What makes Google the omnipresent $21 billion leviathan company it has become? While its search engine and its application suite is impressive, Google’s key to success is its ability to mine data on customers that use its products for free. This data is used to put the right targeted ads in front of its customers for which advertising companies pay a hefty premium. This optimization requires a dedication to data tracking systems and analytics that explain consumer behavior and interests. And it’s not just Google. Despite the difficult economic times of the past few years, data analytics has ranked in companies’ top 3 areas for investment because, like Google, they recognize that the key to success is the ability to get smarter about their customers.

Many fundraising and nonprofit organizations in the recession appropriately feel pressure to spend their dollars on direct service delivery to those in need and severely limit investments in knowledge and capacity building let alone data analytics. However, non-profit organizations who are high performing forward thinkers recognize that even in these difficult times, it is critical to invest in data analytics in order to know your customers (both donors and service recipients) better. This newsletter is dedicated to exploring a few ways that nonprofits might learn from Google’s successful business model undergirded by data-driven decision making.

1) Google generates its revenue by offering advertisers the ability to target their ads to highly specific segments of customers they are interested in reaching. Based on keywords you type and other information Google has collected about you, you receive targeted advertisements that are likely to appeal to you.

As your organization enters a new campaign season it is crucial to leverage donor data to target your message. The days of donor communication using the “one size fits all” mass marketing approach are largely history. To keep your donors’ attention, you need to target messages to them highlighting aspects of your organization’s work that are attuned to their interests and demographic profile. That requires that you use your database as a CRM (customer relationship management) strategy instead of using it to just hold contact and past giving information.

2) Every application in Google’s universe of free tools is constantly culling information about you, the user, in order to enable other parts of the organization to be smarter about how they engage you.

Data cannot be just the responsibility of a single department like your development team, or the marketing team. For data to enable your organization to really thrive, data needs to be coordinated and used across all departments thereby ensuring that everyone is rowing in the same direction. For example, a survey of donors that identifies donor interests and perceptions of where your organization is strong and weak can be used by your marketing team to craft targeted communications, your development team to more effectively cultivate donors, and by your grants making team to inform allocation decisions. This cross-departmental coordination won’t happen on its own, however. We strongly recommend each of our clients nominates a “data champion” whose job it is to ensure that all of your departments are tapping into and making coordinated use of organizational data.

3) Google uses all the data it collects about you to inform an ever-more-sophisticated algorithm that targets more and more effectively thereby maximizing advertising ROI and thus allowing Google to increase the rates they charge advertisers.

For our clients who depend on fundraising to generate revenues, the challenge is how to gain new donors, turn new donors into committed repeat donors, and increase the gift made by committed donors to greater levels. To identify where to invest your limited staff time and energies for the best ROI, you need to carefully analyze data to generate predictive algorithms. For example, with one of our clients we are helping them identify which $1,000 donors have the highest potential to make the “leap” to become a major donor ($10,000+) in the future so our client can assign a gifts officer to start cultivating these individuals now, thereby maximizing the likelihood and minimizing the time it takes to make the leap. We are creating an algorithm that is statistically calibrated based on comparing the characteristics (affinities, interests, passions, income, and demographics) of donors that have made this jump in the past to those donors that never made this jump.

Success for your organization can come from assiduously collecting the right data, analyzing it, and using it throughout your organization. To find out how Measuring Success can help your organization position itself to collect and use the richest data possible, please contact me at Sacha-newsletter@measuring-success.com.

In a few days, several members of the Measuring Success team will be attending the General Assembly November 8th -10th in Washington D.C. If you are attending and would like to set up a meeting or conversation please let me know.

Sacha.