American Red Cross – Enhanced RFM

Turning a problem into a growth opportunity

The challenge

What do you do when you have a unique donor audience that is highly compassionate yet primarily motivated by emergency response?  How do you get these donors to respond to the perpetual need consistently? What if Recency, Frequency, and Monetary (RFM) segmentation strategy best practices aren’t enough to optimize this audience?

Russ Reid solution

What did we do? We turned a problem into a growth opportunity.

In an effort to enhance the American Red Cross direct mail program, we identified the solution within their RFM strategy.  It needed a little something extra, so we expanded the segmentation criteria and created “R-L-M.”

R-L-M combined loyalty score modeling with recency and monetary gift history to produce a successful new segmentation strategy.  The loyalty model assigned donors 1 of 7 scores based on a donor’s relative giving behavior to the Red Cross compared with other organizations, providing a clear understanding of which donors have the strongest affinity to the Red Cross.  Additionally, we focused on a new data point in order to determine true gift recency and monetary potential: the donor’s last non-disaster gift.  By reclassifying disaster-related giving and focusing on non-disaster gifts, we effectively transitioned the communications for disaster-focused donors from standard renewals and enhanced the RFM strategy to focus on committed donors’ ongoing support, unlocking both audiences’ optimum giving potential.

Outcome

When comparing FY12 to FY13 results, the R-L-M strategy effectively:

  • Increased response rates by a dramatic 59%
  • Mail quantity reduced by 14%
  • Cost to raise a dollar dramatically declined by 42%
  • Net yield per thousand sharply increased by 103%

arc_loyalty_insights_graphs

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