Donor Cultivation and Housefile Modeling for Political Fundraisers
Raising More Net Dollars from Existing Donors
What is Donor Cultivation? You hear the phrase "Donor Cultivation" quite often when fundraisers get together. That's because they realize the vital importance of increasing the value of donors once they are found. Every seasoned fundraiser knows that within every file of donors, many are capable of giving larger gifts if the organization's relationship with them is properly nurtured—and some are capable of making major gifts. Even donors who may never give a large, single donation will, if a healthy relationship with the organization is built and maintained, give a substantial cumulative amount over the duration of the relationship. This article discusses donor cultivation best practices. And, it discusses three very important "how to" topics: how to decide which existing donors are worth the marketing investment required to ask them to give again; how to optimally determine the amount to ask each donor to give; and, how to gradually move donors up the ladder from one-time givers toward becoming major donors, or planned givers.
Experts in donor cultivation recognize that all donors are important, but they also realize that not all donors are equal in what they will eventually mean to an organization. Loyal donors making repeat gifts are the lifeblood of most nonprofit groups. The key to success is finding the right donors to begin with, those willing and capable of sustained giving, and then using effective cultivation techniques to encourage them to move up the ladder. When this is done effectively the organization should recover many times the investment they make in acquiring new donors.
Moments of Truth with Your Donors
Donor cultivation occurs via "touch points" with donors and prospective donors. These are occasions over the course of time when a person encounters the nonprofit. Most touch points are initiated by the nonprofit, including touches such as a direct mail solicitation, a thank you note, an informational mailing, an email message, a newsletter, an outbound phone call, or an online ad. Other touch points include mention of the organization in the media, content about the organization seen online, or a social media posting. Another touch point may be the organization's name coming in conversation between acquaintances, or the donor attending an event sponsored by the nonprofit, or the donor contacting the organization for information.
Good marketers know that there is no such thing as a "neutral communication". Thus, every touch point is important. Every time the donor encounters a nonprofit, they are forming an opinion—good or bad. The sum of these opinions over time, along with the person's giving capacity, defines the donor's relationship with the group and determines their likelihood that they will give at all, give often, increase the amount of their giving, or consider the group in their bequest planning.
That's why some fundraisers call these encounters "moments of truth." These are the moments when individuals consider and possibly revise their opinion of the group. Are they casual givers or motivated givers? Are they proud to be associated with the organization? Are they likely to give more or less over the coming year? Will they tell others they support the group and urge them to give as well? Or, will they decide to give elsewhere instead? The answer to these very important questions is often determined by the donor's collective impression of the organization, the sum of all the moments of truth.
The "loyalty ladder" and "moments of truth" help us understand the stages of a donor relationship and the occasions when it is influenced. Many fundraising professionals believe that organizations should also attempt to create and manage opportunities for donor contacts, attempting to increase "share of mind." And many borrow the concept of product "branding" from commercial marketers to describe the process of influencing donor perception of their nonprofit group. It is not unusual to hear nonprofit fundraisers talking about "building their brand." Whatever the phraseology, the process of turning casual donors into committed partners is constantly on the minds of fundraising executives.
Donor Cultivation Best Practices
These are among the most important, most universally agreed upon donor cultivation Best Practices:
1. Do great work and tell the story well. Every nonprofit has a mission. It should pursue the mission effectively. Having done so, it must tell its story well. Demonstrate the importance of the cause. Communicate that importance well, so that donors understand it. Copy, creative, and public relations must collectively render a very positive impression that the organization is worthwhile, does good work, manages itself well, and is trustworthy and highly reliable.
2. Thank donors promptly. This is so obvious it seems hardly worth saying. And yet, some nonprofits could do a better job of acknowledging gifts in a personal, timely manner. Doing so is an important step to building a strong long-term relationship with donors.
3. Blend solicitation with information. Fundraising efforts can do a great job of establishing the need for giving. But what about letting donors know about successful, completed projects, or programs that are underway and going well? Such good news may not raise money but it can establish a group's effectiveness and provide justification for confidence that future donations will be put to good use.
4. Ask the right donors to give again. Every organization, after being in existence for a while, has donors that they stop contacting because response is too low to justify the investment. Often, an organization waits too long to stop soliciting donations regularly because it wants to have as many donors as possible. This is understandable, but it can waste valuable funds and push fundraising costs too high. Careful thought and strategy should be applied to the subject of asking the right donors to give again.
