direct marketing 201 analytics: statistics for fundraisers may 15, 2013

Direct Marketing 201

Analytics: Statistics for Fundraisers

May 15, 2013


ANALYTICS

The key to maximizing value and sustained growth is getting the right information to the right people at the right time


What We Will Cover• Data Sources• Types of Analytics• Campaign Analytics• Forecasting Analytics• Monitoring Outcomes


DATA SOURCES

Old ModelNew Model – need a plan to integrate


Sources: The Old Model

TM

Direct Mail

Web Sites

Events/Major Gifts

Donor/Customer


You Need a Plan that Integrates the Data


Integrating Data to Develop Strategy


TYPES OF ANALYTICS

Balancing Analytical NeedsDescription of Types of Analytics


Analytics – Balancing LCLS • There are basically 4 types of data that need

to constantly be balanced in decision making – each has different value• L – Lagging Benchmarking• C – Current Campaign Reports/Testing• L – Leading Forecasting/Budgeting• S – Strategic Scenario Building/Multi-Year

Growth


Analytics – a Few Types

• Campaign Analytics– Performance Reports– Package Testing Results

• Forecasting Analytics– Budget Forecasting– Cash Flow Forecasting


Analytics – a Few Types

• Digital Media Analytics– Web Site Traffic Analysis– Paid Advertising ROI

• Communication Analytics– Segmentation Analytics– Predictive Analytics


Analytics – a Few Types • Performance Indicator Reports– Trend Analysis (historic donor value)– Multi-Year Forecasting (future donor value)


CAMPAIGN ANALYTICS

Performance ReportsMetrics


Performance Reports• Key metrics help determine campaign success– What are they?– How are they calculated?– Why is it important? Why may it be limiting?

• Which is most important when?– It depends on your goals!– It depends on the program!


Response Rate• What?– The percentage of the quantity mailed that

responded• How?– (# of Gifts/Quantity)*1000

• Why important?– Indicator of package success. More gifts the better!

• Why limiting?– Does not factor in revenue, size makes a difference.


Average Gift

• What?– The average size of the contribution

• How?– Gross Income/# of Gifts

• Why important?– The higher the gift, the more valuable the donor

• Why limiting?– Does not factor in response, large gifts can skew

performance


Gross/M

• What?– Gross income per thousand pieces mailed

• How?– (Gross Income/Quantity Mailed) * 1000

• Why important?– The more revenue per piece, the better

• Why limiting?– Does not factor in cost


Cost/M

• What?– Cost per thousand pieces mailed

• How?– (Total Cost/Quantity Mailed) * 1000

• Why important?– Tracks costs

• Why limiting?– Test vs. rollout pricing need to be considered


Investment/Donor (CTA)

• What?– Net Investment to acquire a new donor

• How?– Net income/# of Gifts

• Why important?– Factors in response AND revenue AND cost

• Why limiting?– Only used in prospecting, but it’s a key indicator!


Acquisition Campaign Report


Net/M• What?– Net income per thousand pieces mailed

• How?– Gross/M – Cost/M– (Net Income/Quantity Mailed) * 1000

• Why important?– Factors in gross and cost, measures net productivity

• Why limiting?– Not really applicable in prospecting when there is

traditionally no net revenue


Appeal Campaign Report


Which variable is most important when? It depends, but general rule of thumb is … • Acquisition – Investment/Donor (CTA)• Appeals – Net/M• Renewals – Response Rate• Upgrades – Average Gift


Package Testing – Why?• Build on what’s working, change what isn’t– Tweak Tests, New Package

• Move the needle on a specific variable based on program goals– Response rate, Average gift, Net (etc.)

• Stay one step ahead of your peers!


Package Testing – When?• As often as possible!– Try and test at least one variable in every mailing

• Tests aren’t limited to creative/design– RFM segment testing in appeals– List testing in prospecting (80/20 rule)


Package Testing – How?• Ensure there is enough quantity (and gifts) to

be statistically significant• Test only one variable at a time• Make sure segments are equally distributed• Ensure you wait long enough to make a

conclusion!


Package Testing – For Statisticians• Confidence Intervals• Bell Curves• Z Score • P Value


Bell Curve

Lower UpperActual

CONFIDENCE INTERVAL


Bell Curves Intersecting

Package A Package B

Lower (A) Upper (A) Lower (B) Upper (A)

Overlap?


