What makes Google the omnipresent $21 billion leviathan company it has become? Though the company has both an impressive search engine and application suite, Google’s key to success has been its ability to mine data on customers who use Google products for free. Such data allows Google to target customers with stra-tegically placed ads, for which advertising companies pay a hefty premium. This optimization reflects a dedi-cation to data tracking systems and analytics that explains consumer behavior and interests.
Google’s not the only one. Despite the difficult economic times of the past few years, data analytics has ranked in companies’ top 3 areas for investment because, similar to Google, companies recognize that in or-der to succeed, they must get smarter about their customers.
During the recession, many fundraising and nonprofit organizations ap-propriately felt pressure to spend their dollars on direct service delivery to those in need. Many groups severely limited their investments in knowledge and capacity building, including data analytics. However, non-profit organizations who were high-performing forward thinkers recognized that even during difficult times, it was critical to invest in da-ta analytics in order to better understand customers. This begs the question of how nonprofits might learn from Google’s successful busi-ness model under-girded 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 mes-sage. The days of donor communication using the “one size fits all” mass marketing approach are largely his-tory. To keep your donors’ attention, you need to target messages to them.
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, it needs to be coordinated 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. We strongly recommend each of our clients nominate 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 tar-gets more and more effectively, thereby maximizing advertising ROI and thus allowing Google to in-crease the rates they charge advertisers.
For our clients who depend on fundraising to generate revenues, the challenge is how to gain new do-nors, turn new donors into repeat donors, and propel repeat 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 gener-ate predictive algorithms. For example, we are helping one of our clients identify which $1,000 donors have the highest potential to make the “leap” to become a major donor ($10,000+) in the future. Our cli-ent can then assign a gifts officer to start cultivating these individuals now, thereby maximizing the likeli-hood and minimizing the time it takes to make the leap. We have created a statistically-calibrated algo-rithm based on comparing the characteristics (affinities, interests, passions, income, and demographics) of those donors who have made the jump to those who haven’t made the jump.
Success for your organization can come from assiduously collecting the right data, analyzing it, and im-plementing it throughout your organization.