Analytics for Annual Fund
Segmentation: 2012
Marianne M. Pelletier, CFRE
Cornell University
March 20, 2012
Outline
• RFM (Recency,
Frequency, and
Monetary Value),
• ROI (Return on
Investment)
• Understanding
engagement
Wisdom from Kevin MacDonnell
• “Sometimes I employ a practice in our
Phonathon program simply because my
gut says it’s gotta work. “
• See:
http://cooldata.wordpress.com/2011/10/03/
data-1-gut-instinct-0/
Easy to measure, fun to use
RFM
What Is RFM For?
• Uses 3 measures instead of 1 to segment
donors.
• Builds a color chart of very top donors.
• Builds a color chart of top donors in
categories.
• Considers volume and time as well as
value.
• Helps define methods that work.
RFM – A Powerful Segmentation Tool
40%
$150
$160
$139
35%
$140
Response Rate
30%
Response Rate
•Frequency is predictive of both
response rate and average gift size, but
is not as strong a predictor as recency.
Recency
$120
Average Gift Size
25%
$100
20%
$80
15%
$60
$49
10%
$40
$11
•Monetary is defined (in this example)
as the average of giving over the prior
five years and is the best predictor of
average gift size, but less predictive of
response rate.
5%
$20
$11
0%
$0
within 6
months
6-18 mos
18-36 mos
3-4 years
4-5 years
Borrowed from Sally Boucher of WealthEngine,
See: http://www.wealthengine.com/newsevents/educational-webinars/fundraisingintelligence-actionable-strategies-growing-your-0
Average Gift Size
•Recency is the best predictor of
response rate, indicated by the greatest
separation between highest and lowest
segments. Those who had given within
the past six months may have had a
lower response rate because they
possibly had JUST given.
Recency
• How recently did the
donor give?
• Can you go back again
for another gift?
• Helps show LYBUNTS
and SYBUNTS
Frequency
• Monthly or annual
pledge payments?
• Givers every year
• Finds infrequent but
high donors (5-year
pledgers)
Monetary Value
Obvious!
Data Prep Considerations
• If you are measuring annual giving year by
year, use one year’s worth of giving
information.
• If you are measuring annual giving trends,
use 3 or 5 years.
• If you are measuring lifetime value, use all
giving.
How to score your file for RFM: 5Year Giving Example
1. Rank all constituents by Recency (limit to five years of giving history).
2. Divide the total by 5 – this will give you the number of records to score in each “quintile”
or 5th of the file
3. Assign the top 5th – those who have given most recently - the number “5”
4. Continue assigning each 5th of the file a number until you get to the final 5th with the
most distant gift date and assign these the number “1”
5. Repeat these steps by ranking all records for Frequency (number of gifts in a 5 year
period – excluding pledge payments, monthly credit card payments and other anomalies)
6. Repeat these steps for Monetary represented by the total giving (again, over a five-year
period).
This and the next 3 slides are also borrowed from Sally Boucher of WealthEngine. See:
http://www.wealthengine.com/news-events/educational-webinars/fundraising-intelligence-actionablestrategies-growing-your-0
Three-Year RFM Analysis Example: Prep
3-Year RFM Sample
Values
Row Labels
Max of GIFT_DATE_SQL Count of GIFT_NO Sum of GIFT_AMOUNT
1000057
4/11/2011
4
$70.00
1000058
2/2/2012
4
$155.00
1000061
6/8/2010
3
$1,550.00
1000067
9/29/2010
2
$120.00
1000069
6/28/2011
4
$3,000.00
1000076
11/29/2011
7
$750.00
Top
4th
3rd
2nd
Bottom
=PERCENTILE(B5:B94361,0.8)
=PERCENTILE(B6:B94362,0.6)
=PERCENTILE(B7:B94363,0.4)
=PERCENTILE(B8:B94364,0.2)
Below 2nd
Top
4th
3rd
2nd
Bottom
=PERCENTILE(C5:C94361,0.8)
=PERCENTILE(C6:C94362,0.6)
=PERCENTILE(C7:C94363,0.4)
=PERCENTILE(C8:C94364,0.2)
Below 2nd
11/25/2011
5/27/2011
11/30/2010
12/3/2009
Below 2nd
=PERCENTILE(D5:D94361,0.8)
=PERCENTILE(D6:D94362,0.6)
=PERCENTILE(D7:D94363,0.4)
=PERCENTILE(D8:D94364,0.2)
Below 2nd
4.00
2.00
1.00
1.00
Below 2nd
1000.00
300.00
100.00
50.00
Below 2nd
Three-Year RFM Analysis Example: Prep
Marking each record by its bin
=IF(B4>=DATEVALUE("11/25/2011"),5,I
F(B4>=DATEVALUE("5/27/2011"),4,IF(
B4>=DATEVALUE("11/30/2010"),3,IF(B
4>=DATEVALUE("12/3/2009"),2,1))))
For frequency, bin 1,2 and 3 had
the same starting value: 1, so all
below a value of “2” are scored at
the third bin.
