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Data-Driven: The Role of Analysis in Your Direct Response Program
As an organization considers the goals for its annual giving or grassroots program – whether acquisition, upgrading, increasing sustaining donors or some other objective – data analysis is not just a component of the program. It is the program. By using both a campaign-level evaluation and comprehensive, global file analysis as well as employing a dose of curiosity, organizations can determine a great deal about donor behavior and the best ways to structure their program for maximum revenue and return on investment.
Good analysis has always been the fundamental competitive advantage for direct response, but it has become even more important in the last five years with the rising costs of direct mail and because more nonprofit organizations are using direct mail and launching online fundraising. Indeed, the introduction of electronic channels has only added to the choices and options that organizations have – and has increased the need for detailed analysis. Organizations must optimize their budgets by targeting the right donors with the appropriate message and package. An effectively planned program will never leave money on the table.
Other factors driving the need for analysis are the transition from older to younger donors and the importance of determining how best to capture the newest generation. File analysis looks at how donors prefer to be engaged and communicated with, examines their financial potential based on their giving history and evaluates the kinds of messages they respond to (e.g., an emergency appeal or a challenge grant). These factors go way beyond the “how much” and “how recent” baselines of simple analysis and give organizations an opportunity to do more robust and deeper campaigns.
And the Data Says…
Each gift should be tagged with a code that represents the channel, solicitation message, package and stage in the donor lifecycle. By tracking more than just amounts and dates and examining performance over time, organizations can learn a lot about strategic issues, such as:
The return on investment in this kind of analysis is: significantly higher performance and/or achievement of specific goals. Ideally, an organization should take a global look at its file once a year; very large programs should review performance more often.
A Look Ahead
While many of the aspects of direct response remain tried and true across channels, there are always trends and innovations related to how donors can be segmented and approached. Analysis can facilitate taking advantage of trends such as:
Remember: every organization is unique and direct response is not a one-size-fits-all proposition. Through analysis, you may discover that your donors behave differently than the conventional wisdom dictates – and, by understanding precisely how they behave, you can engage them better and generate even greater support.
Schultz & Williams is a national consulting firm based in Philadelphia providing management, fundraising and marketing consulting for nonprofit organizations, along with full-service direct marketing, database and creative/production services.