Hello, everyone. By my clock, I show it’s two o’clock. So I think we’ll just dive right in. I wanted to thank you for joining me for today’s proven practices webinar on seven key database metrics. I’m Debbie Merlino, president of agency services for allegiance fundraising group. And I’ll be leading you through each of the seven key metrics over the next 20 minutes or so.

So again, thank you for joining me.

There’s so much effort around a campaign between selecting a theme or a package, determining the timing, the number of hits the audience, segmentation, the offer, and then getting approvals for all that. It can be really easy to get hyper-focused on what’s happening campaign by campaign. In addition, because campaigns have clear beginning and end dates and clear revenue expectations, it’s also really easy to report on results.

However, when we focus only at the campaign level and don’t pick our heads up, it’s like getting stuck in the weeds.

But only when you look at the seven key database metrics that we’re going to review today, can you really get up an appreciation for the whole picture? Like this aerial image of amaze wishing the today shows Al Roker a, happy birthday. Okay.

Campaign results are great for reading test results within a specific campaign determining if campaign goals were achieved or if if you achieve the revenue goals or response goals from a particular mailing campaign results also help you identify opportunities for incremental improvement within the next campaign.

However, Only through really looking at and understanding database metrics. Can you understand the health of the donor file really irrespective of channel or technique? The database metrics that we’re going to look at today are really the foundation for determining a strategy. And then with that strategy in place.

You can then determine which tactics are appropriate to implement within upcoming campaigns. Okay.

So we’ll dive right in and we’ll go step by step through the seven key metrics. The first one. Key metric number one is year to year revenue comparison. Now this is one of the most basic key metrics. And one, I expect that everyone is already looking at how much gross revenue did you generate in each of the last five years?

So according to Blackbaud’s 2019 charitable giving report organizations with $10 million or more in revenue actually saw a decrease of 0.7% in 2019 in terms of year on year revenue for organizations that have between a million and $10 million in revenue. As a whole, those groups saw a year on year increase of 3.2% and then smaller organizations.

Those with less than a million dollars in revenue saw an increase year-on-year revenue of 2.2% in 2019. So how has your organization been trending? Both to those Blackbaud benchmarks, but as well as just compared to past years. For the public media stations we work with, we’ve recently done a benchmarking study and we’ve seen revenues grow more than 17% over the last five years.

This simple metric really got people’s attention. When they’re fledgling sustainer programs started taking off in big numbers. Here’s an example of why and how that happened. So suddenly a new member who would have given a one-time gift of $60 in a fiscal year end campaign in may, for example, was making to sustain sustainer payments of $5.

Resulting in $10 in giving for the fiscal year, rather than 60, that is a real impact on cash flow. And if you have enough of those, you get your CFO’s attention pretty quickly. But this is why it’s important to understand metrics like donor retention, which we’ll talk about in a little bit.

Understanding these metrics really gives you a different way to be able to not only look at your file, but also engage with upper management as well. Lastly, when it comes to year on year revenue, if you’re not already doing so, you will want to break out membership or annual fund giving from major donor giving because both strengths and weaknesses in a program can hide behind those big gifts within the major donor.

Okay. I am hearing that the slides are not changing is what I’m seeing in this message. I am

changing to a new slide that says donor file growth. So I will move through this. And if you still don’t see the slides advance, if y’all could shoot me another message, that’d be great. Just as a reminder this webinar will also be posted on the Allegiance website in a couple of days and it’s entirety. So I’ll go through the second key metric.

And again, please shoot me a message using the little message board here, the little chat function. If you don’t see the file, the slides continue to yes.

Metric number two is donor file growth. Donor file growth is calculated by taking the number of new donors and adding it to the number of reactivated donors. So in the example here, We have 6,193 reactivated donors, plus another 10,122 new donors for a total of 16,315. You’re then going to subtract this total number of donors gained from the number of lapsed donors.

In this example, 18,828. And when you do so you see that this organization is actually losing more donors than it’s gaining their upside down by more than 2,500 donors. It’s important to remember that this is taking all channels and all techniques into account. So this represents both new and reactivated donors from direct mail, all of your digital activity, pledge, any events, anything, really, all activities.

AFP’s fundraising effectiveness project reported that in 2019 organizations and their panel experienced a 3% decline in the number of donors. On the other hand, our own Allegiance public media benchmark shows that there’s actually been a 16% increase in the number of active donors over the past five years.