5. Ask for larger gifts. Many donors give what they are asked to give, so long as the amount is reasonable for them. Ask them to give "$10, $15, $20 or more" and most who give will usually be in the $10 to $15 range. As a rule, if an organization asks for more it will receive more. In fact, some donors may be wondering why they have not been asked for donations of a size that they could give. On the other hand, if a donor is asked to give more than they realistically can, then they may not give at all. They may be led to feel like what they can do is insignificant—the exact opposite of what the organization wants to have happen during a "moment of truth". Every organization should utilize a well conceptualized upgrade methodology that asks for more when appropriate, but never causes loyal donors to begin feeling insignificant.
6. Ask for monthly giving. Many donors are not giving as often as they could, and probably should. They could give every month, if they just decided to do so. Ask them to give regularly, make it easy to do so, and explain to donors why it is important.
7. Increase "share of mind" through digital media. Using the vast Wiland Digital Network™, an organization's donors can be regularly "pulsed" with brief but powerful positive messages. These messages should reinforce the importance and reliability of the organization, presenting a favorable image of the organization and effectively creating a "moment of truth" that influences the donor positively. Surprisingly, these programs that increase share of mind among an organization's donors need not be expensive. Wiland Digital Solutions™ can place image enhancing messages in social media and serve display, video and mobile advertising whenever and wherever an organization's donors may be online. This capability vastly increases the potential for a nonprofit to gain "share of mind".
These image-enhancing ads can be served frequently or infrequently, as often as every time the donor is encountered to as seldom as once a month. Specific websites can be avoided, as can website categories with which a nonprofit would not want to associate with their ads.
8. Cultivate high potential donors. The personal touch is vital in building relationships with donors who could give large sums. First, identify the high potential donors. Then, regularly let them know you are thinking about them. Call them. Don't have a tele-fundraising agent make the call. It should be a personal call from a very knowledgeable staff member. Visit key donors when traveling. Invite them to meals. Learn their interests. Get to know their families. In an ideal world the principal of an organization would make calls or visits. In the real world the principal's day is often too busy for them to spend time focused on any but the very largest donors.
9. Assign staff devoted to donor development. Donor cultivation should not be an afterthought. Successful nonprofits employ talented staff dedicated to making donors happy. Organizations that are too small to justify a staff person rely on the principal, who must find time to do this. The result is lifetime relationships—true donor partnerships.
10. Create opportunities for donor recognition.Are your major donors listed for visitors to see in your offices? If your organization has a conference room, why not name it for a major donor? If you are building or expanding an office, make plans for donor recognition in the building. Many groups have created donor giving clubs (Eagles, Pioneers, Inner Circles, President's Club, Steering Committee, etc.) as a way to define a special relationship with donors.
11. Invite donors "inside the tent." Many groups are sponsoring celebrity-studded annual events, galas, dinners, receptions and even sea cruises to create opportunities to connect with and cultivate donors, blending mission content with social activity. Another favored technique is a regular conference call or web gathering with newsmakers and insiders in which donors can participate.
12. Ask donors to include your group in their estate planning. "Planned giving" is a financial boon for many groups. Inclusion of your organization in the legacy giving of an individual is a true sign of partnership with the donor. Groups that do a good job with cultivated planned giving reap huge rewards. In some cases planned gifts, after years of careful preparation, have become the main source of income for the group. Do not take planned giving lightly. And besides helping the organization, help the donor too. Consider providing legal assistance to prepare wills, trust documents, or whatever is needed. Help donors feel great while they are still living about the planning they have done to help the organization and all of their other beneficiaries too.
Wiland's Powerful Donor Cultivation Tools Support Best Practices
Many of the Donor Cultivation Best Practices discussed above are ones Wiland can help implement. No other marketing intelligence firm knows donors as well as Wiland does, without exception. Our massive database, analytical tools, and fundraising experience dating back to 1971 enable us to help our clients achieve Best Practices excellence.
Most nonprofit fundraising managers know the critical importance of donor cultivation and are already pursuing all or most of these Best Practices. But some don't realize just how much Wiland can do to make their organization even more successful. This section discusses Best Practices where Wiland can have significant impact.
Best Practice: Ask the right donors to give again
Virtually every organization contacts donors regularly to ask them to give again. These programs are crucial. They raise the money that fuels the mission. And they play a key role in moving donors up the loyalty ladder. But only if appeals are directed to the right donors.
