One Size Rarely Fits All
March 20, 2019 Christy McWilliams
Finding donors and revenue hiding in plain sight
Donor acquisition is a critical component of any healthy program, regardless of your organization’s size. But the past few years of the disruption economy have taken their toll on this effort.
Rental and exchange lists are smaller, and, suppressions are increasing for most organizations, resulting in fewer new donors coming onto files, shrinking revenue and narrowing major gift pipelines. Budgets are tight and if the forecasted oncoming recession does happen, they might get even tighter. Don’t despair. There is a way forward that is closer than you realize.
There are “hidden gems” on your file, donors who will generate strong value but require experimentation and testing to find. They exist for any nonprofit. As the prolonged market and industry volatility continues to force organizations to approach fundraising differently, finding your hidden gems can help you maintain a solid foundation and even grow your revenue.
Several studies have shown that households are giving to fewer organizations, but those that they continue to support receive more of their giving. This trend underscores the importance of increasing the share of wallet from your donors. That means you not only have to find them, but you must keep them close to your organization. You can drive greater share of wallet by identifying the donors and warm prospects on your file who are likely to convert to making additional type of gift to your organization. It’s a more efficient way to boost immediate revenue, increase the number of active donors giving and expand your major giving pipeline.
There are several practical steps you can take to uncover your hidden gems and drive a greater share of wallet to maintain or return your program to healthy growth. First, examine your organization’s business rules for solicitation. If your business rules prioritize your organization’s preferred programs, rather than understanding what your donors value or would like to engage in, that’s worth a strategic reexamination. That approach can limit your ability to connect the donor with the multiple ways they can support your efforts.
A single year event donor or attendee for example, might not have the time or appetite to give to that event again the next year. That doesn’t mean the donor doesn’t want to support your mission. You’re limiting your opportunity to grow your share of wallet if you only ask for their support for that historical source. Be strategic about how you’re contacting them and manage the cadence so the touches and asks make sense, feel coordinated and don’t step on top of each other. Engage them with multiple opportunities to give.
Review your suppressions if you have a large direct marketing program. Does your organization purge people from direct response because they’re assigned to a different fundraising program? Do you apply blackout dates across a wide audience? It’s important to quantify the value these suppressions and blackouts provide your organization. By loosening these rules in the right places, you’ll open opportunities to increase your share of wallet.
Remember, your competitors don’t have the same rules for that specific donor or warm prospect and are soliciting them — probably frequently.
There are obvious exceptions. You should carefully manage donors in a major gift solicitation or those targeted for a forthcoming event, and there might be a few other sacred donor types for your organization. Though the remaining donor types will vary by organization, unless you truly understand your donors’ preferences, or they fall into one of the obvious exceptions above, consider a test to loosen your suppression rules to see if you can get that donor to raise a hand to an additional program.
Don’t make the mistake of losing a donor because you are being overly cautious about where your organization has decided the donor has the most value. The industry is moving rapidly toward people-based marketing which requires an understanding of what your donor wants and expects. Test personalized offers and timing to ensure you’re recognizing their existing support while learning where they might be interested in spreading their wings.
Look at your deeply-lapsed donors and test audiences you haven’t touched recently. Every organization is unique but there are hidden gems in this group. Target donors who used to give frequently but haven’t given in more than 48 months. Some organizations find value going back as far as 10 years or more. They won’t perform at the same level as active donors, and maybe not as strongly initially as a cold prospect, but they will cost you less than a rental list and often have better long-term value once they reactivate.
Lastly, evaluate all “other” sources for potential warm prospect audiences you can convert with a first gift or different type of second gift. Audiences you should consider include one-time memorial or honor donors, businesses and sponsors, in-kind donors, car donors and product purchasers. Your audiences and sources will respond differently and vary in value. To get started, identify all the ways a constituent can engage with your organization and then test asking them to make a gift for a different purpose.
Each of the audiences listed above can provide value, but it’s important to understand which offer or offers resonate with audiences and segments. You should test creative, ask amounts, timing and offers — by audience — whether it’s lapsed, events or any of the other warm prospect groups on your file.
You will generate more new donors and a larger share of wallet by developing a deliberate strategy to find your own hidden gems and understanding how best to activate or increase their support.. Targeting the right audience is the most important lever for success, but it doesn’t stand alone. One offer and ask doesn’t fit all. Test many things and test enough of a sample size to get a good sense of what really works and what can best scale for your efforts
Uncover HIDDEN GEMS
✦ Your solicitation rules – reexamine preferred programs
✦ Suppressions – manage cadence
✦ Personalized offers & timing – recognize existing support learn their widening interests
✦ Deeply lapsed donors – (not same as active donors) cost less than rented lists better long term value
✦ Other sources – warm prospects to convert identify ways to engage test gifts for different purpose
✦ And don’t be overly cautious…
Christy McWilliams is senior strategy director at fundraising consultancy Merkle in Columbia, Md. The column was developed from a conference session she and colleagues presented at the recent ANA Nonprofit Federation Conference in Washington D.C. Her email is email@example.com