In Philip K. Dick’s, “The Minority Report,” the police department has the ability to predict when a crime will happen and stop it in advance. The idea is palpable – to have the ability to stop something bad before it happens. Some 50 years after the short story was published, we might not be able to predict crimes, but we are gaining the ability to spot patterns in behaviour that might predict other outcomes.
As fundraisers, what do we want to predict most? You might be tempted to go after who might be your next major donor as it will offer a big potential gain. However, like in, “The Minority Report,” the key might be stopping bad things before they happen. The key to fundraising success is long-term relationships: rather than magically finding a big donor, I look to the exact opposite: which donors are about to leave?
Keeping your donors
Before we even talk about prediction, we need to acknowledge that stewardship is one of the most important activities you can do. As tempting as reducing spending in every nook and cranny of your budget may be, good stewardship helps remind donors why they gave.
What good is giving money to an organization if you don’t know what good it did? Do they even know that you gave? Good stewardship requires the right people, the right medium, and the right message. You need more than a simple thank-you that comes with the automatic receipt and should involve a comprehensive plan of how to acknowledge donors in different subgroups.
However, in the same way that direct response-type fundraising is designed to work on a subset of the overall target audience, stewardship matrixes and plans are designed to try to capture as many people as possible. Similarly, as we move toward more hyper-personalization of fundraising to try to find the ideal way to solicit donors, we also need to figure out how best to acknowledge, thank, and ultimately build a long-term relationship with our donors. Until we get to that point, some donors are going to slip through the cracks.
This is why knowing when donors will leave despite our best efforts is so important.
What is the value of keeping donors?
Dr. Adrian Sargeant has said that an increase in donor retention of 10% could lead to a 200% increase in lifetime value. There are a couple of reasons for this.
First, an increase in retention alone will get you part of the way there. The other is that we know that donors who stay with our organizations longer tend to increase their giving over time, and become more likely to be those big planned giving and major gift donors.
Getting larger donations is, in fact, a consequence of donor retention.
Let’s say your typical donor gives you $100 per year. If you could identify one donor each year that is about to leave and provide an extra personal touch over your current stewardship activities, would it be worth the time making a call or writing a hand-written note? We know that each time they are retained, their propensity to give later again also increases.
With a 60% retention rate, that donor will give nearly another $250 cumulatively if you can keep them from leaving. What if you could identify 100 of these donors a year?
Letting the computer do what it does best…
Obviously, it’s worth being able to put time in to retain donors. How do we go about identifying these donors who are at risk of leaving your organization so that we can do something about it?
In recent years, artificial intelligence has become very buzzword-y, and it is often misunderstood. Computers are really good at finding patterns. They are good at seeing things we might not notice, and they are much better at quickly handling the volumes of information that are too much for us humans.
Think about your average donor file. A gift on this date, a gift on that date – we might not see the precise interrelationship of that information. A computer can look at those dates in a multitude of ways – from what days of the week it was, to when during a campaign they were made, to its seasonality, and beyond. It can look at those interrelationships for all the donors at once, and start to make some conclusions about those two gifts.
At Wisely, we believed that some of those donors who are likely to leave might be able to be identified early based on that giving history. Specifically, we are using predictive analytics – using historical information, we identify patterns to predict future events. In the case of at-risk donors, we look at what behaviors occur before a donor leaves your organization, and identify them before that happens so that you can take action.
You’ve spent time creating good stewardship, but these are the donors who need an extra little nudge. The question goes back to, is that $100 donor worth a 5-minute phone call? How about all the donors we can identify through pattern recognition.
… so that you can do what you do best – fundraise.
There are so many ways that we can fundraise better, but it requires human fundraisers with better tools. We’re not about to replace those important interpersonal relationships. We want to build tools that make it easier to identify donors, identify patterns, and give fundraisers the best opportunity to work with the donors.
With all of the daily time sinks, what we want to be able to do is arm fundraisers with the most important information in a timely way, so that they know exactly what to do with it and take action.
If you are interested in finding out how Wisely can help you identify at-risk donors, or the other ways that Wisely can help you fundraise better, sign up for a free trial at fundraisewisely.com