Uncovering Donor Conversion Insights

In 1968, Grizzard computerized donor records and prospect lists, eliminating the need for manual donor file cards. The advances to donor-program management shifted considerably with this technology, but it also had a tremendous impact on analytics. Patterns in data emerge easily when databases are paired with analytical programs. More advanced reporting became possible using calculated variables, such as the time to convert, or give a second gift.  For instance, length of time between a first and second gift correlates tightly with long-term donor value. Based on an analysis of Grizzard’s human services clients, the relationship between time to convert and donor value can be easily seen. As shown in Figure 1 below, five-year donor value drops by 25% if the second gift comes within four to six months of the first, compared to receipt in the first three months. A quick second gift is reflective of greater donor engagement, but in the deeper sense that the cause is resonating with the donor. Why not build the case with your donors to begin that deeper connection, by providing information and results about your program – the one they just improved through their generosity? Tactics such as thank you calls, invitations to tour your facilities and social engagement can build on their initial goodwill toward your cause.

 Grizzard Human Services benchmark, data through FY14. Analysis includes donors acquired in FY10.

 Another more sophisticated view of converting one-time donors to multi-gift supporters that would not have been as feasible during the Mad Men era, is the donor conversion curve shown in Figure 2. Using the same Grizzard human-services data set, we see that 69% of eventual conversions within five years happen within twelve months of the donor giving their first gift. Eighty-five percent of conversions will be captured within the first two years. This demonstrates why recency is such an important driver in RFM and predictive modeling; focusing efforts on the newer donors increases response probability.

Grizzard Human Services benchmark, data through FY14. Analysis includes donors acquired in FY10.

The ease in which insights are uncovered in data has its roots in the computerization of donor data. But, the ultimate question applied analytics is: what are you doing to optimize your fundraising program based on donor and program insights? How can these insights drive programmatic changes to drive a quicker conversion? How can you target and engage one-time donors more effectively? Start with a quick and personal acknowledgement of their initial gift, crucial to building a deeper level of engagement with your cause. Let them know the value of their gift and what it translates into, and begin to foster that increased connection to the cause. Make it personal to them, so that it becomes their cause.

Communication Trends Changing Fundraising

Want to ensure your communication strategies are keeping pace with your constituents? A good place to start is to understand the digital technologies that are driving the highest rates of consumer adoption. The latest results from Grizzard’s annual DonorGraphics™ media usage study are in, and there are some revealing surprises in the data. The insights and implications, two of which are discussed here, can be used to improve your organization’s online experience, toward the goal of optimizing fundraising effectiveness.

Mobile phones have changed our behaviors, interpersonal communications and shopping habits by providing an always-on networking connection to (and escape from) our current environment. But the fastest growing mobile device is not the mobile or smartphone; it’s the tablet. Tablet computer ownership has exploded beyond the higher income households that were the early adopters. In two years, tablet ownership increased from 16% to 46% among U.S. online adults. The year-over-year growth rate of 59% for tablets far outpaces the smartphone growth rate of 19%. Now that two-thirds of U.S. online adults have a smartphone, and nearly half (46%) own a tablet, it follows that more and more online time is spent on these alternate screens. In fact, a quarter of all opt-in email time is spent on a screen other than a traditional computer (Fig. 1). This underscores the importance of responsive design, to ensure that your messages are optimized across devices, to improve the viewing and navigation experience of donors and prospects.

 

Figure 1. Base: US online adults that receive opt-in email (n=2,283).

 

 

 

 

 

 

 

 

Another surprising insight coming from the annual DonorGraphics™ study revealed that for the first time ever, online is now the preferred giving channel, outranking all other channels. When asked to name their most preferred method among eight choices, online came in at 31%, and direct mail was at 26% overall. (For a listing of all the channels and their percentages, see the DonorGraphics™ infographic.)

The caveat here is that as averages often do, the online average of 31% is hiding the real story. The truth is that giving preferences vary widely by age. It’s the older demographics that are driving the bulk of donations, and the older generations still prefer to give by mail (Fig. 2). In this “X marks the spot” graph, we can see that in looking at the top two donation channels of online and by mail, there are large differences by age. Nearly half (49%) of those 65+ prefer to give by mail, compared to just 4% of those in the youngest demographic. The disparity online is narrowing over time however, with 37% of those 18-29 preferring to give online, something that 21% of those 65+ can agree on.

 

Figure 2. Base: U.S. Donors (online adults who are 12-month active donors) n=1,531.

 

 

 

 

 

 

 

What does this mean for nonprofit fundraisers? Multi-channel, integrated marketing strategies are more important than ever. A strong online presence is key to adapt to older donors’ slow but steady online adoption, as well as attract a younger demographic. But, as direct mail is still responsible for the lion’s share of donations, it should also provide a gateway to facilitate donors going to their preferred giving channel.

Want to see more from this year’s study? Click here for a summary.

