Thursday, January 19, 2012

Grow, Part 3 of 13

Step 97.

Knowing what to measure is as important as getting the metrics right.

To grow, understand what metrics are most important. Not all data points are equal. Each one provides insight, but few can stand alone as a guiding light for your organization.

Long-term donor net revenue illuminates the dark and rocky path of potential marketing decisions like no other. Here is a short story entitled;
Why Are We Not Growing?

INT. NEW YORK CITY INSIDE OF CHARITY USA HEADQUARTERS.
During a quarterly review meeting Bob, Executive Director of Charity USA, is speaking with Amy, Fundraising Strategist.

Amy
Bob, why don’t you ask for email addresses in your print efforts?

Bob
We tested it and it depressed giving.

Amy
What do you mean, how did you test it?

Bob
Well a couple of years ago, we conducted an A/B split test in direct mail. Group A was asked for their email address on their return device within their mail package. Group B was not asked and Group B raised more money than Group A.

Amy
Were your test panels stratified?

Bob
What does that mean? Look, here are the results, Group B produced $31,850 and Group A produced $26,605.

Amy
Well, if your panels were not stratified, Group B simply could have had more major donors because you selected your groups randomly. Therefore, Group B was going to win in gross revenue almost in any case.

Bob
I thought random is good?

Amy
Yes, random is good but only in regards to match panel testing. Stratified or Match Panel Testing ensures each test group will have the same amount of major, mid, new, and regular donors in each group. They are selected randomly of course but this helps prevent an imperfect test materializing.

Bob
Come to think of it, the test panels were stratified.

Amy
Can you produce the list of donors who gave to Group B?

Bob
Of course, give me a second.

Bob grabs a piece of paper from his printer with the list of donors and their giving amounts from Group B. and hands to Amy.

Amy
Bob, look here you have a Mr. Thompson who gave you a gift of $6,500.

Bob
Yeah, he always gives us $6,500 each December.

Amy
Well in that case, do you think we should count the gift toward Group B. It seems like he would have given anyway?

Bob
Why not? How do we know if Mr. Thompson got the Group A package asking for his email address, he would have gotten turned off and not given?

Amy
I doubt that would have happen.

Bob
Yes, but how can we be sure?

Amy
Okay, since it has been two years, have you looked at the long-term value of donors in both groups?

Bob
What do you mean? How would we do that?

Amy
Since the test began, which group has produced the most revenue for the organization?

Bob
Wouldn’t it be Group B?

Amy
Not necessarily. What did you do with the people in Group A who gave you their email addresses?

Bob
We included them in our monthly email fundraising campaigns.

Amy
I see. So it is possible Group A donors gave subsequent gifts through these email campaigns?

Bob
Yes.

Amy
As well as giving through direct mail efforts?

Bob
Yes, you’re right. Let me run a query right now on income received by both groups for just in the last 24 months. Wow!

Amy
By how much?

Bob
Group A now has given more than twice as much as Group B.

Amy
When do you want to start implementing email requests in your print efforts?

Bob
Immediately and thank you! You are a fundraising GODDESS! I worship you!!!

“What did you spend on a marketing channel and what did you get” is Direct Marketing’s mantra. However, it is an old view in a fast changing world. Today’s Direct Marketing mantra should be, “What did you spend per donor and what is their year-to-date net revenue?”

One of the main reasons you are not growing is because you are using short-term metrics to validate long-term decision making.

Our metrics need to evolve from micro to macro . . . from tactics to donor engagement. Move from measuring initial response to a channel in isolation toward donor responsiveness to strategic initiatives over time.

Increased donor engagement yields more revenue.

Keep analyzing. Don’t make decisions from analysis that is older than six months. Update findings and never stop. Each decision is critical to growing your cause.

Photo of Liberty Bay, Poulsbo, WashingtonA rising tide raises all boats . . . donor-first fundraising will lift revenue for all channels. Donor-first fundraising is answering the question, “How can our marketing best serve our donors?”

Forget about which media, person or channel gets credit. For donor convenience trumps all tactics. Let donors give and engage in the way most convenient for them and not you.

Launch donor-first integrated multi-channel campaigns and watch your tide rise.

Giver's Take,

Step 98. Grow, Part 4 of 13
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