Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Growing Long Term Value Through Gift Optimization Strategies

532 views

Published on

Implementing a sound long-term value plan through analytics, segmentation and continual testing gives organizations the insights they need to develop long term relationships with high value returns. Feeding America’s Philip Fertick and Paradysz’s Adam Hannah, Angelo Licursi and Patty Ruch shared their insights on finding Long Term Value at the 2014 New York Nonprofit Conference.

Published in: Marketing
  • Be the first to comment

  • Be the first to like this

Growing Long Term Value Through Gift Optimization Strategies

  1. 1. Growing Long Term Value Through Gift Optimization Strategies
  2. 2. Presenters Angelo Licursi Paradysz Adam Hannah Paradysz Philip Fertick Feeding America
  3. 3. 3 Rising duplication rates along with soft performance have been contributing to a lower ROI and less revenue to fund mission. The State of the Industry: Unbalanced More nonprofits are competing for the same donor dollar. Number of new donors down 3.2% in 2013 over prior year. Number of acquisition campaigns is down 5% in 2013 after being down 3% in 2012.
  4. 4. 4 Number of acquisition campaigns is down 5% in 2013 after being down 3% in 2012. Revenue per donor stats increased 3.6% with 82% of organizations reporting an increase in 2013. Rising duplication rates along with soft performance have been contributing to a lower ROI and less revenue to fund mission. More nonprofits are competing for the same donor dollar. Number of new donors down 3.2% in 2013 over prior year. Number of acquisition campaigns is down 5% in 2013 after being down 3% in 2012. A More Balanced State More nonprofits are competing for the same donor dollar. Rising duplication rates along with soft performance have been contributing to a lower ROI and less revenue to fund mission. Number of new donors down 3.2% in 2013 over prior year. Viable 65+ audience – most responsive to direct mail. Changes in organizational strategy have shifted emphasis to bottom line/ROI and improved donor quality. Online donors and revenue steadily increasing over last 5 years – online gifts generally 2.5x larger than mail gifts.
  5. 5. 5 (Acquisition Net Revenue + Subsequent Net Revenue) Acquisition Donors LTV Long Term Value (LTV) is the financial value of a donor relationship in future terms, generally 12 or 24 months from present. “It is an indicator of how today’s investment decisions affect future revenue outcomes.” LTV Definition Cumulative Net Revenue over a set period of time
  6. 6. 6 In reviewing who your “best” donors are, many times organizations find that the initial acquisition gift level is a big predictor of high long term value and commitment. The question becomes…. How do I get more of them? And if I can’t get high gift donors in acquisition, can I upgrade them in renewal? LTV by Gift Level ($50.00) $0.00 $50.00 $100.00 $150.00 $200.00 $0-$14 $15-$19 $20-$24 $25-$34 $35-$49 $50-$99 $100+ 12 Mo LTV - Net Rev/Donor $0-$14 17% $15-$19 16% $20-$24 42% $25-$34 8% $35-$49 8% $50-$99 7% $100+ 2% Donors by Acq Gift Level
  7. 7. 7 HIGH GIFT DONORS COME FROM ALL ACQUISITION SOURCES. The ability to separate high gift from low gift prospects for improved targeting is a challenge for many organizations. LTV by Gift Level: List Source 0% 20% 40% 60% 80% 100% 120% List #1 List #2 List #3 List #4 List #5 List #6 List #7 $0-$14 $15-$19 $20-$24 $25-$34 $35-$49 $50-$99 $100+
  8. 8. New leadership from commercial sector Increased scrutiny on Direct Mail acquisition budget – Largest single expense source Corporate giving overshadows DM due to minimal cost of fundraising – Corporate food donors often become funds donors – DM revenue is unrestricted – DM revenue creates steady stream of revenue 35% 62% 3% Feeding America (2013) 73% 6% 14% 7% Industry (2012) Individuals Corporations Foundations Other Feeding America – Our Story
  9. 9. Significant growth of online channel Online new donor metrics better than that of Direct Mail initially… – Higher average gift – Ability to acquire new sustainers – Organic contributions further improve online metrics Asked to invest more in digital than direct mail – although digital not easily scalable 25% 75% Digital Sourced Donors Direct Mail Sourced Donors Direct Mail vs. Online
  10. 10. CFO considers ROI at 12-month and 3-year views for investment decisions Became necessary to understand multi-channel LTV – Built acquisition tool to look at subsequent giving and true ROI by donor source Need to shift focus from channel metrics to overall new donor metrics – Understand online attribution to offline Investing more to test new channels with lower costs – success with insert media LTV and Investment Opportunities
