Overall Performance Metrics are Rubbish

Overall Performance Metrics are Rubbish

Your ‘healthy overall retention rate’ is a lie and you should feel bad about believing it. Well, probably. Let’s start with this. Take a look at the chart below and tell me if you’d rather be Organization Blue or Organization Orange? The choice is obvious right? Orange is killing it… WRONG! So, so, so wrong. Now let’s look at projected revenue for the same orgs: What the heck. How is this even possible? It’s not only very possible, I see it all the time. In creating the scenario above, I made each performance metric for Org Blue and Org Orange exactly the same. Their retention by lifecycle – all at the same benchmark levels, their gift sizes and frequency – held constant. Everything about the two orgs is identical except for one thing: Orange is acquiring 10% fewer donors each year, while Blue is acquiring 10% more. Why does that impact retention? Since Blue is adequately growing its file, it has a higher proportion of donors each year in transitional segments (second-year/reactivated). These two lifecycles have lower retention rates than long-term loyal donors. Meanwhile, donors in the active file for Orange are  dropping like flies because the only ones it has left who are factored into overall retention rate are the increasingly lonely, but high performing multi-year donors. These remaining loyal donors are propping up the overall metrics on a crashing file. There are two lessons here… If you like your org and don’t want to have to start a new one, keep acquiring new donors. Always. That’s the lesson from this specific scenario. But what I really want...
The Triangle of Truth

The Triangle of Truth

I love this triangle diagram. Not only is it true for our business in data analysis and donor behavior research, but it can apply to many things in life.   The Triangle of Truth has three points: Quality, Time, and Cost.   You can choose any two points of the Triangle of Truth, but you can’t have all three.   Projects are all about priorities, and the triangle of truth can help clarify which qualities you choose to prioritize. If you want a quality and inexpensive project, you cannot expect it to be quick. If you choose quick and inexpensive, you cannot expect it to be quality. If you want quality and quick, you cannot expect it to be inexpensive.   In recent years, there has been a big push to automate analytics. When we evaluate automation with the Triangle of Truth, we see that automation values speed and low cost over quality.   At Analytical Ones, one of our core values is great work. And great work absolutely requires precision.   That’s why we have deliberate chosen not to automate our analyses. From the beginning to the end of each and every one of our projects we literally touch the data to ensure our analyses are high quality.   Some of our clients value low cost, while other clients need quick turn times. Whatever your needs when you work with us, you have chosen...

A Question to my P2P Peeps

Not surprisingly, one of our favorite quotes at Analytical Ones is from Peter Drucker: “If you can’t measure it, you can’t improve it.” Most people in direct response fundraising agree. Perhaps that’s why the fundraising field is filled with metric hungry professionals – everyone wants to learn how to improve their programs and raise more money. Really, this drive for improving fundraising performance is why we are in business. But there is one fundraising category that seems not to be as metric hungry. And those are our friends who manage Peer-to-Peer fundraising events. While I have some hypotheses, I’m not exactly sure why this is the case. So, if you work in the P2P space, I’d love for you to review my hypotheses and tell me if these are all wrong. And, if they are, share your thoughts to explain this phenomenon. Hypothesis #1: Boards of Directors view P2P events as more about building the brand of the nonprofit and less about fundraising – so the focus is on executing a memorable event rather than a profitable event. Hypothesis #2: P2P events demand so many long hours of preparation that once it’s done, the staff really don’t have time to evaluate it. The focus is on starting preparation for the next event. Hypothesis #3: By nature, P2P staff are more qualitative than quantitative. They aren’t driven by the numbers like their direct response fundraiser counterparts. Hypothesis #4: P2P events just don’t budget for analytics – so they never can afford them. Ok P2P people, tell me I’m...
Pledge Conversion Recommendation

Pledge Conversion Recommendation

Here’s a crazy out of the box idea. We all know the power of the donor who gives month in and month out. This idea will both save you money in the long run and could possibly generate a lot of monthly revenue for your organization. But it is also a bit risky. Particularly if you are still only comfortable with traditional direct response. Start with the donor segment of 60+ months lapsed with 3+ gifts. These are donors who have showed commitment in the past but haven’t given you anything in five years. Send them a request to re-join your cause with a monthly EFT gift. Have four super easy gift ask handles: $2 per month $4 per month $5 per month $10 per month Now here’s the risky part. On the outer envelope put some teaser copy in effect to: “This is the last time we will ask you for a gift. Ever.” In the letter, thank them for their past support and affirm that you are still doing work worthy of support. Recognize that it’s been a while since you’ve received a gift and that there are several reasons why people let their membership lapse. Write that this option would hopefully be easier for the donor’s time, energy, and budget while also being beneficial for the organization. And then you can never mail them again. Ever. Realistically, any response you receive is more than you’ve received from them in the past 5-years anyway. If it works well, try your 48-59 months lapsed donors...