’s come out.  (OK, “spike” is a bit dramatic; “hill” perhaps?  They go up by a little for a time, then back down.)  People almost certainly set them aside and then, reminded by the latest piece, send in whatever reply device they have at hand.

This is one minor example of how offline attribution is often done, but simplified to the point of absurdity.  One is put in mind of the old physicists’ joke about milk production:

Ever lower milk prices were driving a dairy farmer to desperate measures, so he consulted with  a theoretical physicist. The physicist listened to his problem, asked a few questions, and then said he’d take the assignment, and that it would take only a few hours to solve the problem. A few weeks later, the physicist phoned the farmer, “I’ve got the answer. The solution turned out to be a bit more complicated than I thought and I’m presenting it at this afternoon’s seminar.”  As the talk begins the physicist approaches the blackboard and draws a big circle. “First, we assume a spherical cow of uniform density…” (here’s the origin joke, which I simplified

b_-0px8ugaav6t7

So I guess was the only one who thought of that joke with oversimplification?  Sorry ‘bout that…

Anyway, this way of looking at attribution has several program-damaging faults:

  • It can cause people to cut cultivation communications.  These communications that help retain donors, learn about them, and bring them ever closer to the mission but don’t directly convert can have a big impact on eventual conversion.  In essence, you may end up cutting the wrong thing.
  • It can cause overcommunication.  If you add a communication and it nets positive, you may think it is the power of that communication, when it’s really about the the last communication but there wasn’t enough space between communications to differentiate.
  • It puts you in a mindset where you are thinking about the individual communications, not the individual donors.  This puts you in real trouble.  It’s natural to look at a mail piece or an email and think about how it “generated” the gift (when some research indicates that the last piece is about 16% responsible for a gift, leaving the vast majority to other causes).  In reality, the donor generated the gift.  How do you want to treat that donor going forward.

While sacrilegious to some, offline direct marketers would do well to take a bit of the humility from online attribution models (if not the models themselves) — there is only so much the proximate communication is responsible for.

Attribution challenges for online and offline marketers

When does a match light a flame?

We’ve talked about how a lead donation can be as or more effective than a matching gift campaign and how using a lead donation can also calm the overhead related concerns of donors.  

From that, it may sound like I’m anti-match.

 

mission2bimpossible2bfuse2blighting2bmatch2btv

(insert Lalo Schifrin score here:
BUM BUM BABA
BUM BUM BABA
WAHNAHNAAAH WAHNAHNAAAH etc.)

But I’m not.  It’s a widely used tool that I’ve found to be effective in several cases and, unlike most tactics, the donors I talk to also seem to enjoy matching campaigns.

Some research can help shed some light on when to use a match and when not to.  Karlan, List, and Shafir published a study in the Journal of Public Economics (and who doesn’t pick that up for a little beach reading over the summer) looking at match rates.  

Normal studies tend to focus on whether the match works overall: yes it does or no it doesn’t.  This study, however, gives some guidance on when to deploy a match.  It also cross-deployed the match with a test of urgency, which is one of the building blocks of influence.

So there were four test conditions:

  • Matching gift with urgency (with a reply device and PS that said things like “NOW IS THE TIME TO JOIN THE FIGHT!”; you can tell it’s urgent because it’s in ALL CAPS!).
  • Matching gift without urgency
  • Control with urgency
  • Control without urgency

And they did a bunch of other stuff also that is not relevant for our purposes here, including testing different match sizes and timings and such.

The authors found that urgency actually hurt the appeal in many cases (probably, they hypothesize, because there was no particular reason given for the urgency; when it was combined with a match deadline, this negative effect disappeared).

As for the matching gift, there was evidence that it worked, but it only worked for donors who had made their previous gift in the past year.  These donors were 3.2% more likely to donate with a match in place and their average gift went up.  On the flip side, donors who had last given more than 12 months prior had their response rate drop when the match condition was in place.

I mentioned earlier that the donors with whom I spoke seemed to like the tactic and that seems to be supported by this study: active donors do like a match.  However, it seems to bump into trouble when the person has not donated reanecdotalcently.