=IF(C2>=4,5,IF(C2>=2,4,IF(C2>=1,3,1)))
For monetary, we also marked
the records by the indicated bins.
=IF(D2>=1000,5,IF(D2>=300,4,IF(D2>=10
0,3,IF(D2>=50,2,1))))
Recency
5
4
How it Works
Frequency
5
4
3
3
2
2
1
1
Money
5
4
3
2
1
125
Segments
4-3-4
Segment Based on RFM Scoring
Best Scorers:
Upgrade at low
cost and/or
refer to major or
planned giving
departments.
Steward
thoughtfully.
High Money:
Find new ways
to engage face
to face or
through
personalized
events.
5-5-5
5-5-4
5-5-3
5-5-2
5-5-1
5-4-1
5-4-2
5-3-1
5-5-3
5-4-4
5-4-3
5-3-4
5-3-2
4-5-1
4-5-2
4-4-1
4-5-5
4-5-4
4-4-5
4-4-4
4-5-2
3-5-1
3-5-2
3-3-1
3-3-5
3-3-4
3-2-5
3-2-4
3-3-3
3-2-2
3-2-3
3-2-1
3-1-5
3-1-4
2-4-5
2-4-4
2-3-1
2-4-1
2-4-2
2-4-3
2-3-5
2-3-4
2-2-5
2-2-4
2-3-3
2-3-2
2-2-2
2-2-1
Frequent
Givers:
Upgrade or
renew at low
cost.
Middles:
Increase
frequency with
monthly gift
club?
Reengage
lapsed donors
with targeted
appeal.
Our 3-Year Sample Based on RFM
Putting the score together, use the ampersand:
=E4&F4&G4.
Pivot on the score.
Our 3-Year Sample
Not a whole lot of high frequency,
high recency, low monetary scorers,
which is good.
Monetary Score = 5
Recency Frequency 3
1
2
3
4
5
Count
Recency
Frequency 4 Frequency 5 All
1495
494
71
1038
1190
371
599
1891
1208
586
1428
3272
368
1415
5633
4086
6418
10555
2060
2599
3698
5286
7416
21059
Frequency 3
Frequency 4 Frequency 5
Average All
1
$25,644.54 $51,586.55 $2,736,593.76 $125,301.22
2
$31,090.32 $30,545.21
$107,953.84 $41,812.79
3
$25,553.28 $47,991.13
$131,177.77 $71,530.66
4
$30,420.92 $38,603.52
$85,583.49 $66,776.71
5
$24,443.90 $18,305.88
$138,017.21 $109,540.06
Overall Average
$27,591.48 $36,399.57
$137,403.30 $85,314.74
Alternative Data Preparation
• Use 3 segments instead
of 5 if your results are too
granular.
• Use CHAID for finding the
segment boundaries.
Alternative Frequency/Recency
• Last gift date is recency
• Count of gifts (lifetime or time
that you measure) is
frequency
• Or count of payments in one
year if you are measuring only
one year
Example: Small Alumni Base –
Smaller Number of Bins
Using CHAID for Determining Segments
Highest possible score is 6-7-5
7 bins for freq.
6 bins for recency
CHAID Results: Frequency
• The more often they give,
the higher the money
• Frequency of 1 or 2: date
matters
CHAID Results: Recency
This result is not as linear.
