Using Data to Make Annual Giving Work for You

Annual giving folk are unique. I know because I’m one of them. We aren’t tempted by the glamour and glitz of major gifts, the gold-lettered names on a wall or building. No, we prefer to build relationships en masse, using data-driven insights to tell us what our donors really want. Unfortunately, many fundraisers are expected to complete their annual giving program “off the side of their desk,” with no fancy agency to guide them on the latest trends, no idea what donors really respond to, no current data segmentation strategy to contend with. They might even have another job to do in its entirety.

If this is you, I want you to know that this is okay! Annual giving is a long game, requiring patience to get a return on investment. I want you to have confidence (and your leadership team to have confidence in you) that with data and time, you can make annual giving work for your organization.

 Here is my three-step plan to help you establish a baseline for performance and growth of your annual giving program:

 1. Plan for your year.

While it's important to be nimble, it's equally important to have a well-thought-out strategy. Create a data-based plan for your donors that determines who your segments will be and which segments will receive which touchpoints. For example:

 If you have good historical data to look back on, use it to determine what your donor base expects from you. Do your monthly donors expect a newsletter? Be sure to send it to them to avoid hundreds of calls asking, "Where is it?" Do your major donors like to be included in your end-of-year solicitation? No? Keep them out of it for now (we can always test that later.)

Tip: Using the Giving Analysis for Appeals report in Blackbaud Raiser's Edge NXT® is a great first step to analyzing your historical data.

 2. Segment your data, but don't OVER-segment.

 According to Teemu Raitaluoto, CEO at markettailor.io, you should attempt to strike the right balance between segmentation and simplification.

“While creating more segments may seem like a way to better target [donors],” he explains, “over-segmentation can lead to overly complex campaigns that do not resonate with [them].” 

Over-segmentation often leads to small sample sizes within each segment, making it harder to get statistically significant results and draw reliable conclusions. When segment sizes are too small, the data becomes prone to random variations and fluctuations, making it difficult to distinguish meaningful patterns or trends from the noise. This could weaken the validity and credibility of any insights you may have derived, making the exercise moot.

A general rule of thumb is that 100 responses per segment are required for the results to be statistically significant. If you expect an 8% response rate from your donors, the segment needs to include at least 1,250 constituents. In this case of a (very) high response rate, if you have a small database of 5,000 constituents to whom you're mailing, you would not want to segment them into more than four segments.

Keep track of those segments in your fundraising CRM. While it's an option to use constituent codes to denote the segments your donors are in, this leaves the onus on you to update the segments as your donors move up and down segments. Using a CRM that has dynamic constituent lists will save you time and effort.

Tip: If using Blackbaud Raiser’s Edge NXT, be sure to apply the appropriate appeal records and package codes to your constituent lists for good record keeping. Package codes will determine the segment and where in the A/B test they fall—see more in step three, below.

 3. Test one thing at a time.

The only way to learn what works and what doesn't is by testing your approach. For best results, take a focused approach to testing. The "kitchen sink" approach, testing absolutely everything at once, is similar to over-segmentation. By trying to test too many variables at once you can lose nuanced impact of each one. Instead, for each touchpoint, test one aspect in an A/B style, and then use that as your winner for future communications.

Here are some examples of what you can and should test:

• Outer envelope: full color and branding vs. corporate standard envelope

• Ask: hard ask vs. soft ask

• For acquisitions: premium vs. no premium

• Impact report: insert vs. no insert

 Tip: If you use Raiser’s Edge NXT, be sure to note in your package codes which part of the A/B test your donor fell into.

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There is a lot of pressure on annual giving programs to perform, and understandably so. Most organizations are not flush with excess cash and need to raise as much as they can to fund their programs and operations. But it's also important to remember that the outcome of a good annual giving program is to create the pipeline for monthly, leadership, planned, and major giving donors. Getting good insights on your donors' wants, needs, and likes is more important than a fast influx of cash that gives you no reliable data regarding why it worked (and how to repeat that success).

 Use your fundraising CRM as your source of truth, with clearly defined processes and coding procedures. Clean data + good reporting + a thought-out annual giving program = your life, a little bit easier!