Implementing a sound long-term value plan through analytics, segmentation and continual testing gives organizations the insights they need to develop long term relationships with high value returns. Feeding America’s Philip Fertick and Paradysz’s Adam Hannah, Angelo Licursi and Patty Ruch shared their insights on finding Long Term Value at the 2014 New York Nonprofit Conference.

1. Growing Long Term Value
Through
Gift Optimization Strategies

2. Presenters
Angelo Licursi
Paradysz
Adam Hannah
Paradysz
Philip Fertick
Feeding America

3. 3
Rising duplication rates along with soft
performance have been contributing to a
lower ROI and less revenue to fund mission.
The State of the Industry: Unbalanced
More nonprofits are competing for the same
donor dollar.
Number of new donors down 3.2% in 2013
over prior year.
Number of acquisition
campaigns is down 5% in 2013
after being down 3% in 2012.

4. 4
Number of acquisition
campaigns is down 5% in 2013
after being down 3% in 2012.
Revenue per donor stats increased 3.6%
with 82% of organizations reporting an
increase in 2013.
Rising duplication rates along with soft
performance have been contributing to a
lower ROI and less revenue to fund mission.
More nonprofits are competing for the same
donor dollar.
Number of new donors down 3.2% in 2013
over prior year.
Number of acquisition
campaigns is down 5% in 2013
after being down 3% in 2012.
A More Balanced State
More nonprofits are competing for the same
donor dollar.
Rising duplication rates along with soft
performance have been contributing to a
lower ROI and less revenue to fund mission.
Number of new donors down 3.2% in 2013
over prior year.
Viable 65+ audience – most responsive to
direct mail.
Changes in organizational strategy have
shifted emphasis to bottom line/ROI and
improved donor quality.
Online donors and revenue steadily
increasing over last 5 years – online gifts
generally 2.5x larger than mail gifts.

5. 5
(Acquisition Net Revenue + Subsequent Net Revenue)
Acquisition Donors
LTV
Long Term Value (LTV) is the financial value of a donor relationship in
future terms, generally 12 or 24 months from present.
“It is an indicator of how today’s investment decisions affect future revenue
outcomes.”
LTV Definition
Cumulative Net Revenue over a set period of time

6. 6
In reviewing who your “best” donors are, many times organizations find that the initial
acquisition gift level is a big predictor of high long term value and commitment.
The question becomes….
How do I get more of them? And if I can’t get
high gift donors in acquisition,
can I upgrade them in renewal?
LTV by Gift Level
($50.00) $0.00 $50.00 $100.00 $150.00 $200.00
$0-$14
$15-$19
$20-$24
$25-$34
$35-$49
$50-$99
$100+
12 Mo LTV - Net Rev/Donor
$0-$14
17%
$15-$19
16%
$20-$24
42%
$25-$34
8%
$35-$49
8%
$50-$99
7%
$100+
2%
Donors by Acq Gift Level

7. 7
HIGH GIFT DONORS COME FROM ALL ACQUISITION SOURCES.
The ability to separate high gift
from low gift prospects for improved targeting
is a challenge for many organizations.
LTV by Gift Level: List Source
0%
20%
40%
60%
80%
100%
120%
List #1 List #2 List #3 List #4 List #5 List #6 List #7
$0-$14 $15-$19 $20-$24 $25-$34 $35-$49 $50-$99 $100+

8. New leadership from commercial sector
Increased scrutiny on Direct Mail
acquisition budget
– Largest single expense source
Corporate giving overshadows DM due to
minimal cost of fundraising
– Corporate food donors often become funds
donors
– DM revenue is unrestricted
– DM revenue creates steady stream of revenue
35%
62%
3%
Feeding America (2013)
73%
6%
14%
7%
Industry (2012)
Individuals Corporations
Foundations Other
Feeding America – Our Story

9. Significant growth of online channel
Online new donor metrics better than that of Direct Mail
initially…
– Higher average gift
– Ability to acquire new sustainers
– Organic contributions further improve online metrics
Asked to invest more in digital than direct mail –
although digital not easily scalable
25%
75%
Digital
Sourced
Donors
Direct Mail
Sourced
Donors
Direct Mail vs. Online

10. CFO considers ROI at 12-month and 3-year views for
investment decisions
Became necessary to understand multi-channel LTV
– Built acquisition tool to look at subsequent giving and true
ROI by donor source
Need to shift focus from channel metrics to overall new
donor metrics
– Understand online attribution to offline
Investing more to test new channels
with lower costs – success with insert media
LTV and Investment Opportunities

11. Gift band analysis showed DM-sourced, higher average
gift donors performed better at 3-year LTV than online-
sourced
Goal to find higher value donors upfront
$0
$200
$400
$600
Mail Online
Lifetime Revenue by Origin Source
$10-$14 $15-$24 $25-$34
$35-$49 $50-$99 $100-$249
LTV Analysis by Gift Band

