Thursday, May 15, 2014

Dead Simple Metrics to Measure and Understand Your Donor Better

A data-centric approach towards chalking out salient donor insights isn’t a fad. As a non-profit marketing manager and a candidate of a data-centric Masters in Integrated Marketing Communication at Northwestern University, I can certainly vouch that in the years to come, the ability to measure and understand donor behavior can set your non-profit’s voice above the noise.

      The article 5 Metrics Every Development Director Should Know authored by Mike Spear makes various important observations and recommendations. He starts by emphasizing the relationship between donor acquisition cost and donor lifetime value (Donor LTC = Average donation amount per donor / donor churn rate) in order to decide on resource allocation between prolonged engagement and new acquisition. He further advises that donor churn (# of lost donors / # of total donors) be kept as small as possible and donor lifetime be calculated so that business decisions can be based on effective donor segmentation as shown in the pyramid below:
    Source: Avectra blog

    '5 Basic Fundraising Metrics to Start Measuring Today' by Jeffrey Haguewood further accumulates fundraising metrics that can yield important insights for donor management. The list developed by him uses average gift size and number of gifts for the purpose of planning, budgeting and forecasting marketing activities. He focuses on calculating conversion rate for each marketing activity respectively and measuring them individually against donor engagement. This way, it would be easier for non-profit managers to see which activity reaps maximum contribution and allow them an opportunity to dig deep into donors behavior.

          After reviewing these two articles, here are 3 action items you need to keep in mind and apply to improve your donor marketing efforts:   
    •     Develop Success Metrics - Create metrics which allow you to continually monitor the effectiveness of your donor marketing efforts
    •     Base Communication Strategy on Donor Segmentation - Use donor segmentation to develop strategy that will resonate well with the behavior of high-value and high-potential donors
    •     Leverage Insights - Understand donor motivation by gauging where your non-profit fits in your donor's life story

    Sidra Zia is an MS. Candidate in Integrated Marketing Communications at Northwestern University with a specialization in digital marketing geared towards social development. She is passionate about narrating stories on the digital canvas and has previously contributed to marketing efforts of several international development organizations as a strategic communication professional. 

    Follow: @Sidra_Z 
    LinkedIn: Sidra Zia

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