July 1, 2014 Marty Daks
When Nicole Gyorfi Titus, a veteran communications director, was asked to lead digital operations for ReadyforHillary, a Rosslyn, Va.-based national political action committee, she didn’t hesitate to utilize a cooperative database for the PAC’s direct mail fundraising efforts.
In the case of organizations preparing high-end mailings, access to more names is allowing them to score their current donors and possibly even remove them from the plan in favor of prospects with better scores.
It starts “when an organization sends their donor list to a modeler,” explained Suzanne Forman, account director at Key Acquisition Partners, a firm that provides list brokerage and other services from offices in Annapolis, Md., and Naples, Fla.
“The modeler then analyzes and profiles those (donor list) records,” said Forman. “Since they usually have 97 percent of the names provided, the modeler has demographic and lifestyle information on most of the records. They then look for names in their database that have the same characteristics as the organization’s donors.”
The modeler ranks and scores the names, based on a variety of characteristics. “Theoretically the lower-scoring segments won’t perform well,” Forman said. “The organization can now drop those names and replace them with names from their co-op model which should perform significantly better. Since the output file that was provided is used as a suppression, the additional names net out nearly 100 percent.”
The key differentiator between co-ops is the methodology used to create the model. Price matters as well, although industry observers said there are competitive deals that are tailored to each client.
ReadyforHillary uses Infogroup Nonprofit Solutions’ Apogee co-op, according to Titus. Providers often straddle the gulf between list brokers — who generally recommend providers to their clients — and database cooperatives that actually crunch the numbers. The Papillion, Neb.-based business data and marketing solutions firm acts as a list broker for nonprofits and other organizations, but also maintains, mines and models its own co-op databases, according to firm President Gretchen Littlefield.
“One of the big trends is the overall growth of cooperatives,” said Littlefield. “There are many marketers who source the majority of prospects from co-ops instead of traditional response lists. That’s a huge change.”
The change was driven by a desire to improve response rates, or the donations collected, as well as reducing costs.
“Response rates were falling across industries. Organizations had less money to spend on direct response mailing, so they wanted an approach that would yield better results,” she said. “Instead of cherry-picking from individual lists, modeling allows the marketer to mail the people who are most likely to respond, and cut the ones that won’t. That alone can cut your postage and print costs by 20 percent.”
Even as the use of cooperative database marketing grows, “huge technological advances” are making it even more accurate, said Bruce Demaree, vice president of cooperative data services at DonorBase. The cooperative marketing database of the Armonk, NY-based firm focuses exclusively on nonprofits and fundraisers.
“We work with more than 250 nonprofits, and our database contains more than 57 million donor records,” Demaree said. A sophisticated data-mining model can sniff out new prospects who have never before donated to a charity.
“We can also find the most productive ‘warm prospects,’ or people who attended fundraiser events, signed petitions, or otherwise demonstrated support for an organization other than giving a gift, that are likely to respond to a mailing,” said Demaree.
The next fundraising frontier is multichannel marketing, according to Infogroup’s Littlefield. “Right now, direct mail campaigns are still the major fundraising source for nonprofits, but in the near future I believe we’re going to see a convergence between direct mail, online and mobile applications,” she explains. “Fundraisers will be able to select and model names and deliver targeted online display advertising to individuals in coordination with direct mail. It will change the industry.”
“It’s still in the early stages,” she noted. “But data mining, and online and offline are all converging, and big data is driving it.”
She’s quick to add that direct mail isn’t going away. “Quite the contrary, it will be enhanced by new technologies. I’m seeing dramatic improvements in direct mail response rates. Organizations that have figured out how to optimize performance with modeling are doing well in the mail,” explains Littlefield. NPT
Martin Daks is a freelance business writer in Bethlehem Twp., Pa., and a regular contributor to The NonProfit Times.