Different Ways to Look at Results
ROI: RETURN ON INVESTMENT
Cost Per Dollar Raised: Renewals
Recognition Level Donors
Resource
Cost Per #Attempts #Reached Total Gifts Total Cost Cost Per $1
Letter
$0.03
490
490 $35,855.45
$14.70
$0.0004
Envelope
$0.03
490
490 $35,856.45
$14.70
$0.0004
Postage
$0.25
490
490 $35,857.45 $122.50
$0.0034
BRE
$0.04
490
490 $35,858.45
$19.60
$0.0005
BRE Postage
$0.44
490
189 $35,859.45
$83.16
$0.0023
Total Cost Per Dollar Raised:
$0.0071
LYBUNTS,
SYBUNTS
Data is from 1999.
Resource
Cost Per #Attempts #Reached Total Gifts Total Cost Cost Per $1
Letter
$0.03
7551
7551 $51,484.65
$226.53
$0.0044
Envelope
$0.03
7551
7551 $51,484.65
$226.53
$0.0044
Postage
$0.25
7551
7551 $51,484.65 $1,887.75
$0.0367
BRE
$0.04
7551
7551 $51,484.65
$302.04
$0.0059
BRE Postage
$0.44
7551
452 $51,484.65
$198.88
$0.0039
Phone Call
$0.53
7551
4384 $51,484.65 $2,323.52
$0.0451
Caller Pay
$1.74
7551
4384 $51,484.65 $7,628.16
$0.1482
Reminder Envelope
$0.03
7551
1805 $51,484.65
$54.15
$0.0011
Reminder Postage
$0.25
7551
1805 $51,484.65
$451.25
$0.0088
Reminder BRE
$0.09
7551
1805 $51,484.65
$162.45
$0.0032
Reminder BRE Postage
$0.44
7551
486 $51,484.65
$213.84
$0.0042
Total Cost Per Dollar Raised:
$0.2656
Cost Per Dollar Raised: New Donors
Resource
Cost Per #Attempts #Reached Total Gifts Total Cost Cost Per $1
Letter
$0.03
7731
7731 $8,530.20 $231.93
$0.0272
Envelope
$0.03
7731
7731 $8,530.20 $231.93
$0.0272
Postage
$0.25
7731
7731 $8,530.20 $1,932.75
$0.2266
BRE
$0.04
7731
7731 $8,530.20 $309.24
$0.0363
BRE Postage
$0.44
7731
16 $8,530.20
$7.04
$0.0008
Phone Call
$0.53
7731
3700 $8,530.20 $1,961.00
$0.2299
Caller Pay
$1.74
7731
3700 $8,530.20 $6,438.00
$0.7547
Reminder Envelope
$0.03
7731
686 $8,530.20
$20.58
$0.0024
Reminder Postage
$0.25
7731
686 $8,530.20 $171.50
$0.0201
Reminder BRE
$0.09
7731
686 $8,530.20
$61.74
$0.0072
Reminder BRE Postage
$0.44
7731
408 $8,530.20 $179.52
$0.0210
Total Cost Per Dollar Raised:
$1.3535
Do we stop trying to acquire new donors?
Cost Per $1 Raise: Longer Sightedness
•
•
•
•
39% of recognition level donors renewed.
12% of LYBUNTS/SYBUNTS renewed.
5% of nondonors became donors.
Consider: 12% of new donors renew.
Cost Per Dollar Raised: Longer
Sightedness
LYBUNTS/SYBUNT Pool 2nd Year
7975
LYBUNTS/SYBUNT Renewals
957
Average Gift
$54.89
Total Giving
$52,527.52
Total Cost (same ratio)
$14,442.98
Cost Per Dollar Raised
$0.2750
Two-Year Cost Per $1 Raised
$0.81
Gifts Per System Hour
Description
# of IDs
in Pool
System
Time
Total $
Match
Rate
Avg
Total
Pledge
Pledge
Rate
Credit
Card
Rate
Gifts
Per
System
Hour
General NonDonors
FY08 (all gen
non-donor pools)
27391
720:40:00
$56,218.38
10.65%
$117.37
17.99%
41.34%
$1,872
FY07
19066
694:07:00
$45,749.19
9.72%
$108.41
11.67%
30.81%
$1,582
FY06
18409
458:11:04
$56,528.03
14.89%
$92.52
17.78%
26.35%
$2,961
FY05
24539
$68,381.76
8.84%
$85.16
12.60%
19.43%
Timeline: When do Most Gifts
Come In?
