Why should charities invest in in-house predictive analytics?

Predictive analytics can really pay dividends for charities but I often find that such organisations are reluctant to invest in it or unsure of what value it can really bring. Smart Vision Europe has worked with quite a number of charities with the aim of helping them benefit from the power of predictive analytics. Over time, I’ve found that a number of common themes come up during the initial conversations with such organisations.

The lovely people to whom we speak are working hard on behalf of their organisations and, regardless of the nature of the charity, tend to be wrestling with the same core issues: how to better understand their supporter base; how to find more supporters like those they already have; and how to keep existing supporters engaged and active for longer. Alongside these challenges is the significant problem of getting their charity’s voice heard as just one of many charities in the UK’s vibrant charity sector. There is serious competition for supporters’ time and money and charities know they need to use every tool at their disposal in order to survive.

In essence these are the same challenges faced by many of our commercial clients: how to acquire and retain customers (or donors) profitably. However unique to charities, at least in my recent experience, is uncertainty about how to get started with the (admittedly serious) undertaking of supporter insight and prediction, and a lack of recognition of the range of options which are available. I often hear that charities are considering one of two options instead of doing proper advanced and predictive analytics. Essentially these options are a kind of ‘analytics-lite’ which give the impression of doing some kind of analytics but without really getting properly stuck in. These two options are:

•       “We are considering getting an agency to do a one-off piece of work that will deliver a supporter segmentation for us”

•       “We are considering investing a fairly substantial amount of money to buy in geo-demographic data enrichment to add to our existing supporter data”

When I hear that a charity is considering one of these two options then I’m afraid alarm bells start ringing in my head. In diplomatic and reasoned tones I tend to respond as follows:

•       A one-off, agency-driven segmentation will not help you meet your goals of improved supporter acquisition, value and retention.  It may make your fundraising team feel good for a while but it will not be the catalyst to change outcomes in the mid to long term. Such changes can only come about through investment in proper predictive analytics.

•       Enriching data with geo-demographic classifications will certainly provide some additional descriptive data.  It may help you identify households that are sufficiently affluent to consider charitable giving.  But it will not help you identify people that are likely to have an affinity with your cause or tell you how best to engage with them. Both of these things are possible if you invest in – you guessed it – proper predictive analytics.

If charities are serious about improving donor acquisition and retention by engaging with their supporter base then they need to use real insight to make their fundraising, volunteer, major donor and events activities truly differentiated. This has to start with in-house analytical capability.  It’s not something that can be done by an agency on your behalf. No one understands your donors and your data in the way that you do.

It is fair to say that this is not the easiest option.  It can be hard work getting the fly wheel of an internal predictive analytics capability spinning and generating momentum. It requires sustained effort too which means real commitment from top management to making sure that the organisation has the resources and capabilities that it needs for predictive analytics. But the truth is that the secret ingredient of UK’s most effective charities is that they all tend to have in-house predictive analytics capabilities.

The combination of in-house expertise with an understanding of the supporter data, along with the right analytical skills and sufficiently powerful analytical tools is the catalyst that enables long term strategic change and improved outcomes.

The good news is that, based on our experience, there is always more data than you thought and it invariably has more value than you imagined.  That does not mean that the data is ever in perfect shape – that never happens – but it does mean that you’ll already have much of the data you need in order to improve supporter acquisition, life time value and better retention of sustained support.

A further side benefit is that effective application of in-house derived supporter insight will mean that your organisation will be investing money and effort more efficiently, leaving more resources available for core charitable activities.  That has to be a positive outcome for all stakeholders.

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