Top Ten Tips to get the most out of your Donor File

1. Use "RFM" to select the best donors to include in mailings. RFM stands for Recency, Frequency & Monetary value.
2. It may sound counter-intuitive, but the donors most likely to give again are those who most recently contributed. In the business we refer to this as "Recency" and it is the single most important predictor of response to a future appeal.
3. "Frequency" refers to the number of gifts a donor has made in the past. Those who have made more gifts in the past are more likely to give again in the future. But the largest differential in predicting future response is between those giving only one gift and those giving at least two.
4. "Monetary" value refers to the size of previous contributions. This is not necessarily a predictor of likelihood to respond but is predictive of the size of future gifts. For example, donors who have not given in 24 months or more whose largest gift in the past was less than $20 may not be cost-effective to continue mailing. But donors who are just as far lapsed but with a previous contribution of $100 or more are likely to be cost-effective because even though the response rate might be low the average gift size will be high meaning you need fewer gifts from this segment to make a profit.
5. Every mailing should be a learning experience. Past performance is the best predictor of future results. So for any mailing: separate your file into meaningful segments using RFM, assign a code to each segment, print the code on the mail piece, and capture that information when entering response data into your database. This allows you to measure response rate and average gift by file segment and better target future mailings. It can be tricky for organizations with smaller donor files, but where possible it's helpful to have at least 1,000 records in each segment and preferably 2,500.
6. The code that you assign to each record in a mailing is typically referred to as the source code (sometimes called "mail code" or "motivation code"). Source codes can be built a variety of ways depending on the needs of the organization but here is a good standard model for building a source code:
   1. Use one character to indicate the upper level umbrella of technique used to secure the gift. So you might use "M" for "mail" or "T" for "telemarketing" or "E" for "Special Event."
   2. Next, use two characters to indicate the year the mailing went out.
   3. Next, use one character to indicate the month the mailing went out. (A = January, B = February, etc.)
   4. Next, use one character to describe the RFM segment (use two characters if you have more than nine segments, but most smaller nonprofits with less than 10M donors should not have more than nine segments).
   5. Finally, if mailing more than one package, use one character to identify the package. If for example you have one package going to high dollar donors and a different one for regular donors or if you were testing one package against another you would want to use this code.
   6. So, for a mailing going out in May of 2009 you might end up with a code that looks like this: M09E1A (M for Mail; 09 for year; E for month of May; 1 for RFM segment code; and A for package code)
7. After each mailing it is important to capture and maintain in your database the source code, gift amount AND gift date so it can be used for future RFM analysis.
8. Your database should assign and maintain a unique Donor ID#. Many popular database programs will assign these automatically but if yours does not, include at least six figures in this field (allowing up to 999,999 unique Donor ID#'s) and they should all be a uniform length using leading zeroes to fill in. So for example the first donor record you add to your database would be assigned Donor ID# of 000001, the second 000002, etc. This Donor ID# should also be printed on outgoing mail pieces so that data entry will be easier on the back-end once you start to get responses. Using a unique Donor ID# will cut down on data entry time and also avoid mistakes that might lead to duplicate entries.
9. Never delete records from you database. Many organizations make the mistake of purging their database of lapsed or deceased or people who have asked that you not solicit them anymore. First of all lapsed donors should never be deleted because you may want to target them with special lapsed recapture mailings in the future even if they have stopped responding to your regular mailings. (You will use your RFM analysis to suppress these lapsed donors from regular mailings.) It is generally easier to recapture a lapsed donor than to acquire a new one. For deceased donors or others who have requested not to be solicited any longer, assign a code to the record in the database (like "D" for "deceased" and "X" for "Do Not Solicit"). Then, when you do selections for mailings you will build your query to filter out any records with these codes. This is important for a number of reasons but the most important is that if you ever purchase lists to do a new donor acquisition mailing you want to be able to suppress these records in the merge/purge process so that you do not purchase a name you already have. Nor do you want to accidentally solicit someone who has requested that you don't.
10. Don't succumb to "analysis paralysis." If all the above seems intimidating just do the best you can and don't let it stop you from getting in the mail. You'll learn more with each mailing and Starfish Marketing Group is here to answer any questions you have about this process.