There’s likely one exception to this (and this is based only on anecdotal evidence, so take this with an appropriate-sized amount of salt).

I have found that people who have given to a match before are more likely to give to a match again.  Thus, if you are suppressing out 13+ month donors from your match campaign, I’d counsel you to leave the ones who have shown the tactic has worked for them.

Want more studies and analysis like this?  Please sign up for my free enewsletter.

When does a match light a flame?

Building awareness versus actually doing something

OK, that headline is harsher than I meant it.  Awareness is a necessary and useful precondition for many nonprofits.  Using an example I know well, drunk driving was a late-night joke just a few decades ago.  It took awareness activities to alert a nation to the fact that it is an unnecessary, tragic, and violent crime.

But does raising awareness sell?  That is, do people want to donate money to raise awareness about an issue or organization?  Or do they want to fund efforts to remediate wrongs directly?  Robert Smith and Norbert Schwarz wanted to find out.

Actually, being good scientists, they wanted to analyze donor’s metacognition about awareness activities vis-à-vis whether the cause was already in the donor consideration set.  Which means the same thing when you translate it into English.

They found three major things:

  • When people knew more about a charity and its work, they were more likely to donate to it and the more they were likely to donate.  The researchers actually manipulated this knowledge in a cool way. They asked subjects questions about what they had read about a charity, but there were two sets of questions: an easy one and a hard one.  The people who got the easy set of questions and thus thought they knew more about the subject were more likely to donate.
  • This result reversed when the charity was engaging in awareness activities.  That is, if people thought they knew all about the charity and its aims (that is, they got the easy questions), they were less likely to want to invest in the charity’s efforts to raise awareness.
  • Looking at actual donations (not just intent to give), people gave far more to help than to raise awareness when they knew a lot about a cause.  They gave slightly more to help raise awareness when they didn’t think they knew a lot about a cause.

This makes a good bit of sense.  If you think the average person (which people usually consider to be a slightly dumber version of themselves) knows about something, why would donate money to raise awareness?  On the flip side, if you felt there was a story that was undertold, that people needed to hear, you might ante up.

This has a major implication for nonprofits as they mature: what got you here won’t get you where you are going.  In the infancy stage of a nonprofit, it is acceptable simply to point at a problem and say “this is a problem; we need to get more people like you to acknowledge the problem.”  However, as nonprofits mature and people are aware of the issue the cause represents, it needs either to adjust its fundraising efforts to focus on what it is doing to solve the problem or to find more obscure areas of its cause to reenergize its donor base.

This also has implications for donor communications: there’s a difference between what you talk about to acquire a donor and to retain one.  That is, people who are your supporters know you and your issues (or, at least, think they do).  They don’t want to support awareness activities for things they think people already know about.  On the other hand, people who are new to your organization may be willing to chip in to help spread the word.

So remember your audience when you are pitching both helping and awareness activities for greater results.

Building awareness versus actually doing something

Breaking down the “my donor” mentality between direct marketing and major gifts

The first thing that many major gift officers will instinctively do when they see their donor portfolio is to shut down direct marketing efforts to those donors.  After all, you want the donor to take your call and don’t want them mistaking you for a telemarketer.

Imagine if you tried this in any other walk of life.  Imagine going to Jeff Bezos and saying “this person has been buying a lot of stuff from us on Amazon.  Let’s make sure they never get another email from us, because I really think that I can sell them the Lladro Niagara chandelier for $100,000 (plus $4.49 shipping, which is either far too much for shipping or far too little).”

bond_villainHe would laugh at you until he got stomach cramps.  Or he would have an underling, possibly with a mechanical arm, throw you in a vat of piranhas while he stroked a cat.  All depends on the mood.

Bottom line, it’s silly to take someone who has been donating routinely by one means and, by all available evidence, been satisfied with it and cut them off from that means in the hope they might give more.  You should only change this if the donor asks you to (in which case, you should do so immediately, while smiling) or if you have a relationship with the donor to the point that there’s an alternate communication strategy in place.