DonorGraphics™ is a nationally representative annual study measuring digital behaviors among U.S. online adults, as well as an attitudes and usage study for donors to charitable organizations. The 2014 study was conducted among 2,640 U.S. online adults age 18+, of which 1,531 were identified as 12-month active donors of nonprofit organizations (excluding churches or houses of worship).

Changing the Channel to Reach New Generations of Donors

Younger Donors More Likely to Volunteer

Older donors are responsible for bringing in the lion’s share of individual fundraising revenue. Their ability to give outpaces younger generations, and on average donors 65+ give more than two times what donors under 30 give annually. While their giving power might not be fully developed yet, the younger generation of donors is much more likely to volunteer their time in addition to making financial contributions to their charitable organizations of choice. As the age of a donor increases, the likelihood of their volunteering decreases. This means that the involved younger demographic can bring more to your fundraising efforts beyond their face value.

Engaging these younger demographics in their preferred channels is key. Much has been written about younger donors giving online, and their comfort factor using digital technology that has matured along with them. The story isn’t as simple as just engaging them online; personally connecting with the nonprofit organizations they support is more important for this wired generation than for any of the older donor segments.

Preferred Communication Channels: More Digital, Less Snail Mail

For donors under 30, their preferred communication mix with nonprofit organizations of interest includes email (representing 47% of total communications), mail (22% of total) and social networks (14%) in the top spots. These donors ages 18-29 desire about half the typical mix of direct mail, with an index of 54, but nearly three times the social networking communication compared to all adult donors.

 

Preferred Giving Channels: Online and In Person

When it comes to preferred method of giving, while donors under 30 do prefer online giving, they are also partial to more personal, offline methods. The most preferred method of donation for this group of donors ages 18-29 is on the organization’s website, preferred by 35%. Coming in at a close second is giving in person, at 32%. Both methods over index compared to all adult donors, as does participating in fundraising events. The increased preference of in-person and event giving reinforces that younger donors need to feel a personal connection to your cause, and feel part of a movement.

Make the Connection Personal

The younger generation of donors ages 18-29 represents a shift in donor engagement. They prefer to engage through online channels, but they also value a personal connection to their causes, more so than any other age segment. This personal connection can be seen in their higher rate of volunteering, as well as above-average preference for in-person and event giving. Online channels continue to be a preferred way to connect with younger donors, but the sooner you can get them offline and personal with your organization, the better the connection will be.

Source: Grizzard’s DonorGraphics™ media usage study, 2013.

Base: U.S. Donors (online adults who are 12-month active donors) n=2,079, 246 of which are ages 18-29.

An index of 100 is average. An index of 25 means the data point is 75% below average; an index of 200 means the data point is 100% higher than the average.

 

Big Data, Little Data, Integrated Data

Data storytelling is the new black. The ability to coax hidden insights out of large datasets and weave them into an illuminating storyline is the next generation of data sciences. The Harvard Business Review recently called Data Scientist the “Sexiest Job of the 21st Century,” a combination revenge of the nerds and bellwether for the growing importance of data. The nascent title of Data Scientist has gotten nearly as much coverage as the reason for it: Big Data.

Big Data refers to the large amount of data generated through online and offline behaviors, in addition to demographic and attitudinal (sentiment) insights. The Web, and more recently, social and mobile sites and applications, are driving the explosion of raw data available to analyze, profile and predict. According to Grizzard’s 2013 DonorGraphics™ study, 91% of U.S. online adults own a mobile phone, with 61% of them smartphones. It shows 29% own a tablet computer, up 75% in just one year. This rapid adoption of mobile devices is generating large increases in data points available.

Everyone is talking about Big Data, but most nonprofit organizations are still struggling with Little Data: databases that are not real time, have little to no web and mobile data, and sometimes even lack coverage of the basics such as channel coding for donations. You may be struggling with Little Data if you have multiple, disparate systems that aren’t integrated (which pretty much covers most nonprofit organizations today). Analysis of them individually is easy; putting the pieces together at the constituent level and making them actionable requires a data warehouse approach.

Grizzard has invested in a large data warehouse initiative, so that we can enable our clients to use the data they have (big or little) to create a more efficient fundraising program and a more relevant experience for donors. Talk of Big Data can be intimidating, and for many nonprofit organizations, there are still opportunities for Little Data to generate incremental gains through donor-centric analysis, segmentation and modeling. Using existing data can be a phased approach toward expansion in the future. Both data types require centralized integration to put disparate data sources together, and piece together the story of the donors behind the data.

Are you using your existing donor data for fundraising optimization?

Donor-Preferred Communication Strategies

If you knew how your donors preferred to be communicated with, how would your contact strategy change? Grizzard Communications Group’s DonorGraphicsTM research studied the responses of a nationally representative 3,509 online adults age 18+ to learn how the face of communication is changing, both nationwide and for constituents of nonprofit organizations. Continue reading »