Tuesday, November 22, 2011

BIG’s Blog: What’s A Donor Cost/Worth?

Publishers Note: We are sorry that the previous posting of this blog truncated and did not print in full. Below is the complete blog for Tuesday, November 22, 2011.

I spend hundreds of hours a year writing and talking with nonprofit fund raising leaders about shifting their fund raising dependence on direct mail to multiple Internet-based applications and channels.

Two things every nonprofit fund raiser needs to know. First, how much does it cost to acquire a new donor, and second, what is the Lifetime Value of a donor?

When I ask their direct mail managers, they immediately give me answers to the above questions. This is a standard metric direct mail fund raisers have been tracking for decades.

But then I ask, “What are your Internet-based channel equivalents?”

Blank stares.

Why do I ask? Because the Internet is shifting the economic paradigm. Facebook and LinkedIn (to name just two) are delivering new prospects at close to zero cost. How does that compare to cost-per-acquisition in direct mail when fully 60+ % of acquired donors do not give a second gift? Yes, I know Internet-based approaches can be two, three or more steps before you convert to a donor, but when a person engages with your organization for almost zero cost, the Lifetime Value metric looks real good, real fast.


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