Your Second-Gift Rate Is Talking – Are You Listening?
All seasoned marketers know the importance of securing that second gift as a clear measure of retention. That’s why the second-gift rate and related metrics are such an essential part of Avalon’s quarterly client dashboards. This is the rate of new joins giving a second gift in the first 12 months, reviewed in three-month increments. It can give us an early read on donor commitment and influence programmatic changes—because the sooner a donor gives a second gift, the more likely that donor is to stay with the organization, and that affects how we market to that donor.
The secret’s in the data (and y’know, math)
Now, for the analytics behind that phenomenon, we use correlation—the measure of how closely two variables are related—to determine how second gifts relate to other metrics. The values range from -1 to 1.0, with the magnitude, or the value’s distance from zero, indicating the strength of the relationship. A correlation with a magnitude greater than 0.7 is typically considered strong.
For Avalon clients, we examined the correlation between second-gift givers from a particular cohort of new joins and the number of those new joins retained in the following 12-month period to see how strongly they are related. Our clients have an average value of 0.9, indicating a very strong positive correlation between these two values, as represented in the chart below:
The correlation between the number of new donors who gave a second gift within three, six, nine, or 12 months of joining and the number of those new joins who were retained the following year ranges from 0.875 to 0.984. There is a strong positive correlation between the number of donors who give a second gift and the number of those new joins that will be retained the following year.
Uh-huh. So, what does that look like in fundraising terms?
As an example, we can see that for one client, when the three-month second gifts went up in a particular year, the first-year retention of those new joins in the next year also went up. Likewise, when second-gift rates went down, so did first-year retention.
In the table above, we can see that the second-gift rate increased in 2017. Although we can’t predict exactly what first-year retention will be in 2018, we can be optimistic that first-year retention will increase next year, which is a key priority for this organization.
Great—so what can I do with this information?
Digging into second-gift details is an exciting—and effective—enhancement to our current suite of reporting tools. We use second-gift rates as an added indicator of file health: If they are trending down, that tells us something about the quality of new joins. It can indicate issues with resolicitation strategy or the program in general, suggesting it might be time to make a change. It can lend insight into the impact of positive strategic changes. Second-gift rates can also enhance the accuracy of long-range forecasting.
Interested in quantifying this metric for your organization? Contact the Avalon Analytics team to learn more about our dashboards and how they can provide invaluable insight into your program.