Now as you were probably working on budgets for the upcoming fiscal year before just copying and pasting your acquisition investment into next year’s budget. It’s important to really understand this metric. How many new and how many reactivated donors do you need to keep your donor count stable? How many do you need to grow?

Having those targets in mind first? Then refer back, to your past campaign results and figure out what level of activity, and then therefore, what level of investment you need to make in the coming fiscal year.

Yeah, so it looks like we are, it looks like the slides are advancing. And when I’m seeing for the questions, is that the lapsed donors, what we’re talking about is the lapsed donors just in that one year. The 18,828 donors, in this example, these are people who were active donors and then fell off the file in this one year.

This is not the entire lapsed donor file. This is the donors lost in the current year.

So moving ahead. I think it’s important to always make sure that you’re applying the right tactic. I would, you’d be surprised at how many times we do a strategic growth analysis for a client. This is our five-year trending report. And we might see that the organization, like in this example might be losing more donors than they’re gaining.

So when we talk about what strategies to implement, sometimes clients will say, okay, sounds like what I need to do is test increasing the average gift that is absolutely the wrong thing to do. If your file is decreasing rather than growing obviously the first thing to look at is to see if the acquisition quantity has been the same year to year.

So have you been going after the same number of prospects that obviously that’s step number one and if it has been, but if the response rate is falling, the key is not to test increasing the average gift. That’s only going to decrease the response rate even further because you’re creating a bigger hurdle for new donors to overcome instead.

Think about ways that you can improve the response rate and new donor acquisition, as well as lapsed, recapture, and renewal. Activities. So that could be an ask test where you are actually decreasing the entry amount. It might be a different package even. So there’s many things that you can do to try to reverse a decrease in the number of new donors and acquisition.

And again, what we’re talking about here is think about applying these, tactics across all channels. This is not just a direct mail strategy. It’s not a digital strategy either. It’s a fundraising strategy.

Key metric number three is donor retention. Now I’m sure that as your sustainer programs have grown, you’ve seen an increase in your overall retention rate. Our public media benchmark shows an overall retention rate at 72% and FYI 19, which is up from 68% and FYI 15. But beyond this top level number, which is represented here as 86% for this particular client, there’s also value in looking at donor retention by both lifecycle, as well as donor value.

So looking at the retention rate of second year, donors provides insight as to once you acquire a new donor, can you actually keep them. The AFP’s 2019 fundraising effectiveness project, again, reports that retention rates of second year donors is at just 20.3%. Now the AFP doesn’t really look at very many, if any public media stations they look at non-profits in a number of different verticals, both education, as well as cultural organizations.

I believe also food banks. But regardless of which vertical you are in. Second year retention rates are key metrics to look at, I think, in, for the folks that are on this call that are in public media, I think that one of the things that has been so helpful is really two things. Number one, public media tends to have a higher first gift

than many other different types of nonprofit organizations, and that can lend itself to a more committed donor and then therefore a higher second year retention rate. But also there are other things like passport or the Allegiance donor newsletter for public media stations, which also really helps to increase overall retention rates.

Excuse me. Speaking of retention rates, the Allegiance public media benchmark is actually 53% for those second year donors. So you can see if you happen to be in the public media space. There’s a really big gap between the average for our public media clients at 53% and the AFP’s benchmark at 20% for first year donor.

Looking at the trending data for overall retention, you can also identify any unusual environmental factors that you want to adjust for in future budgeting. So really think about regardless of what type of organization you work for, how old the current health crisis in these uncertain times affect your fundraising.

Both this year. But also next year. And even in years beyond that, for example, if you happen to be working in a food bank right now, perhaps you’re experiencing an increase in the number of new donors as people come together and support you through this pandemic, you might find that in the coming year, many of the new donors who you acquired, like right around now, fall off the file faster than they did,

in past years, because really what motivated them were these unprecedented times.

Moving on from lifecycle by retention rate to retention rate by donor value. It’s also helpful to understand the retention rate by donor value so that you can make decisions about where to invest your financial resources. You can see that using a report like this. So I’m looking at on the right side of the slide on the very bottom half you can see that using a report like this really lets you see at what levels are the donors giving.

