Thursday, August 6, 2009

Accept that donors are not cheap

Point number three of ten in my session yesterday, entitled the 10 point plan to recession proofing your fundraising.

In reality I could have scrubbed out the "recession proofing" your fundraising, and substituted it with "leading" because in reality the presentation and the messages within are timeless.

Anyway, back to point three.

If you think that you can make money straight away on acquisition (this comment excludes those in the US where you can make money upfront mainly as a result of the enormous volumes you can talk to) then frankly you are kidding yourself.

There are as always exceptions to the rule. But across the board acquiring new donors is bloody tough.

Depending on the channel you are recruiting by, it typically takes on average anywhere from 18 months to 4 years (and up) to make money.

The point is donors aren't cheap and we need to manage peoples, errrr... your bosses and boards, expectations about this.

Here are some key takeaways:

- The most effective charities on acquisition take a long term view. They don't throw the towel in after one campaign. They test, tweak and refine until they get it right. Messaging, lists, elements within a DM pack. They all need to be tested.

- It's rare to make your money back quickly. 18 months is the lower end (regardless of channel) to breakeven. But it's not uncommon for some channels to take 3 years and above. That doesn't mean its not worth doing if these recruits are bringing in substantial long term value, but you need to realistic.

- You must aim to recruit regular, monthly givers. Looking at some analysis today for a client showed that the long term net value of monthly donors (it differed by channel) is around ten times that of one-time cash donors. It isn't easy but you need to find a way, whether that is signing people up to monthly straight away or getting them in on cash and then converting them really quickly after they come on board.

All in all you need to stop just looking at response rates, average gift levels and the cost per acquisition.

You need to accept that donors are not cheap. But you also need to understand, what is a donor really worth over a period of time when you factor in how much they give over their lifetime, taking into account all costs to recruit and cultivate. That's what smart acquisition is about.


1 comment:

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