Who are your best donors? How do you know they are your best donors? Why do these people choose to give? And how can you convince them to give more?
These are key questions faced by anyone managing a charity or non-profit enterprise. People who run non-profit organizations, institutions, and service programs can’t rely on funds to just miraculously fall from the sky like manna from heaven. Instead, they must solicit financial support the same way start-up entrepreneurs hustle for investors and politicians canvas for votes.
But just as business and politics have become increasingly data driven, so has charitable fund-raising. In the 21st century, community raffles, direct-mail appeals, and TV telethons are quickly giving way to targeted personal outreach based on actionable insights provided by sophisticated artificial intelligence (AI). Using cutting-edge machine learning computer applications, charities and non-profits can now optimize their necessarily limited resources by focusing on probable donors using appeals tailored to the values, desires, and inclinations of each individual.
One of the tools in the modern fundraiser’s toolbox is the RFM score. This is a critical number describing a donor’s propensity to give along three axes: Recency, Frequency, and Monetary Value. It’s also a way of ranking prospects on a scale of best to worst (usually done on a scale of 1 to 5, with 5 being the best.)
What’s more, an RFM score provides organizations with a more informed sense of how much revenue comes from repeat donors (versus new donors), and which levers they can pull to make customers happier, so they become repeat donors. Leveraging this intel, gift officers and the like can pursue the proverbial “path of least resistance” and spend time soliciting those who are not just likely to give—but to give a lot. And often.
Now let’s dive a bit deeper into what an RRM score entails and its implications, especially for nonprofits.
Recency considers the number of days since a donor has visited an organization’s website or otherwise made contact with a group. The lower the number, the more recent the visit, thus the higher interest is likely to be. (A visit made on the same day an RFM report is generated would score a “0.” Multiple visits on the same day still deliver the same recency score.)
Frequency considers how often a donor gives. As you might suspect, all things being equal, someone who donates monthly is a better prospect for outreach than someone who does so annually, or someone who donated five years ago but has not done so since.
Monetary Value evaluates how much a donor actually gives. Again, all things being equal, larger donors make better prospects than smaller ones. Targeting large donors simply makes more economic sense, producing a bigger return on investment (ROI), something charities must consider as much as any for-profit business.
Undoubtedly, the RFM model offers a way to clearly evaluate likely donors using hard numbers. Collected on an ongoing basis, donor data is then graded, analyzed, and finally segmented to place donors into distinct groups. This model especially helps organizations effectively analyze the behavior of each donor to both help predict and shape future interactions.
Recognizing the value of RFM reports, DonorSearch makes these analyses central to its application, thus allowing organizations to target their best donors and then appeal to them in compelling language they understand.
University Of Alabama At Birmingham
The University of Alabama at Birmingham (UAB) is just one of dozens of colleges and universities that use DonorSearch to support fundraising efforts. Understanding and using the RFM reports DonorSearch provides have been central to its success.
“DonorSearch has made a wonderful difference,” said Sabrina Latham, Director of Prospect Research. “It’s given us really wonderful information in terms of what an RFM score looks like for our people and we’re able to sort accordingly and pretty much drill down to some really interesting prospects that we didn’t have on our radar before.”
Latham’s organization, the University of Alabama at Birmingham (UAB), is a public research institution in Birmingham, Alabama. Developed from an academic extension center established in 1936, it became a four-year campus in 1966 and a fully autonomous university in the University of Alabama System in 1969. Approximately 13,800 students attend its undergraduate programs. Another 8,000 students are currently pursuing post-graduate degrees.
Employing the RFM model in service of greater philanthropic outcomes is just what Latham and her team needed.
“It’s uncovered a lot of new donors to a lot of the different areas we have out there. We engaged our development officers in a way that we hadn’t before. It’s yielded some really good names. Even some of the mid-level quotes have secured some major gifts from some of those asks—even on a first visit, a qualification visit even, so it’s been kind of wonderful to see,” said Latham, referring to how she’s employed the prospecting software to successful ends. “I would recommend DonorSearch based on talking to real people, and they’re going above and beyond every time I talk to them. You can’t beat that in terms of service in addition to the results you get from just using the tool.”To find out how your organization can benefit from RFMs, and other key insights provided by DonorSearch, please visit www.DonorSearch.net today.