1. Direct Marketing 201 Analytics: Statistics for Fundraisers May 15, 2013

2. Direct Marketing 201 ANALYTICS The key to maximizing value and sustained growth is getting the right information to the right people at the right time

3. Direct Marketing 201 What We Will Cover Data Sources Types of Analytics Campaign Analytics Forecasting Analytics Monitoring Outcomes

4. Direct Marketing 201 DATA SOURCES Old Model New Model – need a plan to integrate

5. Direct Marketing 201 Sources: The Old Model TM Direct Mail Web Sites Events/Major Gifts Donor/ Customer

6. Direct Marketing 201 You Need a Plan that Integrates the Data

7. Direct Marketing 201 Integrating Data to Develop Strategy

8. Direct Marketing 201 TYPES OF ANALYTICS Balancing Analytical Needs Description of Types of Analytics

9. Direct Marketing 201 Analytics – Balancing LCLS There are basically 4 types of data that need to constantly be balanced in decision making – each has different value L – LaggingBenchmarking C – CurrentCampaign Reports/Testing L – LeadingForecasting/Budgeting S – StrategicScenario Building/Multi-Year Growth

10. Direct Marketing 201 Analytics – a Few Types Campaign Analytics – Performance Reports – Package Testing Results Forecasting Analytics – Budget Forecasting – Cash Flow Forecasting

11. Direct Marketing 201 Analytics – a Few Types Digital Media Analytics – Web Site Traffic Analysis – Paid Advertising ROI Communication Analytics – Segmentation Analytics – Predictive Analytics

12. Direct Marketing 201 Analytics – a Few Types Performance Indicator Reports – Trend Analysis (historic donor value) – Multi-Year Forecasting (future donor value)

13. Direct Marketing 201 CAMPAIGN ANALYTICS Performance Reports Metrics

14. Direct Marketing 201 Performance Reports Key metrics help determine campaign success – What are they? – How are they calculated? – Why is it important? Why may it be limiting? Which is most important when? – It depends on your goals! – It depends on the program!

15. Direct Marketing 201 Response Rate What? – The percentage of the quantity mailed that responded How? – (# of Gifts/Quantity)*1000 Why important? – Indicator of package success. More gifts the better! Why limiting? – Does not factor in revenue, size makes a difference.

16. Direct Marketing 201 Average Gift What? – The average size of the contribution How? – Gross Income/# of Gifts Why important? – The higher the gift, the more valuable the donor Why limiting? – Does not factor in response, large gifts can skew performance

17. Direct Marketing 201 Gross/M What? – Gross income per thousand pieces mailed How? – (Gross Income/Quantity Mailed) * 1000 Why important? – The more revenue per piece, the better Why limiting? – Does not factor in cost

18. Direct Marketing 201 Cost/M What? – Cost per thousand pieces mailed How? – (Total Cost/Quantity Mailed) * 1000 Why important? – Tracks costs Why limiting? – Test vs. rollout pricing need to be considered

19. Direct Marketing 201 Investment/Donor (CTA) What? – Net Investment to acquire a new donor How? – Net income/# of Gifts Why important? – Factors in response AND revenue AND cost Why limiting? – Only used in prospecting, but it’s a key indicator!

20. Direct Marketing 201 Acquisition Campaign Report

21. Direct Marketing 201 Net/M What? – Net income per thousand pieces mailed How? – Gross/M – Cost/M – (Net Income/Quantity Mailed) * 1000 Why important? – Factors in gross and cost, measures net productivity Why limiting? – Not really applicable in prospecting when there is traditionally no net revenue

22. Direct Marketing 201 Appeal Campaign Report

23. Direct Marketing 201 Which variable is most important when? It depends, but general rule of thumb is … Acquisition – Investment/Donor (CTA) Appeals – Net/M Renewals – Response Rate Upgrades – Average Gift

24. Direct Marketing 201 Package Testing – Why? Build on what’s working, change what isn’t – Tweak Tests, New Package Move the needle on a specific variable based on program goals – Response rate, Average gift, Net (etc.) Stay one step ahead of your peers!

25. Direct Marketing 201 Package Testing – When? As often as possible! – Try and test at least one variable in every mailing Tests aren’t limited to creative/design – RFM segment testing in appeals – List testing in prospecting (80/20 rule)

26. Direct Marketing 201 Package Testing – How? Ensure there is enough quantity (and gifts) to be statistically significant Test only one variable at a time Make sure segments are equally distributed Ensure you wait long enough to make a conclusion!

27. Direct Marketing 201 Package Testing – For Statisticians Confidence Intervals Bell Curves Z Score P Value

28. Direct Marketing 201 Bell Curve Lower Upper Actual CONFIDENCE INTERVAL

29. Direct Marketing 201 Bell Curves Intersecting Package A Package B Lower (A)Upper (A)Lower (B) Upper (A) Overlap?

30. Direct Marketing 201 Acquisition Testing Report

31. Direct Marketing 201 Appeal Testing Report

32. Direct Marketing 201 Package Testing – For Everyone Else 9 times out of 10 the result will be the same Lower and Upper Bounds Best Case/Worst Case Scenarios Overlap Which metrics to consider depend on goals of the test

33. Direct Marketing 201 FORECASTING ANALYTICS Budget Forecasting Cash flow Forecasting Multi-year Forecasting

34. Direct Marketing 201 Budget Analysis Question: “Based on where I am today in my fiscal year cash flow and how campaigns have been performing, where am I going to end the fiscal year.” Approach: Combining current cash flow to date along with a forecast of “active” campaigns gives an excellent real-time approximation of total fiscal year revenue. 34

35. Direct Marketing 201 Budget Analysis: Tools Campaign Budgets: All TM, DM, Web, etc. budgets with expected outcomes. Predictive Flow: using different tools for each channel flow out budget (i.e., DM would use a standard days out). Estimation of Carry In/Carry Out: Based on timing of prior FY campaigns how much revenue will be “carried into” this FY. Same for current FY Campaigns. 35

36. Direct Marketing 201 Budget Analysis: Results 36

37. Direct Marketing 201 Forecast Analysis Question: “Recent performance metrics are soft compared to last year, how is recent performance going to affect my fiscal year budget.” Approach: “Look at recent cash flow trends based on which campaigns are active and use tools to forecast the remaining months.” 37

38. Direct Marketing 201 Forecast Analysis: Tools Historical performance by day. Time-series analysis to utilize recent trends along with historical performance to predict outcome. Create several forecasts based on assumptions of environment changes. 38

39. Direct Marketing 201 Forecast Analysis - Results 39

40. Direct Marketing 201 Multi-Year Forecasting Question: “Determine the baseline scenario of business models based on declining performance.” – Analyze what investment levels are realistic given current trends in each business model Approach: “Establish benchmarks for growth in each program areas including investment levels, return on investment targets, donor return rates, retention targets, donor conversion, and upgrading targets, etc.” – Identify the donor segments of greatest value to guide investment decisions. 40

41. Direct Marketing 201 Multi-Year Forecasting - Tools Segment the file into the investment channels (i.e., DM acquisition, Web Ads, F2F, etc.) Estimate performance of the new acquisition channels based on the investment. Use historical activation, retention and upgrading measures to predict future donor value. Create scenarios based on modifications of investments or changes in the base file. 41

42. Direct Marketing 201 Multi-Year Forecasting - Results 42

43. Direct Marketing 201 Thank you! Jim Emlet Principal 202-452-9732 jemlet@integral-dc.com www.integral-dc.com Bryan Evangelista Account Supervisor 202-296-9660 bevangelista@lautmandc.com www.lautmandc.com