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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