That said, the major gift officer is right.  You don’t want to treat a potential donor the same way as a potential $10 donor.  This is not a defense of sending someone with the capacity to give a transformative gift the same 12-mail-pieces-and-a-cloud-of-dust approach that everyone else gets. It means:

A donor newsletter.  You hopefully are doing this already.  And you hopefully are basing it on Tom Ahern’s Making Money With Donor Newsletters.  In case you aren’t, your donor newsletter should:

  • Focus on “you” — you being the donor
  • Focus on what “you” did — progress updates and impacts
  • Have short articles
  • Be written for skimmers — white space, bullets, and compelling headlines and images
  • Have a return envelope but not be as “ask forward” as a traditional mail piece.

This more cultivating newsletter will help you make money from these donors.  But it also creates a holding pattern for your major gift officer.  You’ve already made the segue to what impact the person can have, leading to a more natural conversation when the officer is able to get in front of the donor.

Higher-touch communications.  This can be simple things like crossing out the impersonal salutation on a letter and writing in “Dear Nancy,”.  Paperclips in your mail pieces show that the piece has been touched by human heads.  First-class postage is a nice touch, as is expedited postage to get the mail piece to the donor.  One nonprofit of my acquaintance has their CEO write a holiday letter in blue ink, then copies it on the color copier for a handwritten appearance.  These are techniques that can segue naturally to higher-value communications with a major gift officer.

Higher-value communications.  We’ve discussed the supreme value of exclusivity.  A major donor may want to be able to get a sneak preview of your upcoming report or have an exclusive briefing call with your head of government affairs.  These types of velvet rope communications can build to events where major gift officers can meet with them face to face.  Once natural enemies, direct marketing can set up the major gift relationship.

Helping define the major gift portfolio: You are looking for one of two things: a long giving history with multiple gifts per year, increasing gift amounts, and participation in the mission or someone who makes an unusually high first gift.  Usually the first group will be better prospects.

Thank extremely well.  Have you ever heard a potential major donor consider not making a major gift because they were thanked too well or too often?  Me neither.

Overall, you are looking to create a spirit of cultivation with these donors.  And you should give of your donors to your major gift officers.  By being a strong resource for them, you prevent them from trying the nuclear suppression strategy with you, allowing you to maximize revenue from these donors over time.

Breaking down the “my donor” mentality between direct marketing and major gifts

More donors versus better donors: cost of fundraising

Previously on Direct to Donor…  the question was raised as to whether it is better to have fewer, better (that is, higher value) donors or more, lower value donors.  And now, today’s episode…

point counterpointWe’ll try this debate style.  Betty will be arguing for our better, fewer donor model (aka the Ravenclaw strategy) and Mo will be arguing for our more donors regardless of how much they give (aka the Hufflepuff strategy).

Betty:  Simply put, many donors just don’t pay for themselves.  Let’s say you have a robust multichannel solicitation program that costs you about $5 per person to run.  If your $10 donors don’t average more than a half a gift year (which may be pushing it, assuming that a healthy portion of them are first-time donors), these donors are literally losing you money every time you communicate with them.

Mo: Then don’t mail them so much.  Solicitation costs are something that are under your control.  Lower-dollar donors don’t have to have the same cadence as a higher-dollar donor.  Nor do you have to send the same packages or use more expensive means like telemarketing to keep your lower-dollar donors.  Try to convert them to less expensive means like giving online.

In fact, because volume is a big predictor of communication costs for means like direct mail, you save money on all segments by having more people on file.

Betty: First, let’s dispense with the notion that a $8 offline donor is suddenly going to become a $50 online donor.  Honestly, at that level, you wouldn’t even pay to e-append them.

Second, bulk of donors will save you per piece, but only by a couple cents per piece.  That doesn’t compensate for the vast differences in net per piece value from a strong donor.  In fact, that’s why you can communicate much deeper into your file with higher-dollar donors; even a small chance of getting a gift from a $100+ donor is better than a good chance of getting a gift from a $5 donor.  

And in very strong average gift segments, you can be making over a dollar, two dollars, five dollars, or more per communication to your strong segments, a virtual impossibility with lower dollar segments.  So your fundraising efficiency is much greater.