12. Focus to increase LTV on Direct Mail acquisition program
– A higher cost to acquire is not always bad!
Implemented strategies to improve response, lower costs and
increase average gift:
– Shift in list selection based on LTV vs. Net Rev/Donor and Cost of
Acquisition (COA)
– Shift to non-premium offer
to generate higher upfront gift
– Ask array strategies by list
– Gift optimization model
Shifted volume from
labels/notepad to simple appeal
LTV Focus

13. Targeting
High Gift
Donors & Prospects

14. 14
Marry gift modeling & segmentation techniques with
targeted asks or offers that maximize the giving potential of
each prospect.
Goal:
Strategy:
Improve prospect campaign performance and the overall
quality of the donor acquired (LTV).
Gift Optimization: Acquisition

15. 15
91 95
131
172
94
47
0
20
40
60
80
100
120
140
160
180
200
HIGH $ MED $ LOW $
FEEDING AMERICA
GIFT OPTIMIZATION MODEL
RESP INDEX AVG $ INDEX
Combining demographic and lifestyle data variables with campaign
response behavior leads to predictive model segmentation.
Gift Optimization: Model Development

16. 16
Key Differences Between “High Gift” and “Low Gift” prospects…
Recent Retirees: Ages 65-74
 Married
 Male
 Higher Income & Net Worth
 More likely to donate to Wildlife and Art causes
 Older Retirees: Ages 75+
 Single
 Female
 Lower Income & Net Worth
 More likely to donate to Cancer, Children, or
Catholic causes
High Gift
Low Gift
Gift Optimization: Audience Profile

17. 17
Panel Audience
Test: Open
Ask
Test: High
Ask #1
Test: High
Ask #2
Control Ask
Control Random Nth 20,000 20,000 20,000 20,000
Test
High Gift
Prospects
20,000 20,000 20,000 20,000
Test
Medium Gift
Prospects
20,000 20,000
Test
Low Gift
Prospects
20,000
Total 40,000 60,000 80,000
Gift Optimization: Ask Array Testing
A CB D

18. 18
Gift Optimization: Ask Array Testing
In addition to the
control ask array;
two higher arrays
and an open ask
were tested across
audience segments.

19. 19
Panel Audience
Test: Open
Ask
Test: High
Ask #1
Test: High
Ask #2
Control
Ask
Control Random Nth $87 $126 $129 $120
Test
High Gift
Prospects
$127 $125 $167 $168
Test
Medium Gift
Prospects
$87 $140
Test
Low Gift
Prospects
$74
Panel Audience
Test: Open
Ask
Test: High
Ask #1
Test: High
Ask #2
Control
Ask
Control Random Nth $17.18 $29.46 $22.77 $20.30
Test
High Gift
Prospects
$51.28 $31.24 $32.05 $31.54
Test
Medium Gift
Prospects
$21.60 $24.90
Test
Low Gift
Prospects
$10.82
Gross
Revenue/M
Average
Gift
Gift Optimization: Results
A B C D

20. 20
“High Value” segments had a 20%
increase in upgraded giving
compared to other donor segments
receiving same offer.
Identify NPO’s best donors
based on fundraising value
speed of upgrade to higher
giving levels.
Leverage past campaign
performances and 3rd party
data append to develop a
new donor segmentation
strategy that predicts
tomorrow’s “Best Donor”
upgrade candidates.
Build out an offer and ask
array framework & test
plan to increase giving in
“High Value” upgrade
segments.
1 2 3
}
GOALS
• Increase the # of mid-level giving donors on file.
SCOPE & SOLUTION
RESULTS
Gift Optimization: Donor Upgrade

21. 21
Reviewing donor upgrade
trends also highlighted
Holiday/Year End giving
opportunities that could be
maximized.
Higher ask array testing
around this season is
recommended.
Gift Optimization: Timing

22. 22
• The recipe of receiving higher gifts from
your prospects and donors requires all
the ingredients…
– Audience
– Timing
– Offer
– Ask
• Define objective, test strategy & measurement upfront
– Should include specific audience that is being targeted
– Testing strategy should include creative, timing, offer and ask array
variables
– Be very specific about the key performance metrics used to evaluate
success (ex. Avg Gift or # of upgraded donors)
Best Practices & Methodology

23. Thank you
Philip Fertick
Director, Acquisition and New Media
Feeding America
pfertick@feedingamerica.org
Growing Long Term Value Through Gift
Optimization Strategies
Angelo Licursi
Vice President, Research Advisory Services
Paradysz
alicursi@paradysz.com
Adam Hannah
Director, Relationship Management
Paradysz
ahannah@paradysz.com