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The Epiphany of Online Optimization

Published by Tim Kachuriak

Six years ago, when I discovered optimization, I had an epiphany: Optimizing online fundraising could transform nonprofits—and through their impact, the world.

That single idea remains the source of my passion and the driving force behind everything NextAfter does.

Over the years of performing experiments, speaking at nonprofit events all over the world, and talking to thousand of nonprofit leaders, I’ve fleshed that out quite a bit with, I guess, “mini-epiphanies” about the optimization process.

Today I want to share the first epiphany with you, the breakthrough that changed my life. Hopefully this idea will transform the trajectory of your organization the way it has mine.

The most common question…and my (apparently) confounding answer

It always begins the same way…

Let’s say I’m at a conference, I meet a nonprofit leader. Through the normal “what do you do?” chat, I’ll mention that NextAfter helps nonprofits get more names, donors and dollars through online fundraising optimization.

Here’s the typical conversation that follows:

Them: Wow, that’s great. So how do I grow online revenue?

Me: Optimization.

Them: What is optimization?

Me: Scientific testing to uncover—and improve—the variables that dictate revenue.

Them: ….Hmm, sounds interesting…and complicated. Ok. So, nice talking to you. I need to go over there now…

[end conversation]

I used to wonder if I should shower more regularly or something. But once a week is enough (right?), so something else must be going on…

After years of these encounters, I’ve realized that many nonprofit leaders simply haven’t confronted the breakthrough concepts—the optimization “epiphanies”—that could transform their organization.

I believe that most nonprofits have a single misconception about the internet that is limiting their success online and, worse yet, causing them to miss out on the real benefits of online fundraising.

It’s not that they aren’t paying attention to online. They are. Indeed, they are thinking a great deal about the internet and online fundraising, just not about the right parts of it.

Online is different (but not for the reasons you’re usually told)

The internet is unlike anything else in history—just not for the reasons you’ve probably heard.

The internet is not special because it scales at low cost or because it makes “long tail” segmentation possible or because many tedious tasks can be automated. It does all those things, and more.

But stopping there is missing the point (by a wide margin).

Firstly, for your online fundraising program, these internet insights tend to be misunderstood or even abused. At their worst, they boil down to tactical conclusions like “spamming over email is way cheaper than snail mail. Awesome! Let’s do it.”

Such a focus on tactics indicates a certain posture toward your audience in general. Your audience is not a cash machine. That’s a very myopic and cynical view, one that tends to correlate with organizations who think their audience exists to serve them not the other way around.

Secondly, even if these were the real insights and everyone stopped with these internet 1.0 ideas, you’d still lose. There are no more participation medals in online fundraising. The days of “showing up is enough to win” are over. Online fundraising is now crowded enough that with tactics alone, costs scale right along with returns.

I could go on but I risk distraction from what really matters. So, enough about the tactical debate and advantages (or not) of online. Tactics are the wrong frame for the conversation—and that is the point.

Debating scale and efficiency and tactical online fundraising indicates the real mistake: The belief that online is just another “channel” to reach your audience (and ask for money).

It can be. For most organizations, that’s all it is. Thinking of the internet as a channel is not a mistake because it’s technically incorrect—it’s wrong because it ignores the real power of what it could be for your organization.

The REAL power of the internet (for your fundraising and beyond)

I’ll go further to suggest that the “channel” argument is not just incomplete, it’s completely upside down. And as is so often the case, the truth is quite the opposite of the popular picture.

The web is not a channel!

It is unlike any other medium. Not for the reasons usually cited but because it isn’t a distribution channel at all; it is the source.

The web should be where discoveries are made—where insight flows from your audience through your online fundraising program to the rest of your organization.

That’s why we call the web what it really is: a living laboratory.

On the internet—and only on the internet—you can test. And I don’t mean mailing two versions of a letter and checking in a month later to see which has generated more cash. I mean scientific, systematic experiments that deliver specific conclusions to specific hypotheses.

Scientific experiments. Valid data. Definitive conclusions. Quickly and inexpensively. That is the unprecedented possibility of the internet for your online fundraising.

