When we set up Pareto, my friend Paul and I named it that for a reason: The mathematical concept of the Pareto Principle.
Most people in direct marketing understand the principle in general. They get that 80% of your income will come from just 20% of your customers, or in our case – donors. It is amazing how accurate this can be over the lifetime of your donor program.
But so what?
How do we use this fact to allow us to raise more funds?
Applying the Pareto Principle helps with resource allocation.
If we can increase the income from those few top donors by just 25%, we will raise as much as we would have done from the whole donor file previously!
This effort could be bigger packs, phone calls, events or even personal visits.
Over the next few weeks, I am going to write a few more articles about applying this principle – especially in the area of mid-value donors.
Check out the video below, which we put together to explain the Pareto Principle in the context of fundraising.