Harvesters Benefits From the Bounty of Data Analytics
Challenge: Maximize donor prospecting and retention
Solution: Segmentation based on donor activities
Results: Reactivated donors increased by 65 percent and dollars from this segment more than doubled; cut unprofitable prospecting without the need to trim the acquisition budget
For 20 years, Harvesters - The Community Food Network has been fighting hunger in the Kansas City, Mo., area. And for the past year or two, it's been facing the challenge that nags at all nonprofits: how to maximize donor relationships for better performance. The food bank's database of 40,000 individual donors and 8,000 corporate donors has been built mainly through direct mail efforts but also represents a chunk of the organization's many volunteers and event participants. Just how deep that connection ran was something Harvesters needed to find out to better structure its donor relationship program.
A couple years ago, Director of Fund Development Angela Heer partnered with direct marketing consultants Alan Weber, principal of Data to Strategy Group, and Bob Merrigan, president of Merrigan & Co., to take a different approach to donor segmentation. They started with the premise that people who are involved in multiple ways with a nonprofit are more likely to be advocates who will give more and for longer with the proper communication stream.
By analyzing four years of data across four different databases—fund development, volunteers, food drive and product donations—Weber and Merrigan were able to discern some significant patterns of activity. For example, 12.5 percent of individual donors respond to multiple appeals and generate 33 percent of Harvesters' revenue. Of these donors, those who respond to two or more appeals give three times more than the average donor; those who respond to three or more efforts give 10 times more. What's more, this segment of loyal advocates also is more likely to increase its contributions from one year to the next. Finally, the retention rate for donors who also volunteered is 70 percent. On a corporate level, the big aha was finding out that 12 percent of these donors also volunteer, with a retention rate of 80 percent compared to just 51 percent for firms that only donate.
In looking at how donors and prospective donors came onto the file and then at Harvesters' communication plan, the trio realized the two didn't fit, says Weber. People who were primed for giving might not be contacted until the next direct mail program came due—and that could take more than 30 days.
"You don't want to treat these folks like everyone else and throw them into the general mail program," Merrigan adds.
Based on the analytics, Harvesters made some big changes in the last two years. First, it tore down whatever silos existed between the four departments so data could be shared more freely across the teams. Heer notes that while Harvesters could make some educated guesses about donor activity before, the analytics gives the department managers better insight and gives her "some ammunition on some level of what we can budget for and how these different managers can work together" to achieve the nonprofit's goals.
One of the quick wins was development of an insert that provides details on volunteering with Harvesters, which goes into donation appeals to companies.
A bigger project was the development of a package that went to 24- to 36-month lapsed donors. "In 2008, they reactivated more 2005 donors than they did in 2007. Overall, reactivated donors were up 65 percent, and dollars from that segment more than doubled," says Merrigan.
And because of the strong tie between participation, donation and retention, Harvesters continues to develop ways to maximize communication on this front. For example, says Heer, when a church group volunteers, the volunteer department works with fund development to gather the names of all the people from the group who turned out, not just the person who coordinated the group. Heer then can get those prospective donors into the database and start promoting to them according to their levels of involvement.
Vice versa, the fund development team can help the volunteer department acknowledge loyal supporters. "When volunteers are on-site, and one of them just wrote a $10,000 check last week, we want to know that so the volunteer coordinator can thank them," says Heer.
While Harvesters still is working to adapt to this new "3G" approach, as Weber and Merrigan refer to it (3G stands for "get, grasp and grow), its initial results have been organization-changing, to say the least.