How DELVE’s “data first, advertising second” model helps NFPs attract net-new and younger donors—and drive donation growth.
At DELVE, we recognize that marketing and advertising budgets are some of the biggest expense line items for many Not for Profit organizations. We’re also very aware that the work that we perform for our NFP clients must have a very direct, measurable impact on marketing and advertising performance. And, of course, we believe in doing things the right way—which is why our motto is “Data first. Advertising second.”
That’s why this Manifesto (and our related blog series)talks about how NFPs can attract net-new donors and grow donations through an approach that focuses on data first, advertising second. We believe that, especially today when user identifiers such as IDFAs or third-party cookies are going away, the need for NFPs to own their data is that much more important. In short, the journey to higher advertising returns—and growth in donations—starts with a strong first-party data foundation.
Top Challenges Facing the NFP Sector
The state of nonprofit or NFP marketing and advertising has been facing significant challenges over the past several years. Because the NFP vertical is one of our key focus areas, we partnered with Aspen Finn to commission our own proprietary primary research. Through this research, as well as our deep experience with NFPs including UNICEF and Partners in Health, we have identified the major challenges that surface again and again (listed in no particular order):
Drive More Direct Contributions, with Less Emphasis on Fundraising
Fundraising (during in-person events, or one-on-one with large individual donors or institutions) often represents the majority of a NFP’s revenue. To smooth out their donation “curve,” many NFPs want to increase the share of direct and recurring contributions from smaller individual donors, especially through their website.
Reduce Reliance on Emergencies and Shift Toward Ongoing Giving
No NFP wants to talk about the reality that—paradoxically—emergencies help drive their donation revenue (and at DELVE, we absolutely recognize the moral dilemma that’s inherent in that statement). NFPs recognize that they should be “top of mind” for their donors, with a focus on ongoing giving and less reliance on emergencies.
Lessen Dependence on Q4 or December, and Gain More Predictable 12-Month Donation Volume
For many NFPs, the end of the year—and especially the last days of December—represent the majority of their direct annual donation volume. NFPs aim to smooth out that donation curve and make it more predictable, with donors contributing 365 days a year.
Engage Millennials and Generate Net-New Donors to The File vs. Going to Existing Donors Again and Again
Many NFPs do a great job of messaging their existing donor file, but they don’t know how to engage net-new donors such as Millennials. Meaning, NFPs not only need to drive more donations from their core file, but also to increase the number of donors in the file itself.
Not Just Direct Mail and Email, but Much More Digital Advertising
Many NFPs “love to hate” and “hate to love” their direct mail or email programs. These traditional channels are a gift that keeps on giving, but the file of existing donors gets burned over time. NFPs know that they should do more-effective, personalized, and targeted digital marketing, but have a hard time proving that digital works better than direct mail or email. This inability to conclusively attribute how digital drives donations keeps NFPs from making larger investments in digital.
More Personalization vs. One Big Homogenous Message
NFPs rarely do their own research about their donors, so many have target-donor definitions that are either high level or outdated. Lack of clarity around different donor segments and their unique needs hampers a NFP’s ability to deliver personalized messages that resonate.
One-Time vs. Monthly Donors
Finally, all NFPs want to maximize the share of repeat donors. For many NFPs, only 10% of donors give on a monthly basis. That share of recurring donors could be much higher if NFPs rethought how they do marketing and advertising.
One challenge stands out in all our discussions with NFPs: bringing net-new donors to their core file who will donate on a recurring monthly basis. In this Manifesto, we will argue that better application of your NFP’s first-party data in marketing and advertising is the key to solving many of these challenges. We will also explain how a good first-party data strategy can help NFPs generate more donations.
Why do NFPs Struggle to Reach Net-New and Younger Donors?
Before we delve deeper, let’s start with a foundational question. Why do NFPs struggle to attract more new and younger donors, such as Millennials or Gen Z, who might wish to “subscribe” to the cause or donate on a recurring monthly basis?
In their report entitled The Data-Backed Guide to Nonprofit Marketing, Campaign Monitor and Qliv identified several disconnects between nonprofit marketers and donors. The research revealed these key takeaways:
- People can be motivated to give to nonprofits when there’s a compelling need.