So how many donors do you have giving at each level? In this example while it’s true that the retention rate for the 10 to $24 donors is declining, right? It went down from 62% to 57%. What would be more impactful is any improvements that can be made in the hundred to nine 99 category. And even at the 50 to $99 level, because that’s where you have a majority of the donors.

Now, in this particular example, those retention rates are actually already pretty good. Especially in the hundred dollar plus category, but still there’s room for improvement, particularly in that 50 to $99 group. And that’s where you also have a big chunk of donors. So given the fact that you can’t do everything, a report like this will help you focus your efforts, know where to invest and no way to pay attention.

So a couple of more questions. So the slides will not be sent out after the webinar. If you’d like to email me, I’d be happy to send them to you. They will also, as I mentioned, the webinar will also be posted on the Allegiance website. And then someone else had asked also about like, how the heck do you pull this data in the first place?

These reports are pretty  difficult to pull yourself. This is why one of the things that we offer is what we call a Strategic Growth Analysis. It’s a five-year trending report that looks. Primarily, but not exclusively at these seven key donor based metrics. And if you are interested in more information about that, either give me a call or shoot me an email after this webinar.

I’d be certainly happy to talk to you more about that.

So moving on to our next key metric. This is a two-fer. So key metric number four is average gift size. And key metric number five is gift frequency. These show up on the same slide here because typically these are looked at in tandem as they often have an inverse correlation as is the case in this example. So as you’ll see here as the gift frequency increases, the average gift decreases. The most obvious example of this is with sustainers.

So someone who was a. $60 member before becoming a sustainer, right? They would’ve made a $60 membership gift and then made a one-time additional gift of $35. So in that example, this person has a gift frequency of two and an average gift of $47 and 50 cents. However, If that $60 gift was a $5 a month sustaining gift.

So let’s assume that started with the new calendar year and they made 12 sustaining gifts of $5 a month. Which still gets to that $60 membership gift and they still made a one-time gift of $35. And this case that same person now has a frequency of 13, and an average gift of $7 and 30 cents.

Organizations who were looking at trending data when sustainers first started taking off, really saw these reversals show up in their files. So all of a sudden average gift sizes were just tanking. And if you weren’t looking at that, along with gift frequency, you would’ve had a heart attack. But what was really happening is that people were making monthly gifts like we just described.

So the average gift size is going down, but the gift frequency going up. The AFP (Allegiance) fundraising effectiveness project reported that in 2019, the overall average gift remained flat. Now if the same is true for you, then the only way to increase revenue is either to increase your total number of active donors,

so if your average gift isn’t moving, you need more people to make those gifts, or the gift frequency needs to go up. Not necessarily by becoming a sustainer, but perhaps giving people more opportunities to give throughout the year. You could also implement some type of ask string test in an increase to move up the average gift.

But it would be important to keep an eye on response rate and give frequency to make sure that as the average gift goes up, your it’s not happening at the cost of another important metric.

In addition to the overall average gift, you can also look at the average first gift. Some folks think that this can be an indicator of the quality of a new donor, meaning that the higher somebody’s first gift, the more likely they are to be connected to you to be committed to the organization and perhaps even more committed to renewing or making an additional gift within that year.

So that’s  just another metric that you might want to be looking at.

Moving right along key metric number six is donor value sometimes called lifetime value. You can use this metric to establish your tolerance in donor acquisition. So if your cost to acquire a new donor was $55, in this instance, the donors that you acquired in FY 14, when the donor value was $62, if you are paying $55 to acquire a new donor, that means that the donors acquired in this year were, paying for themselves in the first year.

Now, if I knew that the action that I would take in response to that is that I would have made a decision to increase my investment in new donor acquisition in the subsequent year.

Key metric number seven, we’re getting close to the finish line. So hold on with me a little bit more. Key metric number seven is cost to acquire. It’s important to understand how to calculate this metric and also how to understand how to use it. So cost to acquire a donor can be calculated by campaign, right?

If you have a, good performing campaign, the cost to acquire a new donor within that campaign is going to be much lower than the cost to acquire in a campaign that didn’t do so well. It seems pretty obvious. So you can calculate the cost to acquire by campaign, by package, by channel. So it’s a very useful metric.

Now, the way that you calculate this is you take the total cost, in this case this was a direct mail campaign that went to 35,586 prospects. The total cost for the direct mail production, the postage, the list, everything together was $28,788. You subtract from that cost any revenue. So all of the gifts made in response to this was $19,584.