Every organization, after being in existence for a while, has donors they stop contacting because of low response rates. Organizations want to have as many donors as possible, and they often wait too long to stop soliciting donations regularly, wasting money as a result. On the other hand, they sometimes stop asking a donor who, for whatever reason, has just moved into a giving cycle. It is crucial to identify and contact such donors. Marketing too much to low-productivity donors can waste valuable funds and push fundraising cost too high. Discontinuing marketing to donors who are currently giving is a big mistake too. Careful thought and strategy should be applied to the subject of asking the right donors to give again, and Wiland can help more than any other firm because we have the most donation data.
The primary way we help our clients ask the right donors to give again is by Improving the Donor Ranking. Every organization ranks donors in some way, and then decides which to contact. Some use internally developed predictive models to rank donors. Some use an outside consultant to develop a predictive model using the organization's data. Many still use RFM Segmentation to assign donors to a group and then market to the groups.
RFM Segmentation measures Recency of the donor's last gift, Frequency of their giving, and the Monetary value of their gifts. RFM is an extremely useful tool in helping fundraising managers understand, manage and maximize return on investment for certain segments of their donor file. It is, and for many decades has been, the primary donor segmentation method for many fundraisers. It is seldom the best method, but it is a good method.
There are several reasons that RFM segmentation is not the best method. First, and most important, is that RFM typically relies on only three variables and all three are almost always based only on the organization's own data. In contrast, Wiland has a very complete picture of donors, a 360 degree view of their giving, buying, reading, and other transactional activity, plus demographics and psychographics. More than 2,500 nonprofit organizations, multichannel consumer retailers, publishers, hotel chains, and other service providers participate in the Wiland database, enabling Wiland to provide invaluable insight into the transactional behaviors of virtually every direct responsive adult in the U.S. This depth and breadth of data combined with innovative modeling techniques has helped Wiland produce unprecedented results for nonprofit and fundraising organizations.
Another shortcoming of RFM segmentation is that it provides direction for segments of donors—not for individual donors. Wiland's predictions of future responsiveness are based on the characteristics of each donor, individually. Further, RFM segmentation does not allow for changes in donor lifestyle or behavior. RFM places donors in an RFM cell, and there they are, even if their whole life has changed since their last transaction with the organization. Wiland uses our client organization's donor history to create donor rankings, but we also use recent events unknown to the organization, including address changes, status changes, purchases, subscriptions, and most importantly, donations that have occurred since the donor last transacted with the organization for which we are doing the ranking.
Wiland's sophisticated predictive donor models can completely replace RFM segmentation, but they can also supplement RFM. Some organizations are reluctant to scrap a tried-and-true methodology that is working for them. We respect this. Testing—proving something is better—is good marketing practice. Therefore we work with our client to structure tests to prove the value of our services. And we can even preserve legacy RFM systems and still achieve the enhancements that come from sophisticated modeling and use of our unparalleled data resources. A simple example of this is that we can split each RFM cell based on our model.
Wiland allows savvy fundraising managers to go beyond simple RFM segmentation and raise more net money as a result. Any organization that wants to raise more net money will benefit from Wiland's donor file modeling and segmentation services.
Best Practice: Ask for larger gifts
Most fundraisers have an "upgrade system" in place to encourage donors to give more now than they have given in the past. One common upgrade methodology is to vary the ask string from one donor to the next based on the donor's highest previous donation. Thus, a donor whose largest gift ever is $25.00 might be asked to give $30.00, $50.00, $100.00 or more while a donor whose highest previous donation is $7.50 might be asked to give $10.00, $15.00, $25.00 or more. This "constantly ask for more than ever before" strategy has been tested many times, and it consistently increases current giving. But it isn't optimum. Here's why.
First, simple upgrade technique such as that just discussed uses very limited information to make the decision. For example, an organization may know only that a person gave once, $100.00, two years ago. For two years the organization has been asking the person to give $150.00, $250.00, $500.00 or more, with no response. Maybe that ask is about right, but maybe not. Maybe the $100.00 gift to this organization is the largest donation a 75 year old lady has ever made, given when her husband passed away using part of his life insurance proceeds. Maybe she gives $20.00 per month to two other organizations, but has never made a donation of $100.00 or more, except that one occasion. Maybe the organization should have been asking her to give $20.00, $25.00, $30.00 or more rather than basing the ask on her highest previous donation; and maybe she would have been continuously giving in that time rather than not giving.