- Not all channels are equal. Email drives the most donation dollars, but the content of the emails needs to evolve from organization-led narratives to recipient-led stories.
- Nonprofits may be placing too much emphasis on events as donors don’t cite events as a primary driver of donation behavior.
- Over half of donors will respond after receiving a specific plea, even if they have already established a donation cadence. This places further emphasis on the need to segment donors and tailor donation requests to their specific interests.
- The use of emotive visuals (images, video) and stories give donors a compelling reason to donate right now.
- Donors identify with real people—and they want to hear from them. Hearing (or experiencing) the impact a donation is making in the lives of real people has a major impact within the context of a story.
Recent research from Salesforce.org also makes a case for how NFPs are disconnected from their donors, including the fact that many nonprofit marketers do not tailor their messaging to different donor segments. According to the Salesforce. org report, “Seventy percent of respondents do not differentiate their message to different constituencies—and this could be the result of smaller marketing teams and under-funded budgets.” Nonprofits that rely on individual contributions traditionally track and analyze donor demographics, carefully segment email and mailing lists, split-test direct mail pieces and ads, and use other experiments to align the right message to the right donor.
Because many nonprofit marketers struggle to tailor messaging to different donor segments, it’s no surprise that nonprofits lack the ability to deliver personalization at scale. In the Salesforce.org report, a whopping 83 percent of nonprofit marketers agreed that their organizations relied heavily on batch email blasts for communications with donors.
These findings point to the need for nonprofit marketers to engage donors by personalizing powerful stories about the causes that individual donors (and donor segments) are passionate about supporting.
What does this mean? With Millennials now becoming the largest workforce segment and recognizing that they prefer “experiences over things,” nonprofits must evolve by engaging them with relevant, personalized messaging and experiences to capture their hearts and minds—and in the process, their wallets.
DELVE’s proprietary NFP research into Millennial beliefs and attitudes validates that personalized messaging matters, including accentuating more positive/optimistic narratives and providing more transparency as to how/where the donation will be used to make an impact:
“I feel like a lot of ‘child org’ messaging is really generic, kind of sad, heartstring-tugging, and I think I’d be less put off by it and more likely to give if it were more focused on ‘here’s the program, here’s the impact, here’s the data, here’s what will happen with this kid’s future that’s great because of you.’” (female donor, age 30-35)
Beyond Millennials, younger (digitally native) Gen Z donors also require more than periodic “en masse” communications or waiting for natural disasters or social/political upheaval to trigger interest in donations. Instead, successful donor growth and engagement among younger segments requires data-driven personalization across multiple channels.
The Case for a First-Party Data Strategy
The marketing and advertising challenge of attracting net-new and younger donors who are open to a recurring monthly subscription isn’t easy to address. However, as we discussed above, we do know these donors want to hear personalized stories that connect with them on a personal level. Therefore NFPs must look to customize their marketing and advertising to resonate with each donor.
At DELVE we believe that first-party data—the data that an NFP owns—can start to address this challenge by increasing the effectiveness of your marketing and advertising efforts.
Unfortunately, the need to embrace their own first-party data is sometimes resisted by NFPs.
Many NFPs are led by more mature executive teams whose fundraising experience was honed in an era when direct mail and live events dominated. As a result, their marketing strategies, staff and budgets were built to support these tactics. Data skills and analytics were largely limited to donor demographics in spreadsheets and flat files for import by their mail houses into the next direct mailer. In short, they are simply not data-driven and digitally equipped to segment, target, and engage today’s donor segments.
Case in point: Salesforce.org (the nonprofit arm of CRM vendor Salesforce.com) commissioned research just before COVID-19 to talk to over 300 nonprofit organizations about the state of their marketing readiness. Those findings are published in a report The Fundamentals of Marketing and Engagement at Nonprofits and highlights a range of challenges facing nonprofit marketers:
(1) better systems for sharing data,
(2) lack of tailoring messaging to donors,
(3) lack of personalized communication at scale,
(4) installing the appropriate KPIs,
(5) breaking down organizational silos,
(6) overcoming budget constraints, and
(7) MarTech upgrades and the staff skills to run the tools.
