Success Stories

This is the first post in a 3-part guest series by Steven Screen of The Better Fundraising Company. If you’ve ever had Analytical Ones analyze your nonprofit’s donor data, you’ve heard them say this: “Every donor data file has a story to tell.” I always thought that was a powerful idea: that your donors as a group, through their giving and their lack of giving, are telling your organization a story. And as a fundraiser, I know that the story your donors are telling is mostly a response to the story that your organization is telling. Right? Your organization sends out your donor communications – the tactics and content that make up your organization’s story – and your donors either give or they don’t. The better your story, the more money you raise. So I got to wondering; was there a certain kind of story that lead to fundraising success? For the donor files that Analytical Ones showed were doing really well, were there any commonalities in the “stories” those organizations were telling their donors? And I work mostly with small- to medium- nonprofits, so I was specifically curious about the ‘success stories’ for organizations with three characteristics: 1. Organizations without a built-in advantage. For instance, if you’re the national organization that works on a common type of cancer, thousands of people are diagnosed each day. Those new patients, and their friends and families, are immediately potential donors for your organization. That’s a built-in advantage that most nonprofits don’t have. 2. Organizations that weren’t too big. I didn’t precisely define a number, but we all know that there are...

Response Rate Testing and Statistical Significance

One of the more straightforward analyses we often do at Analytical Ones is to compare the results of a direct mail test to identify whether the differences are statistically significant. Though this is a straightforward analysis, there are a lot to these tests. So, let me try to clarify a couple of things. Generally, we are testing to determine whether the differences in either the response rates or average gift sizes are statically significant. Each of these tests are very different and require different data sets and tests. Let’s take the easy one first, testing the statistical difference in response rates. Because there are just two outcomes for response – yes, the donor responded, denoted by a value of “1”, or no, the donor did not respond, denoted by a value of “0” – you can use summary statistics (averages) for this test. We recommend using a Z test. All you need for testing response rates are: 1. Number of mailed in the control 2. Number of responses in the control 3. Number of mailed in the test 4. Number of responses in the test You also need to know the level of test confidence you are comfortable. Confidence levels are standards. Let me try to explain this. Typically, in Z tests, analysts use one of three confidence levels: 1. 99% 2. 95% 3. 90% If your results are significant at the 99% confidence level, it means that if you repeated the test 100 times, the result will be statistically significant 99 in 100 times. That’s a very high level of confidence. Conversely, if your results are significant at...

Sustainer Donor Value

We recently did some analysis on a client’s sustainer or monthly pledge donors. The client wanted to see how much donors were worth AFTER joining the monthly pledge program compared to their value BEFORE joining the program. While this wasn’t a test and we can’t directly prove cause and effect, we do find that the donors were worth $52 more – a 24% increase – after joining the monthly pledge program. If those donors stay on the program and maintain that difference in value, that’s an additional $260 over five years for every donor that joins the monthly giving program. So, maybe that means that they can afford to invest a little more in converting annual donors to monthly pledge donors. If they get an additional 200 donors to become sustainers each year, that’s an additional $10,000 each year. So, that’s $50,000 over 5 years. With an additional 200 new sustainers EACH year that’s $150,000 cumulative over 5 years! So maybe that means the organization can also spend a little more to cultivate and thank those donors once they become monthly sustainers. Even with a welcome package that costs $10 and another $10 invested in cultivation each year, that still leaves the organization with an additional $200 net per donor over 5 years. Pledge donors are more valuable. Are you treating them that...

Net Dollars Not Donors Part 1

Somewhere over the rainbow in fundraising, two metrics were established as the gold standard: gross revenue generated and the number of donors acquired. And that’s a shame. It’s a shame because you can optimize these two metrics into organization ruin. Let’s take gross revenue. The reason it is used is because it’s simple to measure. But it has a serious drawback: it doesn’t account for what you spent to raise that money. It’s like a habitual gambler bragging about the $1,000 lottery winnings they had the night before while omitting the fact that have bought a $5 scratch ticket every week for 10 years. So their real ROI is 0.38. Wahoo! Seriously, if you are using gross revenue as your fundraising goal, you need to stop it and start using net revenue. It’s just bad stewardship to use gross revenue...

Make Statistics Understandable

Kent (the resident numbers/strategy guy on Veep): [on the news coverage of a salmonella outbreak] “The number of people taken ill is orders of magnitude below statistical significance. Do people not understand basic nonparametric statistics?” While those numbers folks – and aren’t ALL marketers numbers folks? – among us may laugh at the quote above from the show Veep, I’m reminded constantly how true it is – People do NOT understand basic nonparametric statistics. And we shouldn’t expect them to. As we look back on 2016 and start 2017, I’m reminded constantly that our clients, our board members and our executive directors are not all numbers people. So, our job is not just to do the analysis but to make the numbers make sense. To find what’s hidden within the numbers and to use that to drive the strategy. Then we need to explain clearly to everyone The What and The Why. It’s interesting that Kent’s title in the White House is “Senior Strategist”. Perhaps political strategy focuses too much on polls and on numbers to drive every decision. But often the rest of us focus too little on those things. We marketers can help to fix that by making the numbers make sense. Then they can drive the...

Fundraising Facts Over Fundraising Feelings

We have entered an interesting season in America. Seems like “facts” are being treated like just another opinion. And the consequence is that if facts and opinions are equals, then making your direct response fundraising decisions based on feelings is an equally valid approach. And that would be a mistake. A HUGE mistake. I was reminded of how feelings can misguide us. We completed one of our Offer Forecasting studies last month. Offer Forecasting leverages online surveys to predict whether donors will open a direct mail piece. It also measure donors’ likelihood to give to a certain offer. Before our latest Offer Forecasting study went into the field, everyone at Analytical Ones made friendly wagers on which of the nine offers we were testing would be rated the highest by the donors. Knowing the client and their donors as well as I do (I mean I’ve worked with the client for years, plus I have 20-more years of direct response experience) I was pretty confident that the offer I chose would win. And my pick came in dead last. In. Dead. Last. My business partner has a great saying when fundraising “experts” try to predict how donors will respond. She will say emphatically: “Repeat after me. YOU are not the target audience!” This why we at Analytical Ones always base our recommendations solidly on the facts. And though it may be trendy at the moment to go with your feelings, we implore you to use fundraising facts over fundraising feelings in...