Henze presentation · 2012-06-26 · 1 CARA 2010 The Missing Link: The Search for Transitional...
Transcript of Henze presentation · 2012-06-26 · 1 CARA 2010 The Missing Link: The Search for Transitional...
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CARA 2010
The Missing Link: The Search for Transitional Giving Prospects
Prospect Research and the Fundraising Pyramid
Presented by Lawrence C. Henze, J.D.
October 28 and 29, 2010
Your Presenter – The Missing Link? Managing Director and Senior Consultant, Target Analytics™,
a Blackbaud Company Author and Frequent Presenter on Fundraising and Nonprofit
Topics Law degree, University of Wisconsin – Madison 15 years as fundraising professional, plus 15 years as consultant to colleges, universities, nonprofits and
Fortune 500 companies on the use of predictive modeling in fundraising and targeted marketing.
Lawrence Henze | Page #3 © 2010 Blackbaud
Outline of presentation Terms and definitions
What we have found in our research • Today’s Donor Pyramid • What went wrong?
Fixing the problem: How to find transitional donors in your donor base • Identifying transitional donors through their giving patterns • Donor profiling
• Adding additional insights through external data appends • Predictive modeling
Now that you understand them…now what?
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Lawrence Henze | Page #4 © 2010 Blackbaud
Definitions Two concepts that are not identical in concept or meaning Mid-level giving defines contribution levels bridging the gap between
annual and major giving • Not all mid-level donors transition to the top of the giving pyramid
Transitional giving defines progression through the giving pyramid from entry level giving to ultimate giving
An additional concept – consistent or plateau giving - is associated with planned giving
This presentation will focus on current giving, and I will treat the pursuit of the missing link prospects, whether mid-level or transitional, as the same
Terms and Definitions
The Fundraising Pyramid
Lawrence Henze | Page #6 © 2010 Blackbaud
Reality Check
What our research has found : Today’s donor pyramid
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Lawrence Henze | Page #7 © 2010 Blackbaud
Activity – What Shape is Your Pyramid?
What our research has found : Today’s donor pyramid
Lawrence Henze | Page #8 © 2010 Blackbaud
Why is it the Missing Link?
Transitional giving often exists in the void between traditional annual giving methodology and the assignment of individual prospects to development officers
As a result, we may fail to sufficiently populate the middle levels of the donor pyramid
Emphasis is on both ends of the pyramid, entry level giving and major giving
Donor counts, participation rates and capital campaigns may be the culprits
We need to profile these individuals, target them for personal attention and cultivation
What our research has found : Conclusions
How to Identify Mid-Level and Transitional Prospects
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Lawrence Henze | Page #10 © 2010 Blackbaud
Before you start… First define mid-level giving to your organization It is important that the amount is real to YOUR organization, not what
you want it to be – base the analysis on what your reality is Plan the next steps now…what are you going to do with the insights?
• What resources are you going to need to take advantage of the insights? • Who in your organization do you need to get involved?
Be realistic…do you have the time to do it internally?
