Where do your donors come from? How did you meet them? How did you meet the person who introduced you to them?Â
In a previous life, I ran a for-profit market research consulting firm, focusing on medical and healthcare information. This is a fairly specialized field, but it suited my medical device industry background.Â
About 5 years into the business, I decided to figure out how I was getting new clients. Where did they come from? What prompted that call? Â How did they hear about my services?Â
I decided to conduct a genealogical study of my client base.
First, I ranked each client by the amount of business they gave me. Then, for the top clients, I walked backwards through our relationship. When did I get my first job from them? Why did they call me? How did I first meet them? How did they first hear about me? What was the very first contact?
Time consuming? Oh, yes. But it was one of the most worthwhile exercises affecting the future of my business. I discovered that ultimately, about 80% of my business was initially generated by my attendance at one of two particular industry association conferences. I met many clients directly at one of the conferences. A few others had first heard of me because of a session or workshop I had presented there.
What I called second generation clients were those who had been referred to me by one of those first two groups. Then there were third generation clients; those who were referred by one of those second generation clients.
In other words, even if I’d never met client Z at that conference, that conference ultimately led to my work for client Z.
Armed with this new knowledge, I was able to focus marketing dollars and energy on those two industry conferences. I made sure that I attended each and was visible at each. I made sure my existing clients and prospects knew I would be attending. I approached the organizations putting on the conferences and offered to write for their trade journal. Just as important, I allowed myself to stop spending money and time on less efficient venues and activities.
Every dollar that comes into our nonprofits is precious, and I’m not advocating giving up the annual appeal, the 5k runs, or the donor boxes at the door. But I am suggesting that you take the time to do your major donor genealogy. Take advantage of institutional memory that may reside with a long-term employee, board member or past-presidents.
Have them help you conduct a major donor genealogy. Work backwards and consider how you first met this particular donor. Who introduced you? Is there a friendraiser in common among your donors? Is there a function in common? While a major donor is a huge asset to your nonprofit, even greater is a major donor who refers others to your cause.
Then take action. Focus your board and yourself on the most efficient routes to major donors and put yourselves in their path.  It’s a powerful way to leverage your time, dollars and energy.Â
Very interesting article Susan and wonderful suggestion to figure out where relationships started. Wearing my business hat, it seems most of our business comes from someone who has heard about us either through direct contact or through a recommendaiton of others. Working backwards, I can’t help but conclude that “all of the above” methods of developing relationships are essential and it remains clear to me the more I invest in developing a relationship with someone the more likely it will lead to referalls. Wearing my nonprofit hat, I’m having the same difficulty tracking the origins of gifts back to a neat/single source and as always the importance of a relationship comes to mind and again I can’t help but conclude “all of the above” methods for developing them are important. HELP!
Those are all excellent points, Seth. NONE of the suggestions for working backwards negates the need to build relationships. Client and Donor relationships are paramount, and they really have to be worked. That’s why Bloom (and other good consulting firms) is so right to emphasize to our clients that it’s not raising money, but building relationships that count. In the business setting, though, if you have to make a decision between spending money/time on a chamber of commerce meeting or on a meeting of the Association of Fundraising Professionals, this exercise will tell you where the more viable contacts come from. Time and dollars are limited, and sometimes you have to make those decisions.
Similarly, in the nonprofit world, if you know that a large proportion of your major donors tend to all know each other through a particular association, you can focus your efforts on getting a congenial major donor to introduce you to that association in a meaningful way, because it will have a greater likelihood of being a fruitful connection than some random other encounter. Or if you know that many of your major donors are also involved in a particular arts group (a field unrelated to your own cause), then you can spend time exploring a relationship with that arts group, so as to be introduced to more people like these particular major donors.
It boils down to this being another tool for making the most of limited time, energy and money.
Dan Allenby’s post on Lifetime Donor Value, is a good illustration of why it’s important to know where your best donors come from, and to focus on where it all begins. Enjoy!
http://danallenby.wordpress.com/2009/06/18/donor-lifetime-value/