list cooperatives

Using non-donor knowledge to enhance segmentation

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Yesterday, we introduced you to two special people that a traditional RFM analysis would group as 4-6 month $25-49.99 multis.  To wit:

Since Sandy first donated to your organization in 1992, she’s given over 100 gifts.  Nothing exorbitant – she’s now giving $30 every three or four months – but she also has volunteered, come to three walks, signed up for emails, and taken almost every advocacy action you offer.

On the other hand, you acquired Miriam from an outside list in 2012.  She gave $25, but nothing since then.  You don’t have her email or phone number, but a last chance lapsed package piqued her interest four months ago and she gave another $25.

We talked about how their donation history can and should differentiate them.  There are additional indicators here, however, that can also enhance your messaging and segmentation:

Online interactions.  If someone is active online, it’s relatively simple to group their interests by their activity – what they click on, look at, and interact with.  (Actually, technically, interact with is the easiest, click on is slightly harder, and look at can be a bear with some online tools.)

With Sandy, she is an advocate for you and doesn’t seem to require premiums to donate – perhaps you can replace the labels in that upcoming package with a paper version of an action alert – cheaper, and likely more effective.

Other organizational interactions.  Sandy has been a walker – do you want to mention that your walk is coming up in 90 days in the PS or in a buckslip?  Similarly, you should probably customize the messaging to acknowledge that she has given her time as well as her donations.  Making her feel known will only help her loyalty.

Outside data.  Getting outside data on your donors can help you adapt your tactics.  If you find out that Miriam does all of her banking online, perhaps she’s a better target for an EFT-based monthly gift than you thought (with the right messaging).

List co-operative data may indicate that that she gives to nine other charities far more often and more generously than to you.  Perhaps she’s just not that into you and you might want to cut your losses soon than you might have thought.

You may find out she does a lot of business on the telephone and find that it isn’t your organization that wasn’t lighting her up; it was the means by which you were approaching her.

All this and more can come from data appends.  And you can try to get that email address and engage her online, so hopefully you can learn more about her.

All of this – donor and non-donor interactions – are masked by an overarching RFM category.  But what if we could dispense with RFM categories altogether?  We’ll talk about that Friday; if you don’t want to miss it, or any of our Direct to Donor posts, please sign up for our free weekly newsletter.

Using non-donor knowledge to enhance segmentation

An short update on promiscuously charitable donors

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First, I need to acknowledge a mistake. A much beloved former board member called me on the phrase “charitably promiscuous” on Tuesday. In thinking more about this, this probably should have been “promiscuously charitable” in order to mean what I meant to mean. As it stands, I’m probably going to have some interesting search engine implications for a while.

So I’m leaving it there — as it isn’t my goal to rewrite history — but admit my mistake here.

Second, I received in my inbox Wednesday an email from Apogee talking about results from a new study they did of ten non-profits’ donor bases. They looked at these donors’ behavior in their cooperative. Their results?

“On average, within the past year these 24-month donors have given to 3 charities. Over their lifetime in Apogee, they’ve given to 10 charities.”

“Approximately 70% to 80% of these donors have made a contribution within their core category in the past 12 months, but at least 10% of each organization’s 24-month donors donated to six other categories as well within the past year.”

“On average, only 31% of the total amounts contributed by each organization’s donors were made within category. The percentages fluctuated with 26% being the lowest and 46.5% being the highest.”

The full study is gated, but you can sign up to receive it here.  Don’t worry: there is an opt-out link should you wish it.

So, however you want to say it, our donors give to a lot of different organizations, some related to our cause, some not.  Since I was using older data on Tuesday to make this point, I wanted to give out a quick update.

An short update on promiscuously charitable donors

The myth that our donors are unique and special snowflakes

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Charitable people do charitable things.

Things, plural.

There’s a reason that most of the outside lists and people that you pursue to be donors to your organization aren’t from a cohort of magazine subscribers or motorcycle enthusiasts or even a political party.  They are from other nonprofits: charitable people do charitable things.

Russ Reid’s Heart of the Donor survey indicates that the average donor gives to six different nonprofits.  If anything, my experience would say that this number is a bit low.  I once modeled a list of walkers and it indicates than the median walker gave to nine other nonprofits.  It’s the same reason multis are the most profitable donors to acquire.

Charitable people do charitable things.

Yes, it’s a tautology.  But it’s one we often forget when we make our policies around fundraising, especially when we put up walls around our donors internally.

We must accept that our donors will be charitably promiscuous.  Personally, I’ve been impacted by or had family and friends impacted by Alzheimer’s, autism, cancer, depression, heart disease, kidney disease, MS, sexual assault, suicide, and more.  That’s life.  And people who give will give.