Conversely, consider a person whose single gift was $20.00, because the prospecting appeal to which they responded asked for $20.00. The organization asked them in subsequent appeals to give $25.00, $35.00, $50.00 or more. They gave $25.00. Seems like a good thing; they upgraded. But what if they gave to nineteen organizations during the past year and their average gift was $50.00? Does it really make sense to keep asking for $25.00?
Wiland's Optimal Ask Amount Series addresses this topic directly. It is a better solution for two reasons. First, it identifies donors who can and should give more and quantifies how much they should be asked to give. And second, it identifies donors who gave to the organization at a rate above their normal capacity and adjusts the ask in a manner that encourages them to keep giving. The Optimal Ask Amount Series is specific to the organization that will use it. It is based on an individual's overall transaction history. For donor appeals, the donor's highest previous contribution plays a significant role, but so does the donor's overall giving and buying profile.
The Optimal Ask Amount Series makes progressively larger asks as the donor's overall giving and buying profile rises. Thus, a somewhat aggressive effort is made to upgrade donors who are giving less than they could while low capacity donors are not disturbed by requests they cannot fulfill. For subsequent gifts, donors are asked for more than they have given in the past; but not so much more that the amounts in the Series are outside the donor's proven capacity.
We prove the value of this technique with careful testing and refinement. A control group is used to compare the Optimal Ask Amount Series against current ask strings. If the Series produces more net money raised it moves from being applied to a smaller portion of donors to being applied to a larger portion. If it fails to raise more money it is adjusted, re-tested, and refined. Clients that work with us in this "test and refine" manner virtually always enjoy the intended benefits of the Optimal Ask Amount Series. They raise more net money, foster better donor relationships, and gradually move qualified donors toward Major Giving.
Every organization should test and refine their ask methodology using the Wiland Optimal Ask Amount Series.
Best Practice: Ask for monthly giving
Many donors are not giving as often as they could, and probably should. They could give every month, if they just decided to do so. Some people are open to monthly giving, willing to provide a credit card or a bank account for automatic withdrawal, etc. Some simply are not open to such a system. Which donors are which? It isn't good to keep asking and asking a donor to do what they are not willing to do. On the other hand, monthly giving really helps an organization.
The first step for the organization is to establish a well-functioning, secure monthly giving program and develop the appeals needed to promote it. When that is done Wiland can help with deciding who to ask, and who not to ask. The best way for us to do this is with a custom response model developed using the promotion file and associated givers from three appeals that asked donors to sign up for monthly giving. But if no such files exist to enable a custom model based on ideal marketing universes then we can build a donor profile model that treats existing monthly givers as "best donors" and thus differentiates them from all other donors.
Whichever technique we use, Wiland can rank your entire donor file based on probability of becoming a monthly giver. Then, appeals for monthly giving can go to the right donors and those who are not open to monthly giving can receive other appeals that are more appropriate.
Best Practice: Increase "share of mind" through digital media
As was pointed out earlier, donor cultivation occurs through "touch points" with donors and prospective donors—the occasions when a person encounters the nonprofit, whatever the nature of the encounter. Positive, favorable encounters improve the image of the organization, make donors more aware, and remind them of the organization's mission and its importance.
Using the vast Wiland Digital Network™ an organization can create touch points with donors, increasing share of mind and building positive image. Donors can be reached regularly with brief but powerful, positive impressions. These messages should reinforce the importance and reliability of the organization, presenting a favorable image of the organization, effectively creating a "moment of truth" that influences the donor positively.
Surprisingly, these programs that increase share of mind among an organization's donors need not be expensive. Wiland Digital Solutions™ can place image enhancing messages in the social media and serve display, video and mobile advertising whenever and wherever an organization's donors may be online.
These image enhancing ads can be served as frequently or infrequently as an organization may desire, ranging from as often as every time a donor is encountered to as seldom as once a month. Specific websites can be avoided, as can website categories with which a nonprofit would not want to associate with their ads.
The first step is for the organization to create effective ads, and possibly an effective video too, designed for the media desired. Wiland's digital team will help clients all along the way, providing opinions of ads and landing pages based on our experience with what works and what doesn't work. Then, when the messaging is ready, we manage the entire campaign. We track immediate impact (donations received in the short timeframe after messages are viewed), but the real purpose here is not immediate fundraising. It is to build image and respect with the organizations donors, so that their lifetime giving increases over a long period of time and more donors move up the ladder.