And at the end of the day, in this case, you have a net revenue loss of $9,240. Not so crazy to have a net revenue loss for new donor acquisition. You then take that net revenue loss and divided by the number of new donors, in this case 480, and the result is your net cost to acquire. In this case $19 and 25 cents.

Now, knowing this metric, along with how many new donors you need to acquire, which is what we looked at earlier in key metric. number seven, if you put those two things together, it will help you adequately budget for this activity in the next fiscal year..

Now, because you’ve been such a great group. I have a bonus metric for you. Key metric, number eight. Is revenue by month or percentage of revenue by month. According to Blackbaud’s 2019 charitable giving report on average, 18% of an organization’s total revenue comes in December, primarily as a result of the calendar year end giving.

So remember Blackbaud works with a large number of nonprofit organizations in all different verticals. So your results. May vary, especially if you’re a public television station and you have November, December on our pledge, but the big takeaway is if you’re not seeing significant spikes in the percentage of revenue in the month of December, then perhaps that’s an indication that you should be doing more fundraising, in particular, more digital fundraising and  taking advantage of giving Tuesday and calendar year end.

So the uncertainty that we’ve all been living in will have an impact on your fundraising, not just in the current fiscal year, but in the next one as well and likely even in subsequent years. Understanding these key database metrics will allow you to really see the big picture view of what’s happening on your donor base.

So you can better project and plan for the year ahead. These next couple of slides are really a number of questions that you should be asking yourself as you start to plan and move in to the next fiscal year. So how have year on year revenue been trending for the past four years? And where are you expected to end this fiscal year?

Have you acquired fewer donors this year? And what impact will that have on revenue in the coming fiscal year? What is your cost to acquire a new donor? Like we just talked about a couple of minutes ago, use this metric to project the necessary investment for next year’s activities. And based on lifetime value or donor value, project when these new donors will likely pay for themselves.

Try to understand. Are there certain segments of your file that are experiencing uncharacteristic declines in donor retention? Does that segment account for a large number of your donors? Do they account for a big portion of your revenue? If so, what actions can you take to try and turn the tide? I just went through a Strategic Growth Analysis with one of our clients outside of public media.

And one of the things we saw is that surprisingly, they were seeing declines in the retention rates of their multi-year donors. That’s really one of the most disturbing things to see, because it’s the multi-year donors that are really at the heart of your file, right? Those are the people that have given to you for multiple years in a row.

So to see those people, those tried and true donors start to fall off the file to see that retention rate of that segment decline, is really disturbing. So one of the things that I suggested that they do in response to that was to send a type of file update type of mailing to this group. So that would be something that sort of shows the history of the individual donors giving over the past number of years.

So in 2015 you gave X in 2016, you gave Y in 2017, you gave Z, and then in 2018 you gave nothing, in 2019, you gave nothing. Oh my gosh, what happened? So showing them and reminding the donor that you’ve had this long storied history of giving to us year after year, but all of a sudden something happened.

That’s a great way to get donors, to reactivate their giving with you. Question number five. Have you seen changes in gift frequency or the size of the average gift? If so, what tests can you implement in future campaigns to try to address those declines? And then lastly, question number six.

Do you have plans to take advantage of giving Tuesday and calendar year end again? Because it does make up such a great percentage of revenue. If you have a soft December, it’s likely you’re going to have a soft year.

So I wanted to thank you again. Oh, I’m sorry, I do you want to thank you. But I just wanted to remind you that only by calculating and understanding these seven key metrics, can you really build a sound strategy for your fundraising program. Just to review, here are our key database metrics that we went through today.

Year to year revenue comparison, that donor file growth, donor retention. We talked about the different ways that you can look at donor retention. Gift frequency, as well as average gift. And it’s really helpful to look at those in tandem. Donor value sometimes called lifetime value. Knowing your net cost to acquire a new donor.

And then revenue or percentage of revenue by month. Yes. Yeah, really. Thank you. Thank you. Want to thank you for taking the time to sit in on this webinar today. I know that there are a couple of comments and questions and some people have requested the slides. I will. Send those slides to you.

Again, a reminder that in a couple of days, there’ll be a recording of this webinar on the Allegiance website. So again, thank you so much. I appreciate you taking the time and your interest. I think this really is a very important topic and I hope you found it helpful. Have a great day, everyone, and I’ll respond to any additional comments offline.

Take care.