We are in that competitive environment.  And the way to differentiate ourselves is to build closer ties to our donors, not to try to build walls around them.  As French playwright Andre Gide said, “It is not enough to be loved — I wish to be preferred.”*

So why do we:

Eschew list cooperatives?  This is a way to take other organizations’ best donors and build models that allow you to get the best of the best.  If you are doing a good job of focusing on your donors, you will be able to steal them away.  If you are doing a bad job, you were going to lose those donors anyway.  You didn’t deserve them.

Not try to get donors who are uniquely tied to us?  This sounds like it contradicts the entire rest of the post.  But if you are worried about fishing in overfished waters (and you should be), you are then looking at how to bring people into your organization who may not have given to nonprofits before.  That starts with content marketing and with lead generation tools, especially online.  This is when it pays to have a strong vision of your donor and constituent journeys.

Try to protect our event donors from becoming organizational donors?  This confounds me, because a quality direct marketing program can help increase both event and non-event giving.  Moreover, you get people who are more connected to the organization.  And when these people are already giving to 6-9 other organizations, usually through direct marketing, unilateral disarmament doesn’t seem the wisest approach.

We’ll talk more about the data on this tomorrow.

 

* No, I haven’t ever read any of Andre Gide’s plays or really know who he is.  He was quoted in I’m With Stupid, a book that while not on the same intellectual level, is waaaaay funnier.

The myth that our donors are unique and special snowflakes

Your first acquisition mailings

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The first thing to know is that mail programs will generally lose money initially. Even if you have great donors and good packages at first, the cost of growing the program will likely outstrip the benefits of running it at first, especially because there are significant fixed costs in the mailing space (e.g., it costs just as much to copywrite a letter than does to 100 people as it does one that goes to 100,000).

Acquisition is where you can get into serious money. Acquisition is designed to lose money for all but the most (absurdly) conservative organization. It’s an investment in bringing new people into the organization and getting them to support you financially. Yet, it’s necessary to start to build your file and lower your marginal costs.

One way to do acquisition on the cheap is with warm and conversion leads. Warm leads are people who have engaged with your organization non-financially (e.g., remember those folks we got to download our white paper last week and give us their contact info?); conversion leads are people who have donated, but not through the mail (e.g., online donors, walkers, gala attendees, etc.). These are inexpensive ways to get new donors, as you don’t have to pay list rental fees.

The other way to get names is, not surprisingly, to pay list rental fees. Try to find organizations like yours to test their lists – often people who support an environmental/cultural/health/etc. charity support many of them. It’s much easier to convince someone to support something very like what they already support.

It also behooves you to put your list up for rental/exchange as well. This will lower your list costs because you will be trading lists with some nonprofits instead of renting theirs.

Charity Navigator will ding you for having a privacy policy that allows this, even if you allow people to opt out of list rental/exchange at any time. Like so many things in the nonprofit world, Charity Navigator is wrong about this. They would recommend, in fact, that you not mail your donors because of the cost involved and because they don’t believe that part of the mailing is a program expense designed to educate your supporters about your issue and promote awareness. That said, if you took the same mail piece and gave it out at a walk instead of putting a stamp on it, it could be considered almost entirely a program expense.

If this doesn’t seem burdened by an overabundance of logic, you would be correct. Generally, you would do well to take a George Costanza approach to Charity Navigator and simply “do the opposite” of their guidance.

In addition to rental and exchange markets, you can also work with cooperatives to get additional names. These coops include Abacus, Dataline, Datalogix, DonorBase, I-Behavior, Target Analytics and Wiland. I think I’ve tried almost all of these at some time or another. These coops share names among them and will build a model of response to get the best possible donor lists for your organization. Think of it as not renting from 10 different lists, but rather getting the best from 20 different lists. Some work better for some organizations than others and it may take a few to get it right.

The downside here is that your best names will start to get mail from a lot of different organizations. On the flipside, you have access to the best quality names from other organizations. Be sure to hold out part of your file to determine the impact of this mailing structure on your file.

After you look at your first bill for an acquisition and regain consciousness, you will rediscover the value of warm leads. Just because you started a paid mail program doesn’t mean that the free tips discussed earlier, especially about working to turn your Web site into a constituent generator, don’t still apply. On the contrary, free is often the best possible price. Adding to the original thoughts, now that you’ve run a program, look at lapsed donors as another source of (re)acquisition. Generally speaking, lapsed donors once renewed will be more loyal to your organization than an outside acquired name and they generally acquire more inexpensively.

So far, I’ve been talking about mailings – online and off – as one size fits all. In reality, if time and money were no objects, each communication you would send out would be handcrafted and uniquely personalized and there would be bespoke artisanal direct mail pieces coming out of Brooklyn and Portland in lavender scented envelopes.

In truth, you aim for something in the middle using customization. That will be the topic for the rest of the week.

Your first acquisition mailings