In December 2020, Salesforce.org also published a series of recommendations for nonprofits, noting that “74% of nonprofits say that measuring and reporting on data is a challenge. To survive the challenges of today, and thrive in the future, every nonprofit needs a data strategy.”
At DELVE, we believe that all of these findings—from our own research or from Salesforce.org—can be grouped into activity centered around first-party data. In other words, difficulties in sharing data, tailoring messages, identifying proper KPIs or implementing MarTech upgrades are all symptoms shared by NFPs that don’t have a cohesive first-party data strategy.
What is a First-Party Data Strategy?
When data about your donors is scattered across CRM, email, direct mail databases or donor payment systems, it makes it more difficult for marketers to effectively segment, target, personalize and measure campaign performance. And because many nonprofit marketing teams are understaffed, undertrained, and underfunded they lack the latest technology tools to unify their data and gain a deeper understanding of their donor constituents.
However, a first-party data strategy is more than just technology, as described by a recent article from Google. A good first-party data strategy is about strengthening the relationship between your NFP and your donors.
According to Google and Boston Consulting Group, three steps are required to strengthen the connection between your NFP and your donors:
1. Create a fair and transparent value exchange so you can start building your first-party data pool.
For example: When your NFP learns which causes are most important to your donors, and then emphasizes your commitment to these causes, your donors will be more likely to donate again and again.
2. Ensure strict adherence to local data regulations by understanding what the rules are, where consumer data sits within your organization, and how you are using it as a company.
For example: As you collect more data about your donors, ensure that you store that data in a protected environment such as a data lake or a customer data platform.
3. Develop innovative data collection methods by creating new and genuinely useful interactions with your customers.
For example: During email registration, your NFP could offer a drop-down for donors to indicate the initiatives they care about most; or you could collect data on the types of articles a donor consumes your website, then link that data to a donor profile in your Customer Data Platform.
According to BCG, when properly deployed, a first-party data strategy can increase the ROI from advertising by up to 50%. This means that if your marketing and advertising budget is $100, and before you were able to generate $200 in donation volume with that budget, with a first-party data strategy supporting your marketing and advertising campaigns, your NFP will generate $300. If your NFP focuses on data first, higher advertising returns will follow.
Unfortunately, as we have shared previously, according to Salesforce.org, “74% of nonprofits say that measuring and reporting on data is a challenge.” NFPs aren’t the only organizations that struggle with managing their data. According to BCG, while nine in ten marketers in their study said that first-party data was important to their digital marketing programs, very few are actually using it to its full potential. In fact, while less than 33% reported having the ability to collect and integrate data across multiple online and offline channels, only 1% are using data to deliver a fully cross-channel experience for their customers.
Can a First-Party Data Strategy Introduce Net-New and Monthly Donors, including Millennials, to your NFP?
We believe that the answer is ‘yes’—and that right now is the time to take charge of your NFP’s first-party data. COVID-19 has only accelerated the need for nonprofit marketers to engage donor segments in a highly personalized way as changing consumer attitudes, economic conditions, and priorities place nonprofit organizations competing for donor mindshare.
We also invite you to explore our Not for Profit Transformation series, a step-by-step roadmap to transforming your NFPs marketing and advertising, engaging net-new and millennial donors, and generating a higher donation volume with the same marketing and advertising investments.
This is a pivotal time to be a nonprofit marketer as technology has enabled new channels and ways to find, engage and acquire new donors while engaging existing donors more effectively. At DELVE, our seasoned Data, Analytics, and Media professionals stand ready to consult with your team, share our experience, and develop a customized first-party marketing roadmap for your Not for Profit organization.
Ready to get started? Contact us today at firstname.lastname@example.org.
NOT-FOR-PROFIT RESEARCH 2021
Reaching Millennial Donors
Want to gain a deeper understanding of how and why Millennial donors 25-35 years of age give to social causes? Start with our 2021 Research Report, created in partnership with Aspen Finn.DOWNLOAD NOW