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Case Study: Non-Profit Scores 192% Increase in ROI using RFM Model

Cal Farley's Boys Ranch and Affiliates, a
501(c)(3) non-profit childcare organization focused on the raising of at-risk youth in a "ranch" setting, raises funds with direct mail.

Each year, the Cal Farley organization serves more than 1000 children and families either in residence or through other outreach services.  Today, more than 350 at-risk boys and girls from Texas and 15 other states are finding hope for a brighter future.

Basic-care residential programs and services are provided at the three Texas communities of Cal Farley's Boys Ranch, near Amarillo; Cal Farley's Girlstown, U.S.A., west of Lubbock; and Cal Farley's Family Program, near Borger.

Current donors are contacted three times a year by mail and asked again for support.  The average response to these mailings for the past 4 years has been a little less than 3%.

Cal Farley's decided to use one of the techniques outlined in my book - RFM scoring of their donors.  First, they created a control group - a random sample of all donors - to test the scoring method against.  This is extremely important, because they were also testing a new creative approach in the mailing.

If the RFM scored mailing ended up with a higher response rate, they wouldn't know if it was the new creative or the scoring that created the higher response without something to compare the results to.  Having a control group allowed them to compare the effects of the scored mailing against mailing to a "normal" group of donors.

Next, using the RFM methodology, the rest of the donors not selected for the control group were ranked by their likelihood to respond to a donation solicitation using RFM.  The top 10% most likely to respond were identified by RFM score and sent an identical mailer to what the control group of donors would receive, except for a different donation tracking code.

The response rate from the control group was 5.7% versus the average of just under 3% in previous years; the new creative approach had worked!  But the real eye-opener was the response from the group of donors ranked most likely to respond by the RFM model.  

The response rate for this group was 11.7% - more than twice the response rate of the control group, even though the same creative was used.  This is a huge increase in response, and when combined with the average donation amount from this group, creates the statistic non-profit fundraisers look at most critically - the yield on a dollar spent. 

In this case, a dollar spent asking for donations from the RFM scored group generated total donations 192% higher than a dollar spent with the non-scored group.

After the success of this test, Cal Farley's is continuing to explore further uses for RFM segmentation of their donor base.  For more information on Cal Farley's Boys Ranch and Affiliates, please visit their web site.

For more information on Cal Farley's  application of the RFM concept, feel free to
e-mail Jason Weaver at Cal Farley's.

 

 
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This is the original Drilling Down web site; the advice and discussion continue on the Marketing Productivity Blog and Twitter.

Download the first 9 chapters of the Drilling Down book here: PDF
Purchase Book           Consulting