1st phonathon gift
Last
phonathon
gift
8/29
Bulk of phonathon returns
phonathon
Bulk of mail returns
starts
30
9/9/2009
Mailing date
1st mail gift
60
90
120
150
180
What could we have been doing
here?
210
240
Last mail gift
Timeline: Use the 95%
Confidence Interval
95% Confidence Interval and Giving
• 95% of gifts come in within 53 days of
mailing (e-mail) for this segment.
• Count percent of all gifts from this
segment who gave within 53 days.
• This sample:
Gave later than 53 days
Gave within 53 days
ENGAGEMENT
Aren’t We the Engagement Makers?
• Annual giving programs are
responsible for engaging new
donors, donor renewal
• Can engagement indicators also
be used for annual giving
programs?
• What would that look like?
The Information Score
Prospects who tell you more about themselves
are more likely to become donors.
Variables in the Equation
B
S.E.
Wald
df
Sig.
Exp(B)
MSFlag
-.203
.038
29.243
1
.000
.816
BirthdateFlag
-.135
.039
12.162
1
.000
.874
.885
.040
489.738
1
.000
2.423
3.116
.120
674.705
1
.000
22.549
CountofDegrees
.275
.036
59.032
1
.000
1.316
SpecPrefixFlag
.626
.081
59.422
1
.000
1.869
-4.897
.134
1330.023
1
.000
.007
EmailFlag
CountofConstituency
Step 1a
Constant
a. Variable(s) entered on step 1: MSFlag, BirthdateFlag, EmailFlag, CountofConstituency, CountofDegrees,
SpecPrefixFlag.
Triggers from Donors for
Leadership Givers
• First gift amount: What is the average for
your top donors? It’s usually higher than
for other donors.
• Velocity: If a donor gives 2 times this year
as the average of her prior 3 years’ giving,
pay attention.
• UpOrDown: Increasing giving more often
than decreasing – steward and ask.
Modeling Characteristics of High End Donors
1. Giving to funds outside of annual giving
2. Presence of a special prefix
3. Presence of an email address
4. More than one designation assigned to
the prospect’s highest gift
5. First gift amount – cultivate and steward
prospects whose first gift amount is
$3,500 or more
Velocity
• Test velocity and reward high velocity
donors with higher touch contact.
GivingLast Year
AverageGiv ing Pr evious 3Years
Page 40
Velocity: Pursue Donors with a Velocity
of 2.0 or More
Score 1 or less
Score 1.1 to 2.9
Score 3 or more
UpOrDown Score
• Measure increase in giving over a prior
year as 1.
• Measure decrease in giving over a prior
year as -1.
• Measure repeated giving as 0.
• Measure over 5 years’ changes.
• Sum the scores.
UpOrDown Score: 2 or More
Why Am I Not Mentioning Events?
• Most organizations have difficulty tracking
event attendance.
• However, prospects who refuse events
tend to be donors more often than those
who don’t bother.
• Event attendance and survey responses
will become important over time.
• Social media are virtual events.
Social Media: At the Question Stage
• Can you track which of your
prospects list you on their LinkedIn
accounts?
• Are you using MeltWater.com to
track tweets about you?
• Who likes you on Facebook?
Donors? Large donors?
WRAP UP
Where Do I Begin?
• What does your program need to do?
– Acquire donors
– Retain donors
– Upgrade donors
Pick a Method/Study You Understand
• If you’ve never heard of CHAID, learn
about it before using it.
• Use a study that resonates with you.
• Get results, implement the strategy, and
measure performance.
• After that, learn something new.
• Lather, rinse, repeat.
Questions?
• Marianne:
– marianne@helenbrowngroup.com
– mmp39@cornell.edu
– Twitter: mpellet771