Understanding your donor’s giving patterns: Planning
Lawrence Henze | Page #11 © 2010 Blackbaud
Hypothetical analysis: So, for purposes of discussion,:
Let’s assume that for this organization is defined as $500-$2500 All the necessary shareholders have been engaged There is a rough plan for the strategy following the results
Although there are many patterns to analyze, let’s plot and analyze three: Number of years mid-level donors have contributed prior to reaching
“mid-level” Time of year Age or life stage
Understanding your donor’s giving patterns
Lawrence Henze | Page #12 © 2010 Blackbaud
• Mid-level donors make an average of 9 annual gifts prior to reaching major donor status (also check mode or median) • Establish a threshold, such as 6 annual gifts, to identify potential mid-level prospects • Change stewardship efforts to cultivate better relationships with these prospects at earlier stage (i.e.- personal thank you program)
Findings
Understanding your donor’s giving patterns : Number of Years
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Lawrence Henze | Page #13 © 2010 Blackbaud
What you are looking for You are “growing your own” mid-
level donors By identifying them you can solicit
differently By understanding your giving
patterns you can provide better stewardship and also save money
This is proactive data mining • Our research found that a
significant number of mid-level donors exhibit “trigger point” behavior
• When donors activate these trigger points, they appear on your mid-level radar
Understanding your donor’s giving patterns
Lawrence Henze | Page #14 © 2010 Blackbaud
More Donor Analysis Time-of-Year Giving
• Create a pool of all mid-level donors over the past 10 years • Create a subset of donors giving in at least 6 of the 10 years • Plot the months/quarters of their gifts • Identify the habitual donors
Why is This Important? • You can thank them for their loyalty and habitual behavior • You can solicit at appropriate times • You can build a relationship on fiscal responsibility
Understanding your donor’s giving patterns : Time of Year
Lawrence Henze | Page #15 © 2010 Blackbaud
• Other than past giving, it is the single most predictive variable that you can analyze so collect it whenever possible • Don’t accept industry wide age analysis unless you verify it applies to your constituents • So, create your own age curve for midlevel giving!
Age / Life stage Analysis
Understanding your donor’s giving patterns : Life stage
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Lawrence Henze | Page #16 © 2010 Blackbaud
Donor Profiling Long used in the social sciences &
by business
Assumption: donors have some characteristics in common • Discover those characteristics
(demographic, financial, behavioral, transactional)
• Screen the entire database against those characteristics
• Predict giving or membership
Donor Profiling
Lawrence Henze | Page #17 © 2010 Blackbaud
Mid Level Donor Profiling – Internal Data
Look for internal and transactional data to tell us donor/non-donor characteristics • Internal
• Gender • Major • Degree • Number of relationships
• Transactional • Membership • Premiums • Special events?
Donor Profiling
Lawrence Henze | Page #18 © 2010 Blackbaud
Mid Level Donor Profiling – Words of Caution
Correlation does not imply causality Use data variables that are spread across the database and
do not exist primarily for donors • That approach will not help you to identify new prospects
among your non-donors Be careful to not assign too much importance or causality to
certain findings, for example • You have business addresses on 90% of your donors • You have email addresses on 85% of your donors, 20% of
your non-donors • These are not predictive attributes
Donor Profiling
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Lawrence Henze | Page #19 © 2010 Blackbaud
Mid-Level Analysis– External Data Adds Depth and Breadth
Data to append to your file: • Census • Cluster data
• Equifax Niche data • Acxiom’s PersonicX • Nielsen’s PRIZM
• Wealth • Hard asset data • Echelon
• Summarized credit data
Donor Profiling- External Insights
Lawrence Henze | Page #20 © 2010 Blackbaud
Donor Profiling – External Data – Niche Clusters
Household level clusters http://www.equifax.com/consumer/marketing/en_us Group people by life stages
• 26 Niches ranging from the young and wealthy "Already Affluent" Niche to the least prosperous "Zero Mobility" Niche, these clusters provide a picture of your prospects and donors and make it easier to craft the kind of targeted communications that make people feel like you are talking to them individually.
