Are We Focused on the Wrong Metrics for the Long Run?

Do you have a report monster? It's OK, you can admit it. Let's face it — in an effort to be better fundraisers and marketers, we may have created our own monster. And yes, it's the report monster. As the nonprofit industry has embraced large-scale databases and enterprise-wide systems, we have gotten better and better at collecting information.

And where there is information, there is reporting. Trust me, I've been there. It's a slippery slope, and before you know it you have spreadsheets and PDFs that have 45 columns and 100 rows.

The great news? We've made significant progress in the capture of information on our donors and other constituents. So, we need to reward ourselves for progress in our ability to understand more about what our donors are actually doing with our brands.

Our data evolution is real and can be seen across every type of nonprofit. But, yes, we now have the report monster. In fact, many nonprofits used the management approach of "what gets measured gets entered," which even further promoted the creation of all those reports that fill up our inboxes and land on our desks.

So, as with every evolutionary process, it's time to go to the next stage — moving from focusing on all the data to focusing on the right data. That's where the confusion comes in — what exactly is the right data to measure?

Fundraisers are the kings of data — especially the direct marketers. Their whole focus is based on measuring money, donors, retention, response rates, average gifts, etc. But, as organizations have become more and more focused on keeping their donors engaged more and for longer periods of time — focused on the "relationships" — just measuring elements of the "transaction" is not enough. Before you dive in to your piles of reports and start talking to the IT team about all the data fields in the system, let's step back and ask some questions.

• What are you trying to measure? And, why do you want to measure that?
• Is there a strategy you are trying to inform?
• Are you trying to solve a specific problem?
• What marketing question do you have?

By now, you should know that my point of view and blogs are much broader than just a single program or a single donor type, etc. Plus, I can guarantee you if your answers to the questions above were about donations or transactions, you've probably already gotten that covered in that big pile of reports. The next stage of our data and metric evolution is much more complex. If your answers to the questions above sound like what is below, keep reading.

• How healthy is my donor base? How strong is it?
• How do I know if all the blood, sweat and tears I'm putting into integration is making a difference to donors and my bottom line?
• Why are my donors leaving me?
• What's the real value of cross-program marketing to the organization?

The first thing to understand is that not all data fall into the same category. In fact, the most common types of data that organizations should be looking at in addition to traditional, marketing transaction metrics fall into several categories.

Marketing and engagement data

This is the data and associated metrics that inform you about the engagement across the brand (the key programs, connection opportunities, etc.). But, it's not just about counting interactions; it is about how those constituent actions tie in to higher value, greater loyalty and stronger connections to the brand. Examples include:

• What portion of your constituents is only involved in one area of the organization (i.e., events, programs, direct mail, etc.), and what portion has engaged in multiple areas of the brand? Looking at engagement this way, it enables you to understand the difference in value based on the different scenarios. This type of information can inform strategies to help prioritize promotions for different types of engagements. Just be careful because your past marketing strategies might have created the engagement scenarios you have in place right now. Make sure you don't just re-create the past by accident.
• For many years we have looked at ROI — return on investment — but we typically look at ROI for a specific program. Organizations need to take a broader view and look at ROR — return on relationship. This requires two views that can be hard for the organization to gather but worth it. First, you need to look across all the areas of engagement and calculate the total value of a constituent's relationship for a specific period of time. Second, you need to understand the investment it took to achieve those interactions. As an example, you can claim that for specific segments of donors, direct mail positively not only raises money but it also creates an increase in revenue for another program. But to truly understand the ROR, you need to combine the costs associated with the direct mail AND the costs of the other revenue stream to understand the full picture. Be careful though, some marketing efforts can provide lifts in engagement in non-financial ways. As you know, not all engagement is measured by a check written or a credit card given — so the organization also needs to place some type of value metric on non-financial activity (i.e., volunteering, participating in an event, advocating, etc.)
• Retention is a metric that has been calculated for many, many years, but we have typically calculated retention related to a specific program or campaign. Since many constituents are involved in multiple ways across the organization, it's important to know the difference between someone not retaining to a program/campaign versus someone leaving your brand completely. Retention to the brand is something that should be understood not only for the actual metric, but it can lead to insight on experiences that are great for your constituents and those that aren't measuring up.
• Triggers have been misunderstood in our industry, but they can be very valuable if thought of correctly. For the purpose here, a trigger refers to engagement or activity that typically equates to increased value in the relationship. Triggers are different from one organization to another, but by analyzing the value of the overall relationship and how that engagement unfolds over time (say 24 months) you can identify triggers that can serve as a way for you to react and change your marketing strategy. Some years ago, Blackbaud's Target Analytics informed us about the long-term value of a person who self-reported a change in his or her contact information (change of address, phone, etc.) and how that aligned to a stronger relationship. That is an example of a trigger that could be easily monitored with the right data capture so that you can treat these individuals differently to see if they "step up" and show their loyalty and value officially.

