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October 2010

Fundraising Evolution – Accelerated Learning: Testing & Research

On the heels of Dirk Rinker chiming in on a recent post here, I thought it might make sense to devote some time to a topic that Dirk is a specialist in the area of - Research. 

This is one of the best ways for an organization to really supercharge the speed at which it is learning.  While nothing replaces real in-market testing, the value of executing research projects of varying sizes and scope from time to time will help your organization really “hear” what your supporters are telling.  Everything from what they want to hear from you, what they want to receive from you, and how you fit into their lives.

We all test, or we all should be testing.  Testing is a cornerstone of learning for direct marketers, not just fundraisers, and while it is the most common way of gaining understanding into the minds, preferences, and behaviors of our constituents – it is not terribly efficient from a cost-time benefits perspective. 

Even with more robust multi-variant testing frameworks in place, which allow for several elements to be evaluated in a single test environment, we still end up with the same general scenario as a traditional A / B test when you boil it down.  

Step 1: Test.

Step 2: Hopefully identify a winner(s) (95% or more of all tests fail to unseat the Control).

Step 3: Re-Test Winner at larger volume.

Step 4: Hope that initial winning test produces results that hold up. 

And so on. 

This can quickly turn into a several month long, or even year long, process.   And who knows if we have covered all our bases or even identified the best solution? 

We are trying to identify, by elimination, what offer, format, treatment, or technique works or doesn’t work for our audience or segments.  What flavor ice cream do they like?  Maybe Mango, test.  Maybe Orange-Nectar, test.  Maybe Vanilla Bean, test. 

Ferrando research blog post picture1 

What if, instead, we were able to come right out and ask our audience up front, to provide us with some guidance that might more inform our testing direction and focus, so that instead of eliminating an endless universe of ideas for our entire audience population, we are testing directly into a more defined space they pointed us towards?  Our audience likes Chocolate!  Now what particular variation on Chocolate works best, Dark Chocolate, Milk Chocolate, White Chocolate, or Mocha-Latte-shoot me now

Ferrando research blog post picture 2 

Enter in Primary Research. 

I actually presented on this topic at the most recent DMA-Bridge Conference with Dirk Rinker, and a large health charity partner of ours—the presentation is embedded below or you can find it here. 

The point of all this is – if you are trying to learn something major about your donors quickly, the painstaking and time consuming trial and error efforts of testing from every angle is not the only option available to us.   Do the Primary Research up front – and then execute more informed tests.  It will save you time, expense dollars, and frustration – PLUS – your donors or prospective donors will appreciate that for once you “heard” them loud and clear.  

-Stephen Ferrando

Stephen is a Strategy Director at Merkle with a combined 12-years of expertise in both commercial  and nonprofit marketing, strategy, and analytics.  In his free time Stephen is working on becoming a ninja, as well as focusing on his life-long dream of completing the last side on his Rubix Cube.

Gift Ask Testing Post Follow-up

Since Becky's post earlier this week, we've been having some 'off-blog' conversation with readers around this topic. We found the discussions very interesting and got permission to share some of them with our readers.

Thanks to everyone for their input (on and off blog) and TGIF!

-DonorPower Blog

From Libbie Allen, Development Director at St. John the Baptist Catholic Church & School:

My observation is that everyone is overwhelmed with “asks” this year, in a down economy with a lot of yelling heads in an election year. The negative impact on my donors is huge, and they are dumping everything they receive in the mail except for a very few, close-to-the-heart charities. They tell me even those are not getting the mindshare they would have given them a year ago. No amount of attempts at resetting their expectations re. positive signs in the economy seem to be helping. The money is out there, but people are battening down the hatches because of fear and uncertainty. I predict this will lessen after the elections, especially as they see hiring for holiday sales improve, and the corporate hiring beginning in December for the new year.  

My belief is that donations will improve also, but it is more the personalization of the ask that will draw those in, rather than repetitive asks. The one thing that sets my donors off more than anything is to get a thank you with another ask attached. Statistics aside, my donor base and my experience say these are sure killers.

From Dirk Rinker, President of Campbell Rinker:

Hi Becky,

Good blog post.  Here are my thoughts about the drop in retention after an upgrade gift.  I think your hypothesis is valid and probably correct.  These thoughts simply add some shading to the donor’s rationale for behaving as they do… 

  1. Perhaps donors were only peripherally engaged to begin with – testing the waters with a new charity, as it were.  Their second gift is a way for them to say – “OK; you’ve asked me once and I gave some, you asked me twice and I gave more.  That’s the limit of my engagement.”
  2. The second gift is a huge step, but we’ve found that it’s the third gift that identifies an engaged donor, not the second. 
  3. The donor who waits longer before giving a third gift after an upgrade may simply be telling themselves: “My first gift of $50 was for a year.  When they asked me again to give $100, I intended that to be for two years.  I’ll give my next gift when I feel like the timing is right, and I’ll give at the rate I feel comfortable.”  