  11. 11. Gift band analysis showed DM-sourced, higher average gift donors performed better at 3-year LTV than online- sourced Goal to find higher value donors upfront $0 $200 $400 $600 Mail Online Lifetime Revenue by Origin Source $10-$14 $15-$24 $25-$34 $35-$49 $50-$99 $100-$249 LTV Analysis by Gift Band
  12. 12. Focus to increase LTV on Direct Mail acquisition program – A higher cost to acquire is not always bad! Implemented strategies to improve response, lower costs and increase average gift: – Shift in list selection based on LTV vs. Net Rev/Donor and Cost of Acquisition (COA) – Shift to non-premium offer to generate higher upfront gift – Ask array strategies by list – Gift optimization model Shifted volume from labels/notepad to simple appeal LTV Focus
  13. 13. Targeting High Gift Donors & Prospects
  14. 14. 14 Marry gift modeling & segmentation techniques with targeted asks or offers that maximize the giving potential of each prospect. Goal: Strategy: Improve prospect campaign performance and the overall quality of the donor acquired (LTV). Gift Optimization: Acquisition
  15. 15. 15 91 95 131 172 94 47 0 20 40 60 80 100 120 140 160 180 200 HIGH $ MED $ LOW $ FEEDING AMERICA GIFT OPTIMIZATION MODEL RESP INDEX AVG $ INDEX Combining demographic and lifestyle data variables with campaign response behavior leads to predictive model segmentation. Gift Optimization: Model Development
  16. 16. 16 Key Differences Between “High Gift” and “Low Gift” prospects… Recent Retirees: Ages 65-74  Married  Male  Higher Income & Net Worth  More likely to donate to Wildlife and Art causes  Older Retirees: Ages 75+  Single  Female  Lower Income & Net Worth  More likely to donate to Cancer, Children, or Catholic causes High Gift Low Gift Gift Optimization: Audience Profile
  17. 17. 17 Panel Audience Test: Open Ask Test: High Ask #1 Test: High Ask #2 Control Ask Control Random Nth 20,000 20,000 20,000 20,000 Test High Gift Prospects 20,000 20,000 20,000 20,000 Test Medium Gift Prospects 20,000 20,000 Test Low Gift Prospects 20,000 Total 40,000 60,000 80,000 Gift Optimization: Ask Array Testing A CB D
  18. 18. 18 Gift Optimization: Ask Array Testing In addition to the control ask array; two higher arrays and an open ask were tested across audience segments.
  19. 19. 19 Panel Audience Test: Open Ask Test: High Ask #1 Test: High Ask #2 Control Ask Control Random Nth $87 $126 $129 $120 Test High Gift Prospects $127 $125 $167 $168 Test Medium Gift Prospects $87 $140 Test Low Gift Prospects $74 Panel Audience Test: Open Ask Test: High Ask #1 Test: High Ask #2 Control Ask Control Random Nth $17.18 $29.46 $22.77 $20.30 Test High Gift Prospects $51.28 $31.24 $32.05 $31.54 Test Medium Gift Prospects $21.60 $24.90 Test Low Gift Prospects $10.82 Gross Revenue/M Average Gift Gift Optimization: Results A B C D
  20. 20. 20 “High Value” segments had a 20% increase in upgraded giving compared to other donor segments receiving same offer. Identify NPO’s best donors based on fundraising value speed of upgrade to higher giving levels. Leverage past campaign performances and 3rd party data append to develop a new donor segmentation strategy that predicts tomorrow’s “Best Donor” upgrade candidates. Build out an offer and ask array framework & test plan to increase giving in “High Value” upgrade segments. 1 2 3 } GOALS • Increase the # of mid-level giving donors on file. SCOPE & SOLUTION RESULTS Gift Optimization: Donor Upgrade
  21. 21. 21 Reviewing donor upgrade trends also highlighted Holiday/Year End giving opportunities that could be maximized. Higher ask array testing around this season is recommended. Gift Optimization: Timing
  22. 22. 22 • The recipe of receiving higher gifts from your prospects and donors requires all the ingredients… – Audience – Timing – Offer – Ask • Define objective, test strategy & measurement upfront – Should include specific audience that is being targeted – Testing strategy should include creative, timing, offer and ask array variables – Be very specific about the key performance metrics used to evaluate success (ex. Avg Gift or # of upgraded donors) Best Practices & Methodology
  23. 23. Thank you Philip Fertick Director, Acquisition and New Media Feeding America pfertick@feedingamerica.org Growing Long Term Value Through Gift Optimization Strategies Angelo Licursi Vice President, Research Advisory Services Paradysz alicursi@paradysz.com Adam Hannah Director, Relationship Management Paradysz ahannah@paradysz.com

×