What actually causes donors to give? You can determine the answer and I don’t mean theoretical or vague notions like “goodwill.” We’re talking about specific elements: value propositions, images, sentences, even single words that tip the conversion scale and generate response.

My very first test confirmed that even changing a single sentence can produce dramatic results: In that case, a 141.3% increase in traffic.

For me, that was the moment an idea became an epiphany.

Through testing, you can define goodwill and discover the things that trigger those vague giving theories. Online is the laboratory where you get X-ray vision into “what actually makes donors give.”

You aren’t discovering some universal “best practices.” You’re conducting research into what practices are best for your organization. There is a big difference.

The simple fact is, you can’t know what works best for your audience, your offer, your organization without testing.

Testing is the key. The process of rigorous, methodical, systematic experimentation to answer those key questions is called optimization.

Testing and Optimization is the online advantage.

Online is the only place you can scientifically test into insights unique to your organization.

It is the low cost scaling, the “long tail” segmentation, the automation—and all the other facts about the internet—that make it the greatest laboratory in the history of mankind.

The web is a laboratory because, unlike any other “channel,” you can quickly and easily perform scientific testing to reveal insight.

Here’s the difference:

  • If the web is just another channel it becomes overhead–a shifty, frustrating cost center where you’re engaged in a daily fight just to keep up with the latest tactics to produce the same response you had yesterday.
  • If it is a research laboratory, your online program can become your most valuable asset—the test center where you discover the answer to the magic question, “what makes our donors give?”

The internet is the only platform where that is possible.

That is the epiphany of online optimization. What’s missing? Notice what is conspicuously absent from my case for the web?

Revenue.

That’s deliberate. In fact it’s an important point in its own right. Revenue increases because you gain insight. It is the result of optimization but not the isolated purpose.

In other words, increasing revenue is the means by which you make discovery. When revenue increases, you know the variable you are testing is operative.

You’ve arrived at an insight.

So, how do you grow revenue? Optimization. How do you optimize? Scientific experimentation.

Thinking of the web as a laboratory is transformational. Insight flows from it not into it. That’s why revenue increases (and why you can deploy insights in offline channels, too).

I guess it’s my fault…

With all of that packed into a single word, it’s no surprise that so many people think I’m talking gibberish when I say “optimization is the only way to reliably grow your online revenue.”

But now you know. And now you have no excuse. But the good news is…

You can start optimizing right now.

You can put the research laboratory to work for you and make your online fundraising a reliable source of growth. Just remember:

“The web is not a channel, it is a living laboratory.”

“When I test, the web really can become a living laboratory–for me!”

That is the secret to reliable revenue growth.

Struggling organizations tend to view the web as one more irrigation ditch for their operations. Thriving organizations view the web as the wellspring of insights for better strategies that emerge from discovering how to grow revenue.

Is your online fundraising an irrigation ditch or the source of growth?

Visit the experiment vault we’ve set up to get a taste for what is possible in the living laboratory of the internet.

NextAfter was founded to answer the single question: “What makes your donors give?” We make the web a living laboratory for our research partners. We’ve recorded over 684,761 total conversions, amassed a test panel with a total sample size of 69,975,209 test subjects, and delivered a 7,969.1% cumulative net increase in results.

We’ve only just begun..

The next epiphany I want to share deals with how you optimize and the remarkable simplicity of the optimization model: Just 3 variables that dictate the performance of your entire program.

In that post, I’ll dig deeper into the methodology we’ve developed that makes testing simple and accessible for everyone. I’ll show you how to test and the framework we use to turn the data you get into the insights that power your growth.

I will introduce you to the key ideas (and surprisingly simple concepts) to show you how you can solve the fundamental questions like “How do I grow my revenue?”

By the way, I deliberately use the word “solve” here. When you grasp these key ideas, you will trade guesswork and assumptions for a methodical process that returns specific answers to your questions.

Don’t miss it.

Published by Tim Kachuriak

Tim Kachuriak is Chief Innovation and Optimization Officer of NextAfter.

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