We have been using a fairly simple four-point question to identify donor-perceived thresholds of acceptable gift amounts for over a decade.

Gift asks testing: too much for donors' comfort?

As a sector we spend a lot of time trying to get donors to upgrade. Over the years, those efforts have taught us three things: 

  1. Donors rarely stray far from their first gift amount.
  2. The faster you get a second gift, the higher the likelihood of getting a gift the following year.
  3. It is easier to get another gift than to get a donor to increase the amount of that next gift. Higher gift amounts used to translate to higher retention rates. (The lesson: Times change, and so does donor behavior.) 

It is not uncommon for fundraisers to look at KPI metrics or campaign results and say, “We have an average-gift problem.” One reaction is that we then ramp up ask array testing. We add more ask amounts to the ladder, we circle things. We go from high to low; and then from low to high; and then we try high, low, and then higher amounts. We test HPC and HPC within the last 36 months. We MRC.  We try giving equivalences. 

In short, we spend a lot of time testing. 

Let’s stop for a moment and think about whether it’s worth all that effort; are we really having a positive impact? 

On a client, we are now confronted with a counterintuitive discovery: Donors who upgrade on their second gift can have lower retention rates. How is that possible? 

Our working hypothesis is that the upgraded ask patterns have now moved those donors too far away from their original gift amount – in other words, out of their comfort zone.

What do you think?  

-Becky Graninger 

(contact Becky via email: donorpowerblog@merkleinc.com)

 

Gift asks testing: too much for donors' comfort?

As a sector we spend a lot of time trying to get donors to upgrade. Over the years, those efforts have taught us three things: 

  1. Donors rarely stray far from their first gift amount.
  2. The faster you get a second gift, the higher the likelihood of getting a gift the following year.
  3. It is easier to get another gift than to get a donor to increase the amount of that next gift. Higher gift amounts used to translate to higher retention rates. (The lesson: Times change, and so does donor behavior.) 

It is not uncommon for fundraisers to look at KPI metrics or campaign results and say, “We have an average-gift problem.” One reaction is that we then ramp up ask array testing. We add more ask amounts to the ladder, we circle things. We go from high to low; and then from low to high; and then we try high, low, and then higher amounts. We test HPC and HPC within the last 36 months. We MRC.  We try giving equivalences. 

In short, we spend a lot of time testing. 

Let’s stop for a moment and think about whether it’s worth all that effort; are we really having a positive impact? 

On a client, we are now confronted with a counterintuitive discovery: Donors who upgrade on their second gift can have lower retention rates. How is that possible? 

Our working hypothesis is that the upgraded ask patterns have now moved those donors too far away from their original gift amount – in other words, out of their comfort zone.

What do you think?  

-Becky Graninger 

(contact Becky via email: donorpowerblog@merkleinc.com)

 

VIDEO: Melinda Gates on what nonprofits can learn from Coca-Cola

If you have not yet heard of TED, which describes itself as a "small nonprofit devoted to Ideas Worth Spreading," this is an organization worthy of familiarizing oneself with.  In addition to the exclusive "thought" conferences that bring together the brightest minds out there, TED has a robust library of TED talks that are available for viewing on its website.

One of the talks featured today on TED's Facebook page, and one we thought was very appropriate to share with our readers, is a talk given by Melinda Gates on what nonprofits can learn about the way Coca-Cola operates around the world, and in particular, how it has become successful in developing markets.  In the 16 minutes talk (well worth the time), Mrs. Gates also provides examples of how the successful Coca-Cola tactics are already being used by governments and nonprofits around the world to improve reach, efficiency, and success of their own efforts aimed at improving lives.

If you cannot view the video below, you may view it here on TED's website.

 

 -Donor Power Blog

 

The Power of Authority

Recently, on my drive to work, there has been an ominous warning posted on electronic signs above the highway. "SLOW DOWN. AUTOMATIC SPEED CAMERAS MAY BE IN USE."

Instinctively, everyone slowed down, including me. Even thought I did not see a speed camera van the entire way home, even though there were no police cars pulling people over, even though the threat was only a "may" not a "definitely", just the implied potential consequence was enough to slow everyone down.