Constituent data

In my blog, you heard my point of view on the importance of constituent input and insight. Just remember, this is not just data in a PowerPoint presentation that sits beside the giant stack of reports —this is data that can be leveraged and used in the database to help with segmentation, spending decisions and opportunity marketing. Examples of this kind of data are:

• Loyalty, satisfaction, commitment metrics or whatever your organization has chosen as its primary way of understanding the strength of your relationships is very important. Not only does it help you enhance your segmentation (i.e., high commitment vs. low commitment), but it is most powerful when it can be modeled and applied to your file in mass. By profiling the differences in people who have stronger feelings versus lesser feelings, you can then look for similar attributes within your file to affect marketing in a larger way. This information can be used across the organization, even in your donor services and customer service areas. And, of course, the minute you measure this, you should have a goal of improving it.
• Opt-out/unsubscribe data is often overlooked but is something every marketer and fundraiser should be able to quote off the top of his or her head. In the end, it is absolutely critical to know how many people are raising their hands and saying, "No more, please." And, of course, this should be monitored on a program and campaign basis to understand if you have spikes in these metrics with specific messages, seasonality, channel usage, etc.

Process data

While many people might groan at the use of the word "process," a conversation about data and the value of using the right data at the right time would not be complete if we didn't talk about what makes the data available to use. In other words, if you are using data to drive your strategy, then you'd better make sure you understand the good things and the bad things about it. Is it complete? Is it of good quality? After reviewing the questions below you will be in a much better place to know what data you would like to use — but ultimately should or should not because of a problem with it.

Through analysis of all those reports on your desk and reviewing your current strategies, marketers and fundraisers should be able to prioritize the top 10 to 15 pieces of data that matter the most. I'm not talking about things like phone number, address — I'm talking about information about interactions with your brand or information about constituents that can impact the relevancy of your strategies and messaging (i.e., relationship to the mission, preferences/areas of interest, etc.). Once you have your list of priority information, you need to understand how good that data is.

• What is the quality of the information that is at your disposal? Do you believe it is accurate within reason? Is it self-reported or assumed? As an example of the importance of quality, once again, Target Analytics did some analysis a few years ago that showed that a typo in a donor's name resulted in a 10 percent drop in revenue.
• What is your duplicate rate on your database? Is your organization doing the best job (both human process and technological process) to reduce duplicates?
• What is the coverage of this information? Is it available on most or just a few of your constituent segments?
• How accessible is the information? Does your IT department tell you it can get you this information in eight weeks — therefore making it hard to use it in marketing decisions, etc.?
• How current is the information? You want to use the most accurate and recent data to drive the best marketing decisions for a relevant, personal experience — but does the organization take an exceptionally long time to get specific information into the system? Are you at risk of personalizing your messages based on information that is not up-to-date?

Overwhelmed? Don't be — just start asking the right questions and know what you are trying to solve, improve or inform. And, remember, these are examples of data/metrics that are in addition to the metrics you have identified as important to measure success of your programs and campaigns. Making sure you can analyze response rates, average gifts, retention to a program or channel, and other traditional metrics are still very important.

However, I would challenge you to look at your reports and your metrics and ask yourselves, "SO WHAT?" Don't measure for the sake of measuring, and don't collect for the sake of collecting — make sure you have a good answer to the SO WHAT question. What is each of your metrics helping you do? How is it informing you? If you don't have a good answer then kill the metric. There's not enough time in the day.

Angie Moore is partner at Donor Voice. Reach her at amoore@thedonorvoice.com