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Predictive analytics for nonprofits is easier than you think.

Predictive Analytics for Nonprofits: Why You Need Data to Predict Your Donors’ Future Engagements and Generosity

Posted: May 24, 2019 |

The decision to give is a much different one than choosing a product or service to buy. In many ways, it’s much more personal and nuanced. Whether a donor is giving time, money or other goods, each decision is driven by a unique set of priorities. They are willing to give without expecting anything in return. To be most effective, understanding those deeply personal motivations needs to be at the heart of all fundraising efforts. And yet, up until recently, it was nearly impossible to get an accurate profile of all your donors and why they’re giving.

In past eras, nonprofits were forced to rely on empirical knowledge of employees and complex spreadsheets to guess what messaging would encourage the most donors to give. It was a labor-intensive process that made it difficult to take risks or try to brainstorm creative new ideas.

Luckily, things have changed. Today, donors are giving away information about their preferences, priorities and behaviors every minute of every day. Nonprofits can access as much information as they want and use it to predict their donors’ behavior in the future.  

Now the problem nonprofits face is deciding how to collect data, what they want to know and how to leverage the information to increase giving. Just deciding to start using predictive analytics can be enough to overwhelm some nonprofits into inaction.

But predictive analytics is too important to simply ignore. When you use it right, predictive analytics and data analysis can make the difference between earning your standard amount and a record year. Most importantly, data collection and predictive analytics are not too complex for your nonprofit. It’s a system you can set up quickly that will have a profound impact on your revenue. Not convinced? Let us show you.

How Are You Collecting Donor Data?

Data collection is not a new concept. Your nonprofit has been doing it as long as you’ve had a donor base. Your records, at the very least, organize information about your donor’s personal information, gift size and likely preferred payment method. This is a great start, and it proves that you already know how to collect data to use in the future.

To make the first step towards using data to understand future behavior of your donors is to find an efficient way to store your data. Ideally, you’ll have a CRM that can give you granular data about a single donor and high-level data visualization about your entire base. The visualization part is key, because you want to be able to understand trends quickly. Building those reports manually, without the help of your CRM will be a headache for anyone involved.

Collect the Right Data for Increased Donations

Once you have your donor data organized and visualized in a way that is easy to understand, you want to prioritize the right kind of data. Not every behavior or preference will lead to increased generosity. To make the biggest impact on your goals, keep your data focused and relevant.

The best data to start with is engagement data. Figure out what your donors respond to, and how passionately. Make sure you’re not using vanity metrics, but real actions like video views and shares. Also, try to collect as much demographic data as you can. We don’t mean age and occupation, but the deeper connections your donors have. Figure out who is inside their inner circle. Understand who their family and friends are, what public figures they follow and events to attend. When you can match demographic data with engagement data, you start to pull insights about motivation. The more motivation trends you can establish, the smarter your marketing can be.

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Understanding Predictive Analytics for Nonprofits

You might be thinking all this data collection is too much. After all, marketers in for-profit businesses use predictive analytics to push a variety of products and services. Your nonprofit may only have a single initiative donors can give to. We understand that those fears, but we want to help you see it’s easier than you think. Collecting the data in the right tool, and using it in the right way, can impact everything from your donor relationships to your average gift size.

Ultimately, what data and predictive analytics give you is a clear, objective path towards growth. You’ll no longer rely on what you’ve always done in the past. Instead, you’ll see the future based on objective data from your real donors. More importantly, your team will allocate the right resources in the right places.

6 Ways Nonprofits Can Use Predictive Analytics and Data to Drive Generosity

We would never recommend a strategy without giving you practical applications. We know your time is valuable and if it won’t have an immediate impact, you don’t have time for it right now. That’s why we came up with a list of 8 ways data and predictive analytics helps drive your nonprofit forward.

1. Analyze Trends Over Time

Most nonprofits have a single focus: donations. Of course, you want to see an increase every year, but at the very least, donations shouldn’t trend downward. But, donations are the last step in the process. There is data to be mined at every other step of your donor funnel. For example, what type of traffic is most likely to convert from visitor to potential donor? Do you know what behaviors indicate that a person will be a long-time donor? How many touch points does a donor need to give a bigger donation than their previous year?

All these answers can be found in your data. As long as you have a comprehensive CRM and the right reports set up, you can easily use predictive analytics to figure them out. Then, you can automate the necessary tasks to make these conversions. With additional benchmarks and performance indicators, your success will be easier to predict.

2. Test Marketing Efforts

Most nonprofit marketing teams use a system of A/B tests to optimize their efforts. This is great; we encourage this. But there is a limit to the insights your team can gain from an A/B test. You miss the context of a donor’s overall behavior. You won’t be able to see someone’s entire journey through a series of A/B tests.

Predictive analytics will reduce the number of tests you have to run before you understand what drives engagement. It will also help you understand who is primed to respond to an ask from your nonprofit. Instead of waiting for a big campaign or end-of-year push to ask for donations, you will nurture groups of donors who are ready to give because you’ve engaged with them in a meaningful way all year.

3. Get to Know Your Donor Segments

As your nonprofit matures, you’ll have donors at different lifecycle stages. Some will be brand new, who need education and heavy engagement. Some will be donors who have given for years, who advocate for you without being asked. Predictive analytics provides the steps you need to take in order to bridge the gap between the two. Historical data will give you an idea of what steps are required to retain new donors and turn them into advocates. Predictive analytics will give you your best path forward.

4. Add to Your Donor’s Experience

Personalization is a key output of predictive analytics. And personalization is essential to the kind of donor experience that inspires loyalty and donor retention. Creating a personalized experience is more than simply sending a birthday email to your donor. It also means sending an SMS invitation to an event in their city you’re attending. Perhaps they will respond best to a direct mail piece letting them know you’ve hit another milestone. Predictive analytics will help you create an integrated, personalized experience of your nonprofit.

5. Spend Where It Matters

New marketing trends pop up all the time. Some of them are worth investing in and some aren’t. Unfortunately, most people don’t know which is which until they’ve spent the money. You can leverage predictive analytics data to understand which channels work best for you and say no to the ones that aren’t a good fit.

For example, if your donors overwhelmingly prefer to donate online, maybe you should send more targeted direct mail (instead of a mass direct mail blast to people who will never give by check)  and spend more money on digital ads. Or maybe your donors love to watch videos of your team at work so you hire a video producer and scale back your writing team. All of these insights are made clear by your data, you just need to know how to find them.

6. Ask for The Right Kind of Generosity

Donations are not exclusively monetary transactions. Most nonprofits need volunteers who can give hours of time or lend their professional talents. It’s hard to know who to ask and for what, unless you have a clear picture of what your donor priorities are. Data will tell you that.

Use predictive analytics to find the right time to ask for money and when they’d rather give something less tangible, like their time. You’ll be shocked at how much more productive and efficient your nonprofit can be with a variety of donations from your donor base.

Start Collecting the Right Kind of Data to Use Predictive Analytics at Your Nonprofit

Now that you know how important organized data is to the success of your nonprofit, you can start to think about your next best step towards leveraging predictive analytics. If your first step is to find the right CRM to organize your existing data, we can help you. If your next step is developing a digital strategy to start collecting data, we can also help you. The important thing to remember is this is not too complex for you to accomplish, and you have a team at Virtuous ready to help you get there.

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Mckenna Bailey
Mckenna is a writer and strategist who uses empathy and storytelling to connect nonprofits with their most committed donors.

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