Mo: Fundraising efficiency should not be a metric.  You can tell it’s unimportant and misleading because Charity Navigator measures it. (rim shot)  What you want is to be able to maximize the net revenue you can deliver to the mission of the organization.  And thus you want to have these donors.  There are some segments of donors that like to give $5 at a time, but they will do it to every other or every third communication you send them.  While it’s not a home run, getting on base often means something.

And these donors are much cheaper to get.  Sometimes they are half of the cost of acquiring a larger-average gift donor.

Betty: But because they make smaller gifts and usually have smaller response rates, they are far less able to make back the investment.  A quality donor is a gift that keeps on giving and lower quality donors simply aren’t.

Mo: But you don’t know the hidden gems when you acquire them.  Having more donors is likely panning for gold.  And so you want quantity.

Betty: That would be true if donors generally upgraded.  However, if someone gives you the same amount three times, chances are you are going to be getting that amount for the rest of their useful donor life.  Upgrading is good to try to do, but you can’t count on it for the bulk of your audience.  And loyalty goes up as average gift goes up, so you really can tell from average gift whether someone is more likely to become a good donor for you.

The verdict: This one is a split decision.  The case for more donors makes some good points and you should be doing whatever you can do to minimize your costs with low-dollar audiences.

But, by a nose, we have to give this to the case for better donors.  There is a point in every file where donors just stop being profitable.  For some, it’s at $5; for some, it’s at $15.  At that point, you don’t have a good way to make money for your mission from them.  And when you can’t fund your mission from them, you should aim not to acquire them.

“But wait!” Mo says.  “What about the non-monetary benefits of having more donors?”  Well, that will be tomorrow’s debate.

More donors versus better donors: cost of fundraising

Learning from political fundraising: hypercustomization

fireworks4_amkOn the path to his win in Iowa, Ted Cruz took an unusual position for a presidential candidate. He spoke out against fireworks regulations.

Usually, Iowa contests focus on broad national issues that a person would be expected to lead on as president (plus ethanol).  Fireworks range as a national issue somewhere around garbage collection and why-don’t-they-do-something-about-that-tacky-display-of-Christmas-lights-on-Steve-and-Janice’s-house.

But from a data perspective, the Cruz campaign knew its supporters.  There’s a great article on this here.  Here’s a quote:

“They had divided voters by faction, self-identified ideology, religious belief, personality type—creating 150 different clusters of Iowa caucus-goers—down to sixty Iowa Republicans its statistical models showed as likely to share Cruz’s desire to end a state ban on fireworks sales.

Unlike most of his opponents, Cruz has put a voter-contact specialist in charge of his operation, and it shows in nearly every aspect of the campaign he has run thus far and intends to sustain through a long primary season. Cruz, it should be noted, had no public position on Iowa’s fireworks law until his analysts identified sixty votes that could potentially be swayed because of it.”

As we unpack this, there are several lessons we nonprofits can take from this operation:

The leadership role of direct marketing.  Cruz’s campaign is run by a direct marketing specialist.  Contrast this with Marco Rubio’s campaign, which is run by a general consultant, or Jeb Bush’s, which was run by a communications specialist.  As a result, analytics and polling in the campaign are skewed not toward what generalized messages do best with a focus group or are the least offensive to the most number of people.    

In fact, in the campaign, the analytics team has a broader set of responsibilities than normal.  Analytics drive targeting decisions online and offline.

The imperative to know your constituents.  Much political polling is focused on knowing donors in the aggregate.  The Cruz campaign wanted to know them specifically.  So they gathered not just people who were supporters and asked them about local concerns.  This came up with 77 different ideas, including red-light cameras and, as you probably guessed, fireworks bans.  We’ve talked about knowing your constituents by their deeds and by asking them; what’s important about this example is the specificity of the questions.  It’s not “what do you like or dislike”; it’s “what do you care about.”

Testing to know potential constituents.  One the campaign had these ideas, they tested them online with Facebook ads.  The ads weren’t specific to the Cruz campaign, but rather asked people to sign up for more information about that issue.  Once they had these data, they not only had specific knowledge of what people cared about, but the grist for the mill of data operations that could model Iowa voters and their key issues.  

