Strategy+Business is not a publication that focuses on non-profits, but it's still a great resource for fundraisers. Check out a recent article on consumer choice.
My colleague Jeff Brooks (Future Fundraising Now) summarized the article nicely: "choice isn't good; good choice is good."
One good nugget is item #4, which talks about referring to the person's past choices to help them decide.
I've found that to be true in fundraising. In an A/B test the appeal letter that referred to the donor's past gift to the same offer generated more response than the appeal that presented the same offer without the reference.
Test this with your donors, and let me know how it worked.
Sunday, September 26, 2010
Tuesday, September 21, 2010
What Would Your Mother Say?
Back to the Heart of the Donor study ...
One of this study's findings has puzzled me over the last month. It's this: the speed in thanking and receipting a donor's gift ranked low among the factors encouraging the donor to give a second gift.
I always thought a prompt thank you was important. My mother told me growing up to always say thank you. Always write a thank you note for gifts. And do it right away. Don't these things matter to the recipient?
It seems to go against a fundamental fact of direct response -- the recency curve. The curve tells us that the donor who last gave is the donor most likely to give again. Don't you want to fill the space under the high part of the curve with the good will that results from a thank you?
So, is the Heart of the Donor study is a bunch of hot air? Not at all. I've worked with the researcher behind this work, and I can vouch for him and his work. It merely points to the challenge of self reported data. We sometimes say one thing in a focus group or survey and then do another.
That's why is good to confirm this stuff with testing in the market. If your organization is slow to thank donors, don't use this study to let yourself off the hook. Rather, test a more prompt receipt/thank you package.
One of this study's findings has puzzled me over the last month. It's this: the speed in thanking and receipting a donor's gift ranked low among the factors encouraging the donor to give a second gift.
I always thought a prompt thank you was important. My mother told me growing up to always say thank you. Always write a thank you note for gifts. And do it right away. Don't these things matter to the recipient?
It seems to go against a fundamental fact of direct response -- the recency curve. The curve tells us that the donor who last gave is the donor most likely to give again. Don't you want to fill the space under the high part of the curve with the good will that results from a thank you?
So, is the Heart of the Donor study is a bunch of hot air? Not at all. I've worked with the researcher behind this work, and I can vouch for him and his work. It merely points to the challenge of self reported data. We sometimes say one thing in a focus group or survey and then do another.
That's why is good to confirm this stuff with testing in the market. If your organization is slow to thank donors, don't use this study to let yourself off the hook. Rather, test a more prompt receipt/thank you package.
Monday, September 13, 2010
The All Important Second Gift
I've been going through the Russ Reid / Grey Matter "Heart of the Donor"study. Lots of good material to inspire new thinking on donors and fundraising.
They surveyed over 2,000 donors about many aspects of their giving. They asked donors what encouraged them to give a second gift to an organization. These donors identified three things:
1. Explained the specific mission of the organization to me (76%)
2. Made me feel that my gift really made a difference (72%)
3. Gave me information about exactly what my gift helped accomplish (71%)
These all make intuitive sense. Further, it's an crucial that your donors do go on to give second gifts. The data tell us that donors who give second gifts within their first year are more than twice as likely to give again in their second year.
Two = Three
There's more. These multi-gift donors turn out to have higher long-term values (LTVs). Usually 2.5 to 3.0 times more. The following graph of one organization's direct mail acquired donors shows that multis have an LTV that is 2.8 times that of their single gift counterparts.
Recommendation
Be sure to audit what you say to new donors after their first gift. How well are you doing the three items listed above? If you're missing in any of these areas, then by all means fix it. But do test your new ideas to learn their impact.
They surveyed over 2,000 donors about many aspects of their giving. They asked donors what encouraged them to give a second gift to an organization. These donors identified three things:
1. Explained the specific mission of the organization to me (76%)
2. Made me feel that my gift really made a difference (72%)
3. Gave me information about exactly what my gift helped accomplish (71%)
These all make intuitive sense. Further, it's an crucial that your donors do go on to give second gifts. The data tell us that donors who give second gifts within their first year are more than twice as likely to give again in their second year.
Two = Three
There's more. These multi-gift donors turn out to have higher long-term values (LTVs). Usually 2.5 to 3.0 times more. The following graph of one organization's direct mail acquired donors shows that multis have an LTV that is 2.8 times that of their single gift counterparts.
Recommendation
Be sure to audit what you say to new donors after their first gift. How well are you doing the three items listed above? If you're missing in any of these areas, then by all means fix it. But do test your new ideas to learn their impact.
Sunday, September 5, 2010
Unpacking Long-Term Value
It's important to know the Long-Term Value (LTV) of the donors you acquire. This helps you justify the expense of acquisition. It's also important to understand the donor performance underlying LTV. Here's a basic table that does just that:
The table tracks the 5-year performance of 1,000 donors acquired in Year 1. In Year 1 the average donor gave 1.4 gifts with an average amount of $30.
In Year 2, only 400 donors continued giving. As is usually the case, these donors brought an increase to giving frequency and average gift. And they added $26 on average to their cumulative LTV.
The active donors from Year 2 become the beginning number of donors for Year 3. There are fewer donors than the prior year due to attrition. However, these donors have stronger retention (% Active). Again the performance of the donors continuing is higher than the year before. Less committed donors are leaving the fold. Those who stay have stronger giving performance.
At the end of 5 years, the cumulative LTV is $121. Each metric in the table -- % Active, Gifts per Active and Average Gift -- is instrumental in building to this eventual LTV.
If retention had been lower, the LTV would have dropped. That's why bonding donors through 2nd gift strategies is important. Same for lapse prevention and lapsed donor reactivation.
If giving frequency changes, so does LTV. That's why we need to give the donor ample opportunities to give to multiple offers and multiple channels.
Average gift also has an impact. That's where challenging yet appropriate ask amounts come into play.
The LTV metric helps you understand your organization's growth. At the same time, there's a lot going on underneath that helps us understand we can adjust strategies and tactics to improve it.
The table tracks the 5-year performance of 1,000 donors acquired in Year 1. In Year 1 the average donor gave 1.4 gifts with an average amount of $30.
In Year 2, only 400 donors continued giving. As is usually the case, these donors brought an increase to giving frequency and average gift. And they added $26 on average to their cumulative LTV.
The active donors from Year 2 become the beginning number of donors for Year 3. There are fewer donors than the prior year due to attrition. However, these donors have stronger retention (% Active). Again the performance of the donors continuing is higher than the year before. Less committed donors are leaving the fold. Those who stay have stronger giving performance.
At the end of 5 years, the cumulative LTV is $121. Each metric in the table -- % Active, Gifts per Active and Average Gift -- is instrumental in building to this eventual LTV.
If retention had been lower, the LTV would have dropped. That's why bonding donors through 2nd gift strategies is important. Same for lapse prevention and lapsed donor reactivation.
If giving frequency changes, so does LTV. That's why we need to give the donor ample opportunities to give to multiple offers and multiple channels.
Average gift also has an impact. That's where challenging yet appropriate ask amounts come into play.
The LTV metric helps you understand your organization's growth. At the same time, there's a lot going on underneath that helps us understand we can adjust strategies and tactics to improve it.
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