Thursday, July 7, 2011

Donor Analysis: Demographic or Behavior

To maximize donor giving, you can employ one of two effective donor analyses: demographics or behavior.

To use either, you must still do rigorous analysis of your donors! We implore you not to use heuristics to put together your nonprofit’s donor profile or identify which giving behavior really characterizes your donors.

Or, hire Arrowhead Management and we'll do the analysis for you (c'mon! You knew there would be at least one shameless plug for us...)!

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If you can’t invest some data analysis to identify these demographic or behavior ‘drivers,’ you might as well bulk mail your best post-Lehman Brothers appeal to everyone on your list.

Demographic


Demographic analysis involves determining which demographic characteristics make a donor likely to give to your nonprofit.

A profile may be female, homeowner, between 55-65 and who attends religious services.

Using this profile and our proprietary analytical techniques, we predict the giving behavior and can identify donors and prospects in your database with high probabilities of giving at certain levels.

We would generate a list of prospects with a likelihood of making a minimum contribution. For instance, we would give you a list of 50 people, all of whom have never given a major gift, but fit the above target demographic.

This list has prospects with a 1 in 5 chance (or 20%) of making a gift above $10,000.


Behavior

In outcomes or evidence-based analysis, donor behavior is analyzed and strategies are tested to maximize donor conversion rates and gift size.

Using statistically significant sample sizes, various tests/experiments are run over a period of time to determine the most efficient (highest conversion rate) and effective (highest average gift).

A specific action is determined and multiple donor lists are created, which are statistically significant to your nonprofit’s overall donor list.

For this example, an action can be a direct mail appeal. Different appeals will be sent to each list (we vary the dimension of differentiation depending on what you/we think might vary – e.g. teaser on the outside envelop, maximum gift options).

Analyzing the comparative response among lists, we determine which list yields a greater response rate and average gift – this is the most effective strategy.