Data analytics, data analysis, prescriptive analytics—these are all words that many of us who are more “people-focused” tend to shy away from.
However, the reality is that we are analyzing data all the time, especially when we decide how to interact best with others. Our brains are data analysis machines that subconsciously calculate risk and return while sorting through the millions of stimuli we are exposed to every minute.
So, what is Data Analytics, and how can it make a good fundraiser a great fundraiser?
Let’s start at the beginning with a simple definition.
Data analytics is simply the science of analyzing raw data to make conclusions about the information. Data analytics for fundraising is analyzing donor data to determine how best to raise more funds.
I will assume you don’t want a deep dive into how data analytics for fundraising works, and instead, I’ll walk you through how to get the benefits of data analytics without any of the pain.
Data Analytics for Fundraisers: The Basics
There are three main categories that data analytics can provide major benefits to, specifically for fundraisers.
- Identifying and Visualizing Opportunities in your Data: If you use a CRM, you already have more data than you might realize. Data analytics can recognize patterns you would never see to showcase which opportunities are worth your time. It helps you answer questions like: which donors you should reach out to next, which donors may lapse if they don’t get a little extra attention and which new prospects are most likely receptive to an ask this week.
- Optimizing your Ask: The ask can feel like the most challenging part; how do you know you’re getting it right? Again, this is where data analytics can shine. There are patterns your donors have created buried in their giving history and their interactions. Data analysis can draw from these patterns to predict precisely how much you should be asking for and when a donor is ready to jump from one time to recurring and then major gift.
- Guiding and Prioritizing your Day to Day Work: Fundraisers are brilliant, but they are still only human, and with 24 hours in a day, understanding where to prioritize efforts gives you a huge advantage. Who should you focus on today? How should you reach out? Can you segment donors into categories that make them feel like every outreach is personalized? Data analytics can answer these questions for you.
There are hundreds of articles that guide you by manually developing and recording KPIs, calculating trends, and drawing conclusions from your spreadsheets.
I’ll stop you right there. You need to get back to fundraising.
In this article, we will not discuss how to become a part-time data analyst. Instead, you’ll learn how to choose the right tools you need to understand what you’re looking for and how it can benefit your nonprofit organization.
Let’s start there.
What Nonprofits Can Learn from For-Profits about Data Analytics
Even the best fundraisers can benefit from using data strategically. So why, then, would anyone choose to forgo these powerful tools. The real answer is: until very recently, there haven’t been tools on the market designed specifically for fundraisers.
Ten years ago, for-profit businesses went through this technical transformation and adopted data analytics en masse for sales, operations, and marketing. The companies that were first to adopt these tools grew faster and outperformed those who chose to maintain business as usual.
This transformation has finally come to the nonprofit sector, with fundraisers being the first to consider using donor data analytics for good.
What I’d like to suggest is that nonprofits, as a sector, learn from for-profit businesses and adopt the data analytics tools for the areas where the most benefit is likely.
Thousands of businesses have already gone through this adoption, and hundreds of studies have reported their results. We can learn from what they did, both right and wrong, to get the actual value from our data more quickly.
So, what does data analytics do well, and where does it fall short?
McKinsey reported that there are four main areas where data analytics had the most value to for-profit businesses:
- Lead Generation & Lead Scoring
- Customer Lifetime Value Maximization
- People management
Let’s take a minute and translate these into nonprofit-specific applications.
- Donor Prospecting & Donor Scoring
- Donor Lifetime Value Maximization
- Optimizing the Ask
- Team Development
One organization used its data strategically to analyze which leads were converting the best; they shifted their focus to these leads and raised conversion rates by 30%.
Imagine if your Donor Conversion rates jumped by 30%? These are not small, incremental benefits; however, you are bound to see those too! Let’s look at fundraising-specific tools available to address each of the four categories above.
4 Ways Data Analytics Benefits Fundraisers
1. Donor Prospecting & Donor Scoring
Donor prospecting can mean many different things, but we will focus on Prospect Screening, Wealth Screening, and Donor Research for this article.
On the other hand, Donor Scoring is how your data analysis tool aggregates all this data into one simple score, or insight, that allows you to prioritize, categorize and then take action.
There are a few excellent Wealth Screening tools on the market like Windfall, DonorSearch, iWave and WealthEngine. These tools will look at various wealth markers like real estate ownership, stock holdings, business affiliations, and political giving to determine a prospect’s giving capacity.
Prospect Screening requires you to use your wealth screening data, combined with additional data, to determine which donors in your database may be a potential major gift or recurring donors. You must gather the data, sort the associated categories, compare this to your fundraising plan or strategy then analyze all your results. It’s not for the faint of heart, and we promised you could get back to fundraising.
A tool like KIT can do all of this for you. It even offers integrations with leading wealth screening tools, so you don’t even have to run an analysis; it simply creates insights and posts them to each donor contact profile. You can then sort donors by this data and set up campaigns for only those you intend to target. A seemingly personalized outreach can be created for each group improving your donor conversion rates and confirming more funds reach your organization.
2. Donor Lifetime Value Maximization
One of the most valuable ways to utilize fundraising data analytics is to nurture and cultivate donor relationships.
KIT analyzes your fundraising data to provide you with a list of donors who need a little extra attention to prevent them from churning. It can also crunch your data to tell you who is most likely to become a major gift donor or a recurring donor.
These are just some of the insight tools like KIT can provide. Here is a summary of some of the insights you can derive using data analytics to help maximize your donor’s lifetime value.
3. Optimizing the Ask
By understanding which donors are most engaged and how much to ask them for, you can get strategic with making your ask and boost your chances of success.
How you reach out and when you reach out can determine whether you catch a donor at a generous moment. Data analytics tools like KIT can provide these insights to help increase your donor conversion rate. If you know when a donor is most likely to give, you can reach out at the perfect time and ask for precisely the right amount.
4. Team Development
Nonprofits are run by and made up of brilliant individuals who choose to dedicate their time to the cause they believe in. However, they still need management and training.
Tools like “Gong.io” are revolutionizing sales training by “listening” to sales conversations and crunching the data to make suggestions like “talk less about x” or “Don’t mention discounts so often.”
Imagine if you received an email each week describing how you could improve your donor conversion rate, not someone’s opinion, but from the technical analysis of your email and phone calls. This is what Gong provides, and it’s a powerful example of data analysis using Artificial Intelligence.
Other software focuses on HR data analysis looking at employee engagement, cost per hire, turnover rates, and gender pay equality. Software like OrgVue, ChartHop, and Lattice all focus on HR Analytics and provide powerful tools for any organization that manages people.
Data Analytics Can Contribute to Your Nonprofit Growth
Most larger nonprofits start using fundraising analytics to guide strategy. The question is whether you, as a fundraiser, are at the stage where data analytics gives you the competitive advantage you are seeking.
So, consider the growth opportunities that exist for your organization right now. Chances are, with the right data analytics tool, you can be a step closer to reaching those heights.