Best Practice: Cultivate High Potential Donors
The essential first steps toward successful cultivation of high potential donors are to conceptualize good programs and devote staff or consultant time to implementing them. Then, after this is done, Wiland can arm the people involved with a powerful ranking of the organization's donors. This ranking puts the highest potential individual at the top of the list. Donor cultivation staff works the list from the top down, stopping when they have a full plate. Technically, we can inform an organization which 100,000 of its 1,000,000 donors have the most potential, but in practice it is better to focus on a much smaller number. No one can get well acquainted and stay in touch with thousands of people. So, the number of donors who are actually contacted personally will vary based on available staff time. But, our ranking really has two uses:
1. Personal Contact. This may be restricted to the top few hundred people on the ranking, or even just 100 if it is a small organization with only one person on the development staff.
2. Invitations and Special Appeals. A larger portion of the high potential donors may receive a special "high dollar appeal" or be invited to a special event. Those who respond further qualify themselves as having high potential. Organizations that host such events now, or have a high dollar fundraising appeal, should consider using our service as one means of identifying donors that should be solicited.
This unique product is known as Major Donor Probability Score™. It is a powerful indicator of an individual's inclination and capacity to make a large donation to a particular organization. Wiland will rank the organization's house file and provide the score of the 20 percent of the house file that scores highest. The higher the score, the more likely the individual is to give, and the more likely it is that their gift will be substantial. The score is calculated specifically for the organization that will be using it rather than being a standard score. Thus, an individual might have a high score for one organization and a relatively low score for another.
The score is based on the transactional history of the individual. Thus, two people who look exactly alike in terms of age, income, home value, and other demographic characteristics may have vastly different Major Donor Probability Scores. Factors that cause an individual to have a high Major Donor Probability Score include:
- Commitment to the organization for which the score is developed
- Giving in large amounts to the organization for which the score is developed
- Giving often, in large amounts, to organizations with a cause or philosophy similar to the organization for which the score is developed
- Large transactions: exceptionally large donations and/or frequent purchases of high price point merchandise
- Buying merchandise that has synergy with the cause of the organization
- Reading books, magazines, or newsletters that have synergy with the cause of the organization
Along with the score, Wiland provides a Target Major Donation Range for each Probable Major Donor, enabling member organizations to gain insight into gift amounts that might be expected from the highest scoring individuals. Each record includes one of ten codes that represent target donation ranges, such as "$5,000 to $9,999" or "$10,000 to $24,999."
The Major Donor Probability Score is designed to help organizations in the Major Giving stage of fundraising. Regardless of past giving activity, high-scoring Probable Major Donors can be treated with special care, especially the cultivation techniques outlined above.
Best Practice: Cultivate Potential Planned Givers
Similar to a major gifts program, the first step to a successful planned giving program is to have at least one staff member or consultant who can follow-up on planned gift prospect leads by effectively building relationships with prospective planned givers and fulfilling their needs as a donor. Many organizations today identify planned giving prospects by including planned giving informational literature requests on their direct mail reply devices, in their gift acknowledgements, in their newsletters/magazines and on their web sites. Those who request information about planned giving then become leads for planned giving officers to personally contact and are also added to the organization's planned giving newsletter mailing list.
These methods of identifying planned giving prospects have proven to be effective, but for various reasons miss good prospects currently on your donor file. That's where Wiland can help. Your donor file has "hidden gems" that can be identified by the Wiland Planned Giving Model. Wiland uses a "cross-tab" of two distinctly different custom models built from client data. Those donors scoring the highest in both models are given the best scores and every donor on file is scored and ranked from best to worst. Wiland's scoring and ranking method helps in at least two ways:
1. It identifies good planned giving prospects who have not been noticed in the past.
2. It will help your organization use its planned giving marketing budget more effectively and more efficiently by identifying the best prospects.
Wiland is Here to Help
Organizations connect people to information regarding the things they care about. They connect people across the country that they may never visit in person. They teach. They inform. And they inspire.
Wiland is committed to helping your organization thrive in today's challenging and evolving marketplace, in both digital and traditional channels. Wiland helps clients better understand their best donors and make the most of their donors' potential for giving. Now with decades of experience, and unsurpassed data and predicative modeling capability, Wiland offers a range of powerful and surprisingly affordable way to supercharge your donor cultivation efforts.
Contact Wiland today to learn more about the entire suite of nonprofit services.