Barn Find of 2010

Car collectors fantasize about visiting a farmer with a used car to sell. There in the farmer's barn is a vintage Duesenberg, and the farmer is just happy to get rid of it. Multiple cars might be involved.

For me the Barn Find of 2010 happened while analyzing Network for Good's data. I was looking into the timing of giving. I knew online giving would be concentrated in the month of December, but didn't know how much. I also didn't know how concentrated giving was on December 31.



Further, the December 31st spike translates into online revenue that 24 times more than the average day of the year.

(Learn other important findings by downloading the Network for Good study. It's free!)

So what makes this finding more valuable than the vintage Duesenberg? If you're like many organizations, your website is a conflicted place. The organization tries to balance a list of goals for its website. This list includes things like PR, branding, education, advocacy, and so on. Fundraising often gets short shrift.

The December 31st spike means that even if the homepage can't be a fundraising engine year round, it should be on December 31st. Once you reap the rewards from focusing the homepage on giving for this day, you can then set your sights to the last week of December, or even the entire month.

Will Younger Donors Give to Freemium Packages?

A few weeks ago I recommended analyzing acquisition campaigns by age. Is your current control losing it among the young -- your future donors?

Here's an example of that analysis in action. It's a direct mail campaign. The organization's control package was a freemium notepad package. The test package removed the freemium. The thinking was that the freemium was an old folks gimmick and that it was a turn-off for more "mission minded" younger prospects.

Hypothesis: the freemium package would win over the mission package among older prospects and the opposite would be true among younger prospects.

The packages were tested with randomly selected panels from the client's continuation lists. We appended age information after the fact.

The age split that yielded the largest mail quantities for test reliability was at the 70 year mark. The 70+ year olds were mailed 21,000 of each package and the under 70 year olds got 15,000. This first point is that their DM continuation lists were weighted heavily toward the older end.

The graph below shows the response rates of the two packages by age:

As we expected, the Notepad package had a nice lift in response among the 70+ prospects (mostly Silent Generation). Contrary to our hypothesis, the Notepad also won among younger prospects (mostly Boomers).

The mind-blower is that the freemium had a higher lift with the under 70 crowd -- a 55% lift versus the 30% lift for their older counterparts.

The good news is that the control optimized performance from both age groups. But this finding also gives rise to developing freemiums that are specifically tailored to younger prospects.

I'll keep you posted.

How to Maximize Year-End Online Giving

Over the past few months I've had the pleasure of analyzing Network for Good's massive and rich dataset of online giving. The dataset features giving history that goes back over seven years and represents almost 2 million online donors and their nearly $400 million in giving.

This analysis identifies the peak period for online giving in December. This finding -- along with our recommendations for what to do about it -- will be presented by my TrueSense colleague Jeff Brooks and Katya Andresen of Network for Good in a FREE webinar.

The webinar will be hosted by Network for Good at 1PM (Eastern) on Tuesday, November 2. Register here.

How Long to Break-Even?

New donor acquisition can be a drag on your cash flow. It seems that most acquisition loses money out of the gate, and this impacts cash flow.

However, the payoff is in the subsequent giving of the acquired donors. Or so we've been told. What does this look like? The following graph shows Long-Term Net Revenue per New Donor for one organization:

This graph shows the average net revenue given by each new donor from one acquisition campaign. We see that the campaign lost money initially. There was a loss of about $7.50 for each donor acquired. If 10,000 new donors were acquired that would be a loss of $75,000. That's a hit to the current year's cash flow.

Fortunately, these donors continued to give (and the organization continued to offer new chances to give). By the sixth month, the subsequent giving of these donors was sufficient to recover the acquisition loss (break-even). This is excellent news.

I've run this graph on many organizations and many acquisition programs (TV, radio, DM, etc.). Some break-even within twelve months and some take as long as four years. How can a program sustain itself if it takes four years to recover an acquisition investment?

My recommendation is to run this analysis on each of your acquisition programs. Know when your campaigns break even. Sure Long-Term Value is important, but you need to count the cost. And you need to understand the impact acquisition has on your current year cash.

Is Choice Always Good?

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.

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.

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.