Donor Profiling- External Insights
Lawrence Henze | Page #21 © 2010 Blackbaud
Donor Profiling – Append Niche Clusters and Analyze
% of Donors
Niche A Niche B Niche C Niche E Niche G Niche H Niche I All Other Niches
Donor Profiling- External Insights
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Lawrence Henze | Page #22 © 2010 Blackbaud
Donor Profiling – Niche Cluster Analysis
Applications of cluster data • Append cluster codes to your entire database • Segment donors and non-donors by dominant clusters • Analyze the distribution of codes
• For example, 77% of donors are described by 7 of the 26 clusters
• 39% of the non-donors are also described by the same 7 clusters
• Concentrate on the non-donors who are included in 1 of the 7 clusters for acquisition or recapture
Donor Profiling- External Insights
Lawrence Henze | Page #23 © 2010 Blackbaud
Donor Profiling – External Data – Niche Clusters
Further application of cluster data • Determine solicitation frequency or aggressiveness by
cluster performance • Craft messages by cluster • Use clusters to segment responders by channel:
• Direct mail • Telephone • Email • Personal solicitation
Donor Profiling- External Insights
Lawrence Henze | Page #24 © 2010 Blackbaud
Echelon Power Segments™ Demographic tiers developed from
direct & projected liquid financial asset data • 95+ leading financial companies • $10+ trillion in liquid assets • 42%+ of all consumer invested assets • Zip+4 level
Prospects uncovered • Retired wealthy individuals • Inherited wealth • Other privately-held wealth • Companies reporting low sales to D&B • Industries not readily available through
traditional screening (i.e.: Doctors and lawyers at practices)
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Lawrence Henze | Page #25 © 2010 Blackbaud
Predictive Modeling and Segmentation
Accurate and reliable methodology for segmentation of prospects by likelihood and ability to give
Scores based on characteristics of current and past donors For broadest application possibilities score the entire
database available for solicitation
Donor Profiling and Segmentation- Predictive Modeling
Lawrence Henze | Page #26 © 2010 Blackbaud
How Modeling Works: Identify the Action to be Predicted
Lawrence Henze | Page #27 © 2010 Blackbaud
Building the Profile
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Lawrence Henze | Page #28 © 2010 Blackbaud
Scoring the Database
Lawrence Henze | Page #29 © 2010 Blackbaud
Target Gift Range Model The capacity model looks at the inclination combined with the capacity a
prospect has to make a gift at a certain level to Fairfield University Gift range projected by the predictive model for a one year period Target Gift Ranges are numbered 1 to 12, from $1-50 to $100,000+
7: $2,501 - $5,000 8: $5,001 -$10,000
9: $10,001 - $25,000 10: $25,001 - $50,000 11: $50,001 - $100,000
12: $100,001 +
1: $1 - $50 2: $51 - $100
3: $101 - $250 4: $251 - $500
5: $501 - $1,000 6: $1,001 - $2,500
Lawrence Henze | Page #30 © 2010 Blackbaud
Predictive Modeling Results
TGR $1-$250 (1,2,3)
TGR $251-$500 (4)
TGR $501-$1,000 (5)
TGR $1,001-$5,000 (6,7)
TGR >$5,000 (>=8)
TGL >= 851+ (Excellent) 512 757 950 930 362 TGL 651-800 (Very Good) 2,060 412 192 106 51 TGL 551-650 (Good) 6,828 1,233 567 352 159 TGL 451-550 (Average) 9,583 1,331 580 381 164 TGL <= 450 (Below Avg.) 19,714 1,546 722 380 128
Donor Profiling and Segmentation- Predictive Modeling
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Lawrence Henze | Page #31 © 2010 Blackbaud
Power of combining Wealth and Modeling
A recent study completed by one of our senior statisticians showed that Wealth or Modeling alone did not account for the gift potential in a database • Only 31% of the revenue from a University came from new donors with
publicly identifiable assets • In a healthcare organization, only 13% of the revenue from the test group
had publicly identifiable wealth.
Lawrence Henze | Page #32 © 2010 Blackbaud
Analysis That Leads to Action? Identifying transitional prospects is a worthwhile pursuit To succeed in building a stable fundraising pyramid, we must design
cultivation and solicitation programs for this targeted group Are you doing it at your organization? What works?
Lawrence Henze | Page #33 © 2010 Blackbaud
Our Goal
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Lawrence Henze | Page #34 © 2010 Blackbaud
Contact information:
Lawrence Henze, 843-991-9921 [email protected]
Link to Blackbaud white papers: http://www.blackbaud.com/company/resources/whitepapers/whitepapers.aspx
Lawrence Henze | Page #35 © 2010 Blackbaud
A Free Copy is Waiting for You at the Target Analytics’ Booth