This is the first post in a 2-part series I'm writing about maximizing lifetime donor value.
Sustainers are where the money is.
What are sustainers? You probably already know, but it bears some discussion of terminology since there are many gifts that fall under the broad designation of "recurring giving."
Different organizations may call these gifts by different names, and that's okay. The point is, you should track them differently. There might be a darn good reason you are asking for a pledge vs. an open-ended gift.
Why should you care?
Here's why: sustainer giving yields very high return on investment and sustaining donors typically stay active two to three times longer than occasional donors.
Tom over at The Agitator discusses how donor retention is in "free-fall" - combined with soft acquisitions, donors are becoming less loyal all the time. Amergent recently put out a paper detailing how getting the second gift more quickly raises lifetime value and loyalty. The point here is, if the second gift - or even the first - is a sustaining gift, then both lifetime value and loyalty increase.
A couple of other sustainer nuggets:
Next month we'll talk more about stewardship - a key piece of maximizing lifetime value. People support your organization because they support the mission, so connecting their support to your work is key.
And speaking of sustainers, mark your calendar now for the Convio Summit - October 3-5 in Baltimore - because David Glass from World Wildlife Fund is going to be presenting a session again this year on sustainers. David's work in this area is groundbreaking, and if you attended his session from 2010, you know what a treat you're in for.
See you there!
Every year at Summit, our client conference, we honor organizations that are doing truly innovative things, whether its tech-related, campaign-specific or data management brilliance. Our call for Innovator nominations end this Friday, August 12th at midnight, so if you're a Convio client we really hope you will submit! This is the one time during the year that you can earn bragging rights, show-off your team's skills and tell your board members how far you're taking your technology investment!
We want to see submissions from clients of all shapes and sizes in the following categories:
Winners will be recognized at the Convio Summit on October 3rd in Baltimore. We'd love to see you there and better yet, doing an Innovator Award victory lap around the conference hotel! I'd like to leave you with the winners of last year's Best Overall Use of Convio category. Because we had so many awesome submissions we decided to recognize both a small and large organization for the award. Check out their acceptance video and read more about their work.
Yes, donor behavior can be predicted.
Most fundraisers are keenly aware of the challenges associated with acquiring new donors, retaining existing donors and increasing donor value. To meet these challenges, fundraisers are embracing campaign optimization and lifestage management.
For most organizations, the majority of their public contributions are garnered via direct response campaigns. These campaigns generally employ a selection methodology; whereby donors are included or excluded based upon the donor’s recency of their last contribution, the amount of their largest contribution and the frequency in which they contribute – also known as RFM. The RFM selection methodology has many inherent benefits. Namely, it is an easy method to categorize donors and track their performance. Also, RFM allows a campaign manager to easily include and exclude groupings of donors based upon their RFM behavior. This method works stellar for segments that are solidly profitable or unprofitable. But, for segments that are marginally profitable or unprofitable, RFM alone isn’t so stellar. More times than not, unprofitable donors will be included or profitable donors will be excluded from these segments.
So, how should a strategic fundraiser improve the performance on marginally profitable segments, or be so bullish as to find ‘pockets’ of profitable donors in marginally unprofitable segments? Enter stage right, campaign optimization. Optimizing campaigns can be done several different ways. Let’s focus on RFM+A – ‘A’ttributes. Applying single-variant analysis to any RFM segment can provide a degree of discrimination that can easily detect donor groupings that are profitable.
For example, let’s assume we have an RFM segment grouped with 10,000 donors who have given a gift in the past six months, with a largest single contribution between $25 - $49.99 and an annual frequency of one gift. Further assume that this RFM segment has a 3-month ROI of .91. In other words, for each $1.00 expended on this segment, the return is only $.91. Now let’s suppose that we parse this segment of donors into age bands such as 40 – 49, 50 – 59, 60 – 69, etc., and find that individuals who are 60 years of age or older are profitable and those under 60 years of age are unprofitable.
Age is just one attribute that can be used, but other attributes such as household income, wealth, lifestyles, philanthropic giving to other non-profits, giving to other channels (e.g. online) can be used in this RFMA method. By default, clients using Convio’s campaign management services automatically gain access to these demographic, philanthropic and multi-channel variables. This provides a means to more effectively cultivate valuable relationships with constituents.
Fundraisers have a unique opportunity to proactively identify donor lifestage events. A lifestage event can be defined as a point in time when a donor increases or decreases their loyalty to an organization. For example, the period of time following a donor’s first-time gift is a lifestage. For most organizations, 60% or more of their first-time donors will never give again. Conversely, a portion of these first-time donors will become monthly sustainers. The trick is to identify which pathway a specific donor will follow. Identifying other lifestages such as active donors who are at risk of defection; middle donors who are likely to increase share of wallet; lapsed donors who are most likely to re-engage; or even identifying event participants who are likely to become financial contributors can significantly improve fundraising performance.
Being able to identify when a donor enters a lifestage, and predict the likely behavior that a donor will exhibit during the lifestage is critical for successful lifestage management. Additionally, having an effective strategy to influence the donor’s behavior within the lifestage is equally important. Convio’s Strategic Services utilizes data modeling techniques to effectively predict the likely pathway a donor will pursue within a lifestage. In the above example of the first-time donors, a model can determine which new donors have the greatest propensity to become sustainers, and determine which of these donors will never give again.
Powerfully, this allows timely and relevant communication strategies to be implemented against both sets of donors; therefore, increasing the retention and lifetime value of those donors likely to become sustainers, and decreasing the amount of budget expended on those donors who are never likely to give again.
