Donor Driven Segmentation

2010 WASHINGTON NONPROFIT CONFERENCE January 28-29, 2010

Donor- Driven Segmentation

Data Driven Predictive Modeling to be Relevant to Donors

Suzanne Joiner

Director of Direct Response

Feeding America

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Feeding America

Feeding America is the nation's leading domestic hunger-relief charity.  Our mission is to feed America's hungry through a nationwide network of member food banks and engage our country in the fight to end hunger.

Each year, the Feeding America network provides food to more than 25 million low-income people facing hunger in the United States, including more than 9 million children and nearly 3 million seniors.

Our network of more than 200 food banks serves all 50 states, the District of Columbia and Puerto Rico, securing and distributing more than 2.5 billion pounds of food and grocery products annually. Those member food banks support approximately 63,000 local charitable agencies and 70,000 programs, which provide food directly to individuals and families in need.

• 800,000 individual donors• 400,000 active individual donors• Labels based acquisition• Minimal premiums in cultivation• Campaign based cultivation, not membership

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Advanced Donor Targeting

+Lifecycle

Giving media

Offer preference

Creative preference

Seasonality

And more…

Recency

Frequency

Amount

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Why?

Increase Loyalty

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Why?

More connection

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Why?

More Impact

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Why?

Be Relevant

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Donor Preference Variables - Offer

Basic Offer:

Stop food from going to waste and provide specific amount of

food for hungry Americans.

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Donor Preference Variables - Offer

Pounds of food:

Each $1 provides

9 pounds of food

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Donor Preference Variables - Offer

Bags of groceries:

Each $1 provides

2 bags of groceries

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Donor Preference Variables - Offer

Meals:

Each $1 provides

7 meals.

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Donor Preference Variables - Offer

Value of food:

Each $1 provides

$14 worth

of food

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Donor Preference Variables – Offer Flavor

Strategic:Save food from waste.

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Donor Preference Variables – Offer Flavor

Emotional:Provide food for people facing hunger.

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Donor Preference Variables – Offer Sweetener

Matching funds double your gift.

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Methodology

• 2-Stage Scoring Model – to optimize response rate and gift amount simultaneously

• Stage 1 – Response Rate Prediction (Based on Logistic Regression)– Calculated from complete transaction history, 3-year promo records, 2-year interest

match– Factors derived to yield maximum prediction– Interaction effects examined exhaustively

• Stage 2 – Average Gift Prediction (Based on Poisson Regression)– Consider both recent year and lifetime/baseline giving trends to avoid over-asking– Use personalized value as expected gift amount

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External Validation – Phase One

Decile#

Mailed#

Resp Gross RevResp Rate

Avg Gift GYPM

GYPM Lift NYPM mROI Net Rev

1 13,047 1,268 $104,580 9.7% $82.48 $8,016 4.25 $7,606 19.55 $99,231

2 13,048 919 $40,941 7.0% $44.55 $3,138 1.66 $2,728 7.65 $35,592

3 13,047 711 $27,314 5.4% $38.42 $2,094 1.11 $1,684 5.11 $21,965

4 13,048 543 $18,123 4.2% $33.38 $1,389 0.74 $979 3.39 $12,773

5 13,048 584 $15,408 4.5% $26.38 $1,181 0.63 $771 2.88 $10,058

6 13,047 462 $11,506 3.5% $24.90 $882 0.47 $472 2.15 $6,157

7 13,048 425 $10,367 3.3% $24.39 $795 0.42 $385 1.94 $5,017

8 13,047 349 $7,243 2.7% $20.75 $555 0.29 $145 1.35 $1,894

9 13,048 288 $5,887 2.2% $20.44 $451 0.24 $41 1.10 $537

10 13,048 361 $4,953 2.8% $13.72 $380 0.20 -$30 0.93 -$397

Total 130,476 5,910 $246,322 4.5% $41.68 $1,888 1.00 $1,478 4.60 $192,827

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Projected Performance

• 10%~20% reduction in mail volume • 5% lift on net revenue• Cost savings can be invested in higher-

leverage opportunities• Sensitive to donor behavior dynamics –

meaning more net opportunities

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Actual Performance

- 9.6%

4.4% 4.3%

7.0%

0.4%

Quantity Response Average gift ROI Net Revenue

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Projected Impact by Segment

• Reduce contacts among segments with lower ROI, increase contacts to higher ROI segments

Core Donors (2+ Prior Years)        

Prior Year Cume Donors Total NPV Current Year

Cost/Donor Donor NPV LT ROI

<$5 1,121 $13,972 $1.21 $12 1.61

$5-9.99 7,254 $106,837 $4.61 $15 1.37

$10-14.99 26,296 $1,070,155 $5.87 $41 1.78

$15-19.99 12,678 $958,656 $6.85 $76 2.29

$20-24.99 23,014 $2,557,767 $7.19 $111 2.79

$25-49.99 49,490 $10,201,287 $7.52 $206 4.01

$50-99.99 40,833 $18,437,031 $7.77 $452 7.00

$100-199.99 27,494 $27,501,244 $7.62 $1,000 13.53

$200-499.99 13,952 $31,920,286 $7.59 $2,288 26.83

$500-999.99 3,317 $17,052,857 $6.25 $5,141 55.01

$1000+ 1,655 $17,562,063 $3.57 $10,612 122.65

Grand Total 207,104 $127,382,154 $7.11 $615 9.97

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Actual Impact by Segment

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Additional Impact – Reinvestment of Cost Savings

DDS DDS 2.0 DDS 2.0 over DDS

Appeal Mailings

Total Cost $2,215,099 $2,040,084 -$175,015

Gross Revenue $9,304,979 $9,159,969 -$145,010

Net Revenue $7,089,880 $7,119,885 $30,005

Reinvestment of Cost Savings (Assume ROI = 3.0)Total Cost $0 $175,015 $175,015 Gross Revenue $0 $525,046 $525,046 Net Revenue $0 $350,031 $350,031

Combined Financials

Total Cost $2,215,099 $2,215,099 $0

Gross Revenue $9,304,979 $9,685,014 $380,036

Net Revenue $7,089,880 $7,469,916 $380,036

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What Next?

Unique donor

experiences based

upon their past and

present behavior