I wondered to myself whether there was even a need for the actual speed camera or if the implied threat was enough. Likely, as with speed limits that many people ignore, if there was a prolonged period of threat with no consequence (no pictures of all of us speeding with tickets arriving in the mail), everyone would likely start ignoring the ominous electronic sign and go  back to speeding.  But, at least in the short-term, the impact was immediate and effective.

Of course, as with everything I do in life, this got me thinking about whether there is a way to use the same concept for donors.  How can we, as fundraisers, get all of our donors to pay attention, give  us a gift, care, by using our well-worn mission statements in a different way? Should, and can, we threaten donors with consequences if there is no action? Will the new threat be enough?

Perhaps donors are tired of hearing that children are going hungry,  diseases need to be cured, rights upheld, arts projects funded.  Perhaps the threat of lives lost if we don't do something doesn't resonate anymore.  So, what would be the equivalent of the highway billboard to get donors to pay attention again, to believe they MUST act even if the threat is only a potential loss of something?

I'm going to spend some time this weekend contemplating ways to do this. I hope you do too!

-Miriam Kagan

(@MiriamKagan)

 

 

Smaller Goal, Bigger Donor?

Recently, I have been reading a book about how social media can be used to drive change called The Dragonfly Effect.* In it, the authors site numerous studies about human behavior, one of which is about setting goals.  According to the study, we humans are more likely to achieve goals, or at least try, that are smaller in scope, rather than goals that have a huge one.  So,  "run a mile" is an easier goal to achieve than "get healthy," and I am more likely to set my mind to and be successful at running a mile, then follow through on "getting healthy" (I won't know where to start and may quit trying altogether).

I have been walking around thinking about this specific concept and how it can be applied to more traditional fundraising when I realized that something very similar to this was used on me recently by an organization to successfully increase my giving to a sustainer program.

For years now, I have been sponsoring  children in developing countries through a monthly sponsorship program.  Recently, I received a letter from the organization telling me that due to increased costs of doing business, my monthly sponsorship rate was increasing from $22 to $30 per month. 

While the marketer in me questioned the increase, the long-term donor in me thought, "hey, what's an extra $8 month? And, it is going to a good cause!" 

Now here is the interesting part:  I was chatting with Greg Fox about this, the marketer in me discussing the approach of increasing my monthly contribution, when he mentioned to me that if you are going to ask someone to give $100 more year, that's a lot to ask for.

"One hundred dollars?! That's a lot of money," I thought to myself. "I could do a lot with that much money! (Like buy a pair of shoes). Maybe I shouldn't increase my giving."

The moral of the story: when asked for only $8 extra per month (small goal), I was happy to contribute. When put into a bigger perspective--$100 per year (larger goal)--I started to question whether I had the resources to increase my contribution.

What does this mean for us fundraisers? Finding the ask that doesn't make the donor feel like they are stretching their own budget is the way to go? Making the goals seem achievable? Parsing what we are asking for help with into more digestible programs? Probably all of the above.  This donor is going to focus on the $8/month and not think about the shoes she could by with $100. After all, $100 could buy a lot of shoes for children.

-Miriam Kagan

(contact Miriam via email: donorpowerblog@merkleinc.com or @MiriamKagan on Twitter)

*A complimentary copy of the book was provided to the blog by the publisher.

Weekend Reading: Social Entrepreneurship for Social Good

We came upon this story from NPRthis morning: a Social Entrepreneur using his skills for Social Good.  Below is a small snippet of the story and you can read the full story on their website.

"Well over half the kids in this country don't have easy access to a community playground. That bothered Darell Hammond so much, he started an organization to create places for children to play. So far, over nearly 15 years, the group has helped build more than 1,800 playgrounds....Investment and capital — these are terms you hear a lot from social entrepreneurs like Hammond. They are taking terms from the world of finance and applying them to all kinds of social problems." (Read the rest of the story here.)

TGIF!

-Donor Power Blog

 

What is this blog all about?

If you're serious about raising money from donors, you need to get serious about donors. More than ever before, donors are insisting that you share power with them, not treating them like passive ATMs. This blog is about the ways you can do that -- and the rewards that await you and your donors when you do.

About the Blogger

DonorPower Blog is penned by Merkle's Power Blogging Team, led by Greg Fox, our senior vice president of strategy. Working with Greg is a police line-up of guest "artists", fundraising pros all, who like to pose as blogatorialists when the sun goes down. You can reach this blog, and any of our regular contributors, at
donorpowerblog [at] merkleinc [dot] com. See this blog's policies.


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