One last important point – managing these lifestages can be a daunting tasks and one that should be managed with Constituent Relationship Management (CRM) technology. Manually managing a donor’s movement in and out of a given lifestage is a recipe for failure unless your database contains less than a few hundred donors. To do this correctly, one should consider Convio’s Luminate CRM™ a technology built on the Force.com platform which natively automates the identification, communication and management of donors from one lifestage to another. This takes the focus off of the logistics and lets the fundraiser focus on the strategy of retaining and improving the value of each donor relationship.
The following post is by Katya Andresen and originally appeared on her blog, Katya's Non-profit Marketing Blog. In addition to blogging, she works as the Chief Strategy Officer for Network for Good, a Convio partner.
A couple of days ago, I joined Mark Rovner and Alia McKee in a Network for Good speed consulting round on the good, the bad and the basics of nonprofit websites. Since I get so many questions about websites, I wanted to share the key takeaways. You can access the whole session (for free) here.
The key rules:
So what are some good websites? Mark, Alia and I like these.
Here are tips for sites we reviewed: how to make your site better.
Want more information? Check out the Online Fundraiser’s Checklist 2.0 for great website tips.
In addition to the resources provided by Katya, the following Connection Café posts can help you build a great website for your organization.
Earlier this summer, I attended the National Partnership for Women and Families (NPWF) annual gala lunch. The organization was celebrating its 40 year anniversary and several very fabulous accomplishments, too. The RSVP list was HUGE (I’ve never seen Washington, DC’s Hilton as crowded as it was that day), the menu was set (grilled chicken salad served on a bed of micro greens), and the speakers were confirmed (including First Lady Michelle Obama)! There was just one problem:
The First Lady’s presence required all guests to be screened through a metal detector which meant long lines of event goers waiting around with nothing to do.
Have no fear! In the weeks leading up to the event, the smart minds of the NPWF staff were hard at work with a plan to not only entertain guests while in line, BUT add value to their luncheon experience with the use of a little technology.
Here’s how it went down:
When I arrived at the event, I was presented with a ticket with my table number on it. There was a QR code printed on the ticket which, when scanned by my QR code reader on my smartphone, took me to a fabulous little site which included the seating plan for luncheon, the luncheon program, the video that was shown at the beginning of the lunch, and links to the NPWF twitter feed and Facebook profile.
I know what you’re thinking: I have no idea what a QR code is and that link to the Wikipedia article isn’t going to cut it. So, allow me to take a moment to explain what I’m talking about.
QR codes, short for “Quick Response” codes, are similar to barcodes, but with more web savvy pizzazz. When scanned using an app for your smartphone, they automatically take you to a website, image hosted on the web, calendar invite, series of text, or other types of content. They make copying and pasting URLs unnecessary and the Convio team is all about ‘em! In fact, my colleague Jonathan just posted something yesterday on this here blog about this fancy pants topic. Check it! I told you, we’re ALL about ‘em. And QR codes can be created really easily (and free of cost). There are a bunch of websites and mobile apps that’ll whip one up for you in seconds (check out this list for a few of the best).
So, back to my lunch date with the First Lady. The fun times I had on the NPWF mobile site kept me entertained while in line and enhanced my experience at the luncheon itself. I knew exactly how to find my table in the sea of the ballroom, previewed the video so I could turn my attention to live tweeting when it was shown to the whole luncheon crowd, and connected me with two great social media outlets so I could share the experience with my 2,500 Facebook friends (yes, that’s right, I love Facebook).
In addition to the QR code and mobile site, NPWF also had tons and tons of helpful and friendly volunteers greeting folks in line, answering questions, and keeping things moving while we waited. This was another very smart tactic since it added a little human connection and positive energy to a situation that would otherwise feature masses of cranky, hungry event participants.
I applaud the NPWF for their very savvy use of a QR code and a mobile site!
So now that you have a good feel for how much I enjoyed the NPWF luncheon QR code, I thought it would be useful to discuss a few other tips to make use of these funky black and white squares.
Direct Mail: Consider putting a QR code on a direct mail piece! USPS will even give you a 3% discount if you do so before August 31.
Membership Cards: Another great idea for QR codes is what Convio client WQED is doing -- they've put a QR code on their membership card so members can scan the code and go directly to a smartphone enabled site that has a listing of all the member benefits. So when folks are out and about, they can quickly and easily access that information.
Mix It Up: Get creative with where you put QR codes! Here is an extensive list that was featured on the Nonprofit Tech 2.0 blog earlier this year.
Beware: Before you plaster your office with QR codes directing folks to a mobile optimized donation form, check out this helpful article on QR codes gone bad. HINT: remember to test the code and link to sites that look good on smartphones.
To the Beltway, and Beyond: Advocacy friends, don’t think QR codes are just about the dollars. Epolitics has a whiole bunch of exciting ideas about ways you can incorporate QR code fun into political campaigns.
Form AND Function: Remember that QR codes can be stylish too! Here are 15 examples of well accessorized QRs.
And in the category of the most juicy Connection Café cliffhanger ever, consider this: we’ll be doing some very fancy things with QR codes at the Convio Summit in October. Join us there and experience the QR fun for yourself!
PS—One thing that is really important with QR codes is to make sure the place you’re sending people that use them is going to look good on a mobile device. If you’re using Convio CMS, don’t forget to check out the Summer 2011 release goodness all about mobile detection and sites that play well with smartphones. Just saying…
Subscribe to receive posts via email:
Get answers to product questions, join "Birds of a Feather" discussions and more. Join the Online Community
Alltop - Nonprofit
A Small Change
Bob Ottenhoff's Blog
Donor Power Blog
Future Leaders in Philanthropy
Katya's Nonprofit Marketing Blog
Kivi’s Nonprofit Communications Blog
Nonprofit Law Prof
Pamela’s Grant Blog
Sea Change Strategies
Zen and the Art of Nonprofit Technology