This article was first published as “Marianne’s Mining Minute” in the APRA Upstate New York chapter’s newsletter, 2010.
In data mining, we frequently choose the dependent variable that is easiest to acquire from our primary databases. Most often, we start with the prospect’s lifetime giving (I admit that I teach that as well). However, we want to be careful when thinking about which giving variable is measuring what we want to see. Here is a smattering of giving variables and their uses.
Lifetime Giving measures only lifetime customer value. In addition, it is often directly related to the length of time a prospect has been involved with your organization, especially for consistent givers. So, lifetime giving values tend to favor older donors.
Giving Per Year in System reduces the effect of length of time by dividing lifetime giving by number of years in your system. For instance, a prospect became a member of your organization in 1999 and her giving is $10,000. So, her giving is an average of $1,000 per year for her lifetime ($10,000/10 years). You are still measuring lifetime customer value, but removing the effect of age/length of involvement.
Highest Gift/Pledge measures a donor’s single highest gift or pledge. Note that major gifts tend to be pledges, so it is best to measure pledges for this variable. This is my favorite variable for looking for major gifts prospects.
Velocity or Consistency measures a donor’s recent behavior, whether she is escalating her giving or whether she is giving consistently. I use these variables for annual giving studies. Velocity is calculated as (last full year’s giving/average(previous 3 years giving)).
Distances help measure the amount of required cultivation for different level gifts. Measure the distance from first to first major gift (major gifts), from entry date to first gift (annual giving), or from lowest gift to highest gift (major gifts or high-end annual giving) –hoping that the lowest gift came first.
If you are measuring different dependent variables than highest gift, what are they?