Metrics That Really Matter To Your Organization – And How To Improve Them
We love equipping nonprofits with modern software that helps accelerate generosity. But there’s a well-known ‘secret’ in CRM software that, if not understood, can dramatically inhibit your success. The ‘secret’ is this: even the best solutions are only as effective as the data and processes that they help automate.
In other words, you’ve made the investment in tech in order to drive your fundraising forward. So now you need to invest in the people who will be using it, and the processes they’ll be using, in order to get the most bang for your buck.
The best way to start optimizing your process and realizing the value of your CRM is by benchmarking. A benchmark is simply a baseline number that tells you where your organization stands compared to other nonprofits… or compared to your own past performance. As you begin using your software and collecting better data, you can begin compare the new numbers against the prior benchmarks to see if you are, in fact, performing better than before.
This might sound complicated, but it doesn’t have to be. In fact, there are two simple categories of benchmarks that can have a tremendous impact on your organization
Donor Retention Rate
When someone makes a donation to your organization for the first time, it’s a big deal. Getting someone to move from the position of casual bystander to the role of active donor is something to celebrate. But it’s actually MORE important to figure out how many of those first-time givers come back to give a second time. It’s been found that 76 percent of those who donate once will never donate a second time. That’s mind-boggling. Especially when you consider that the cost of retaining a donor is far less than the cost of acquiring a new donor.
If you want to move the needle on your fundraising, it’s imperative that you improve the number of donors who give a second gift. After the second gift, there’s a much higher likelihood that they will be a donor for life. By getting 20% more first-time donors to give a second time, you can have game-changing results. After you’ve identified this benchmark for your organization – and you take action to improve it – you’ll be amazed by the increase in you multi-year donor retention rate. To validate this result, make sure you also record the benchmark for your current multi-year retention rate (number of donors who have given at least 1 gift in the last 3+ years). These two benchmarks are key to the long term success of your nonprofit
One of the best ways to get that second gift (and increase your retention rate) is by sending a timely, personalized welcome series of emails, letters and calls to each person who gives you money for the first time. If the donor gives to a particular program or project with their first gift, then personalize their welcome series focus on results/stories from their chosen project. You want to build on their initial excitement and show them that they matter to you. A simple personalized welcome series over the first 60 days of a donors journey will greatly increase the odds of getting that second gift and gaining a donor for life.
Average Gift Size
The second important benchmark to focus on is average gift amount. Our friends at NextAfter have coined a phrase for key online giving benchmarks call “The Flux Capacitor” for giving. They point out that three key numbers determine online giving levels: 1. Total traffic to your website, 2. Percentage of site visitors that give a donation and 3. The average size of the gift. The thinking goes that if you can improve two of these three things, it will have a multiplier effect on your organization’s donations.
You can certainly optimize your giving programs to increase traffic and conversion, but the average size of the gift is where you may end up having the biggest impact. We recommended analyzing your donations and calculating the average gift amount you get from first-time donors and for repeat donors. Hang onto these benchmarks, and be sure to keep measuring your new numbers to make sure you’re improving them. Then begin to adjust messaging on your web donation pages and direct mail appeals to determine which calls to action drive the biggest lift in gift amount
Also, take time to analyze the average gift you’ve received on each channel (web, mail, events, etc). Maybe you get an average of $50 online but you consistently get an average of $200 donations at your live events. It’s helpful to have these baselines, and watch how they change as you turn knobs on your fundraising strategy.
Virtuous CRM Dashboard showing “Best Ask” gift amount using predictive analytics.
Predictive analytics can be incredibly powerful in growing your average gift size. In Virtuous, we use analytics to suggest gift amounts based on the donor’s giving “capacity” (wealth data, giving patterns, etc). This type of predictive power can give nonprofits a significant lift in average gift size.
Other Standard Benchmarks
If you’ve been around fundraising for a while you’re probably familiar with a few the other standard industry metrics like LYBUNT and SYBUNT reporting. These acronyms stand for Last Year But Unfortunately Not This and Some Years But Unfortunately Not This. These benchmarks refer to donors who have lapsed at some point in their giving and are qualified for a reacquisition strategy. Stay tuned for our June blog that will dive into what you need to know about these two benchmarks, along with a guide to reporting.
Give it a try. Spend some time gathering the right benchmarks and the train your team on how to make adjustments to optimize results. We promise that you’ll be surprised by the direct impact you have on your fundraising results.