Outlook 2006: Nonprofits: Don't Keep Data Fallow

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Soaring costs. Lower ROI. Donor fatigue. Muddy data. What's a fundraising organization to do? The key is improved analytics. New techniques and tools are available to fundraisers, including cutting-edge marketing automation technology that performs many of the functions that previously chewed up large chunks of valuable staff time. Because of these enhancements, one could argue that the overall outlook for data-driven fundraisers is positive. You see this reflected in the industry's effort to produce "clean" data and to leverage it across multiple channels.

Organizations can't afford to let their data sit fallow, or simply be underutilized. For example, if a group wants to do a cost-benefit analysis on marketing costs, it needs to set up its database to ensure that the costs can be factored in across all marketing channels, not just direct mail.

The biggest development today: a sharper focus on net lifetime donor value. Development directors are correctly changing their strategy from campaign-centric to donor-centric, giving the organization a 360-degree view of the donor over the life of the relationship. But to do this, organizations must go beyond direct mail results analysis and examine the donor relationship across all touch points.

Improving ROI amid spiraling increases in postage, paper and other production costs won't be easy, but opportunities exist. If fundraisers ask themselves more focused questions upfront, they will send the right messages at the right time to the right potential donors. Donor fatigue won't go away, but sophisticated nonprofits will get smarter about analytics and database marketing solutions to understand donors. For example, some donors may only want to give, say, $25 through the mail in a given year. Why not respect that and look at cultivating the relationship through a different channel, whether it's online, a special event or some other form of interaction?

The year won't be easy, but what year is? Fortunately, the answers are all in the data, and the smart organizations will find them.

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