Focusing on actual goals.  Cruz’s end goal is to drive voters, just like ours is to drive donations.  By simplifying things down to what gets people to pull their levers/hit the button/punch the chad, they had a crystallizing focus.  One can debate whether this is a good thing, as the campaign sent out a controversial Voting Violation mailing that attempted to shame infrequent voters with Cruz leanings to the polls.  (It should be noted that these mailings are the part of campaign lore — they’ve been tested and found to be very efficient, but few campaigns have ever wanted to backlash that comes inevitably from them.)  But that focus on things that matter, rather than vanity metrics like Facebook likes , help with strategy.

Hypertargeting: All of this led to some of the most targeted direct marketing that has been seen in the political world.  When telemarketing was employed for particular voters, not only would the message reflect what they cared about (e.g., fireworks bans) but also why they cared about it (e.g., missed fun at 4th of July versus what seems to some as an arbitrary attack on liberty).  This came from both people’s own survey results and what models indicated would matter to them.

So now, let’s look at this in a nonprofit direct marketing context.  How well do you know your donors and potential donors?  Or how well do you really know them?  And how well do you play that back to them?

I’ve frequently advocated here playing back tactics to donors that we know work for them and focusing our efforts on mission areas and activities we know they will support at a segment level.

But this is a different game altogether.  The ability to project not only what someone will support, but why they well, and designing mail pieces, call scripts, and emails that touch their hearts will be a critical part of what we do.  And once you have this information, it’s cheap to do: if you are sending a mail piece or making a phone call already, it’s simplicity itself to change out key paragraphs that will make the difference in the donation decision.

This also applies in efforts to get donors to transition from one-time giving to monthly giving or mid-major gift programs.

So, how can you, today, get smarter about your donors and show them you are smarter about them?

Learning from political fundraising: hypercustomization

It’s time to stop… the big check photo

Every nonprofit has a photo like this somewhere:

ansari_x-prize_check

It’s not necessarily a bad thing to do.  It’s a photo that your corporate partner can use on their Web site or in their annual report as a way of showing their commitment to the community.  And, among a still-sadly-plurality-older-white-male business community, the big check sends the message to other business people in the audience:

Your check is too small.

And this, to stereotype broadly, is not an audience that wants their anything to be too small.

But for goodness sakes: do not put this big check picture in your donor communications.

Ever.

Because it sends the message “your check is too small.”  This is sometimes a message you want to send.  We’ve talked about social proof nudges like “the average donor gives $X” as an upgrade strategy for people who don’t know what the socially acceptable amount is.  (Side note: can any of my readers let me know what the proper amount is to tip a shared-ride (Uber, Lyft, Sidecar, etc.) driver?)

But that is usually trying to get a person to increase their gift by double or less.  What you are saying with the big check is:

  • “What you are giving is 1/10000th of what this person is giving”
  • This is how we treat people who give us things like this: note that we look to be dressed nicely at what appears to be a fancy hotel and really yucking it up with each other.”
  • “This is how we treat people who give us what you give: we send them this letter.”

Needless to say, this is not a response rate booster.  And, since the amount is so far off from not only what they give, but what they could possibly give, it is not an effective anchor for a higher gift.

It also indicates that this type of thing is what you do with your time as nonprofit employees.  This doesn’t help us dispel the overhead myth that we should have Robin Leach narrating the story of our non-profit; it reinforces it.

But the most grievous sin the picture has (and this goes for award pictures and ribbon cutting ceremonies): it’s not about the donor.  Remember that for the donor, you are a means to the end that they are hoping to create in the world.  The opportunity cost of that photo is immense when you could be showing visual proof of the impact the donor is having on the world.

It is a cultural shift because the big check photo is one of those things that is done.  But it shouldn’t be.

Instead, ask if you could also get photos of your corporate partner, grantor, or their employees doing some of your mission work.  Someone in a logoed polo shirt planting a tree or serving on your crisis phone line or reading a story to children is something you can use in your communications.  And it helps cement the bond between you and the person who gave you the big check.  Because they are (hopefully) in it for the impact as well and having a photo of trees, services, or kids is a far better reminder of that than phony grins and foam core.

It’s time to stop… the big check photo