Acquisition Testing Report


Appeal Testing Report


Package Testing – For Everyone Else

• 9 times out of 10 the result will be the same• Lower and Upper Bounds• Best Case/Worst Case Scenarios• Overlap • Which metrics to consider depend on goals of

the test


FORECASTING ANALYTICS

Budget ForecastingCash flow ForecastingMulti-year Forecasting


Budget Analysis• Question: “Based on where I am today in my

fiscal year cash flow and how campaigns have been performing, where am I going to end the fiscal year.”

• Approach: Combining current cash flow to date along with a forecast of “active” campaigns gives an excellent real-time approximation of total fiscal year revenue.


Budget Analysis: Tools• Campaign Budgets: All TM, DM, Web, etc.

budgets with expected outcomes.• Predictive Flow: using different tools for each

channel flow out budget (i.e., DM would use a standard days out).

• Estimation of Carry In/Carry Out: Based on timing of prior FY campaigns how much revenue will be “carried into” this FY. Same for current FY Campaigns.


Budget Analysis: ResultsDM FY Thru 9 Proj 10 Proj 11 Proj 12 EOY Proj FY Budget Diff

Acknowledgments $83,400 $9,530 $9,610 $9,760 $112,300 $120,000 ($7,700)Acquisition $78,950 $8,100 $9,370 $8,140 $104,560 $120,000 ($15,440)Monthly Giving $78,960 $8,600 $8,110 $9,510 $105,180 $120,000 ($14,820)Lapsed $80,670 $9,150 $8,820 $8,380 $107,020 $120,000 ($12,980)Renewals $79,980 $8,200 $8,510 $9,340 $106,030 $120,000 ($13,970)

Total DM $401,960 $43,580 $44,420 $45,130 $535,090 $600,000 ($64,910)List Rental $79,140 $9,310 $9,860 $8,510 $106,820 $120,000 ($13,180)Whitemail $8,095 $884 $831 $906 $10,716 $12,000 ($1,284)

Total Whitemail/List $87,235 $10,194 $10,691 $9,416 $117,536 $132,000 ($14,464)Restricted (-) -$824 -$91 -$83 -$81 ($1,078) ($1,200) $122Grand Total $488,371 $53,683 $55,028 $54,466 $651,548 $730,800 ($79,252)FY12 Budget $548,100 $60,900 $60,900 $60,900Diff ($59,729) ($7,217) ($5,872) ($6,435)


Forecast Analysis

Question: “Recent performance metrics are soft compared to last year, how is recent performance going to affect my fiscal year budget.”

Approach: “Look at recent cash flow trends based on which campaigns are active and use tools to forecast the remaining months.”


Forecast Analysis: Tools• Historical performance by day.• Time-series analysis to utilize recent trends

along with historical performance to predict outcome.

• Create several forecasts based on assumptions of environment changes.


Forecast Analysis - Results


Multi-Year Forecasting• Question: “Determine the baseline scenario of

business models based on declining performance.”– Analyze what investment levels are realistic given current

trends in each business model

• Approach: “Establish benchmarks for growth in each program areas including investment levels, return on investment targets, donor return rates, retention targets, donor conversion, and upgrading targets, etc.”– Identify the donor segments of greatest value to guide

investment decisions.


Multi-Year Forecasting - Tools• Segment the file into the investment channels

(i.e., DM acquisition, Web Ads, F2F, etc.)• Estimate performance of the new acquisition

channels based on the investment.• Use historical activation, retention and

upgrading measures to predict future donor value.

• Create scenarios based on modifications of investments or changes in the base file.


Multi-Year Forecasting - Results


Thank you!Jim EmletPrincipal202-452-9732jemlet@integral-dc.comwww.integral-dc.com

Bryan EvangelistaAccount Supervisor202-296-9660bevangelista@lautmandc.comwww.lautmandc.com

mailto:[email protected]

http://www.integral-dc.com/

mailto:[email protected]

http://www.lautmandc.com/

direct marketing 201 analytics: statistics for fundraisers may 15, 2013

Documents

direct marketing

performance slide

data slide

cost slide

strategy slide

right time slide

future donor value slide

analytics balancing