Why You Need to Move Away From Mass Marketing
The donor landscape is becoming increasingly fragmented.
Need response. Regular giving. Peer-to-peer.
These are earmarks of modern fundraising. They all point to a segmented pool of donors.
Different people with different needs and motivations.
In order to remain viable and grow impact, not-for-profits need to adapt their strategy to fit new ways of growing income.
Here’s our recap on trends and what NFPs can do to maximise on them.
The value in planned giving
The 2020 McCrindle Australian Communities Report suggests that need response is on the rise. That is, 46% of givers are more likely to give to an organisation when they hear about a need or an issue.
Source: McCrindle Research.
This research was conducted in January so it did skew to the Australian bushfire response. However, in our work with clients, we’ve seen a rise in spontaneous donations that mirrors this trend.
According to Giving Australia, spontaneous donations grew more than 3 percentage points over a 10-year period (2005-2016). Unfortunately, this rise has been offset by a decrease in average donation size.
Source: Giving Australia 2016.
To us, what’s a bigger opportunity isn’t the rise in spur of the moment donations, it’s the increase in planned donations. Planned donations increased by over 22 percentage points and give 6 times more than spontaneous responders.
These findings are reflected in research by Pareto (2017).
Source: Pareto 2017. Those who took part in the benchmarking have seen the value in regular giving.
So why is this happening? Looking outside of the industry, we’re seeing companies increasingly adopt a subscription model. Netflix. HelloFresh. Dollar Shave Club. Companies across the globe have found value in long-term loyalty and repeated purchases.
This is driven largely by digital—people are now able to connect more deeply and expect personalisation.
The not-for-profit space is no exception.
Although giving as a whole is declining, planned giving continues to rise, and charities are adapting by increasing their planned giving products.
Source: Pareto 2017. Planned giving products are on the rise.
The takeaway here is to invest your limited resources into where the long-term value lies.
Be laser-targeted in your approach
In practice, this means moving away from mass marketing—trying to get thousands of new donors at a low CPA.
To generate long-term income, you need to target narrow but valuable segments with relevant propositions at the right moment to grow committed supporters.
Below is a simple model showing the worth of paying a higher CPA for a regular giver rather than a low CPA from a one-off donation.
Trying to reach hundreds and thousands will generate short-term income and a low CPA, but won’t take advantage of the high-value opportunity in the market.
But how do you drive activity that translates into regular giving?
You need to build meaningful products to grow donations through value-adding programs.
This is often challenging for NFPs as product development is not given the emphasis or focus and it requires the alignment of marketing and program/service delivery teams.
It’s also vital to segment your database for opportunities. Consider segments like middle donors, major donors, corporate partnerships and bequests.
So where do you start?
Define your strategy. Use the intelligence you gain from your database and digital channels as a starting point. Digital insights and financial modelling drive your analysis – work closely with your finance team.
Identify the segments that are of highest value to you, understand what they value, then equip your team with the ability to connect with them.
Tell a meaningful story of need and impact and build a long-term relationship through communications and experiences.
The above could take you between 2 months to 2 years, but this short-term effort makes the long-term benefits worth it. In the end, you’ll be able to run a sustainable organisation and grow your impact.
If you’d like to learn about how to find and grow more valuable fundraising segments, we are running a free Modern Fundraising masterclass in Sydney and Melbourne.