Acquisition

And they all gave happily ever after ….

Admit it. We all fall prey at times. The Fairy Tales of Fundraising.

Consider the urgent appeal that so dramatically (dare we say, hyperbolically?) calls for an immediate response to forestall impending disaster. And never a thought of Aesop’s bored little shepherd boy who shouted out false alarm.

“Don't cry 'wolf' when there is NO wolf!” the villagers admonished. When the wolf actually does come, no one responds to the call.

Or picture the harried volunteer manager, frenetically dashing from task to task as she falls ever further behind. After all, it often seems quicker to do something yourself than to convince (or teach) someone else to pitch in.

Sound remotely like The Little Red Hen as she bravely announces, “Then I’ll do it myself”?

Or think of the countless organizations reaching for the next shiny new thing. Ever hopeful, investing time after time … in the pricey premium that’s a can’t-fail investment … or state-of-the-art software that’s an end-all solution…or a proprietary new approach and its path to prosperity.

Surely this couldn’t be those treacherous tailors who knew how to weave a cloth “invisible to anyone who is too stupid and incompetent to appreciate its quality."

It’s so seductive, this siren’s song. Always a quick and easy solution. Plug-and-play.  Set-it-and-forget-it.  Trust me ... it'll be all right.

And perhaps nowhere is the deception more dangerous than in acquiring new supporters.  Just get someone to raise their hand and ask for information…attend an event…or better yet, send in a gift ... and you’ll own them forever.

When you really don’t own them at all.  In fact, unless you earn it, you likely won’t receive further consideration at all.

Because when it comes to fundraising, fairy tale endings are few and far between.


Building a Broader Base


I’ve been on a retention rant for some time now. Still am, in fact.

But no one stays on your file forever. (Or, as they say in the publishing business, even the most loyal subscriber is bound to expire.)

So how do you find replacements?

The easy solution would be to buy a list, drop a mailing and voila … new supporters abound.

Unfortunately, it’s seldom that simple … particularly for a smaller  organization that can't afford to invest heavily today, but not expect payback for years.

There are a number of activities most organizations can pursue to help build their base of supporters. Much of it depends on encouraging a capture mentality throughout the organization.
  1. Your web site is your window to the world. Do you offer visitors convincing reasons to raise their hand and identify themselves? It’s not enough just to offer your free newsletter (captivating though that may seem to you!) Stay on top of current issues? Find out more about an area of interest. Receive updates on events or activities?
  2. Will current supporters–especially advocates–help facilitate an introduction to their friends? Not give you names to send an appeal to, but be a part of outreach activities. Meet the actors, before or after a performance. A fireside chat with the CEO. A friend-raising reception in their home.
  3. Can you tie onto timely events to draw attention to your organization? A bill in the legislature. A civic milestone. A recently released study or report. In a perfect world, your ED is the person reporters call for comment. In the real world, you may need to help make the connection through tweets, posts on facebook, an article on your web site, etc.
  4. Make it easy. If you’re presenting, don’t just ask people to get in touch;  pass out cards people can fill out and return to you (and give them a reason to do so!) Always make sure your contact information is readily available.
  5. Target groups who could become allies. A local Rotary or Lions club. A young professionals group. A nearby school or neighborhood association. You’ll need to get to know the group well enough to understand their needs (what they’re looking for) and then find ways your organization can help them fill those needs. 
Granted, none of these offer an immediate panacea.

But don’t think of acquisition as a one-time activity. Instead, consider it an ongoing effort that permeates the organization. A mindset that includes both the openness to organic growth … and the eager commitment to encourage that growth.

Then look for every opportunity available to help make that happen!

The Alphabet Soup of Acquisition

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“What’s a realistic response rate to expect from acquisition?” I was recently asked.

Realistically, I don’t know how to answer that question.

Instead, I suggest, as a KPI, you should track CTA and LTV.

KPI: Key Performance Indicator

Don't get me wrong: I’m a huge advocate of measuring and monitoring performance. And response rates are an important metric.

For example, response rate can be a good metric to use to compare package performance … or list performance. But it's really only part of the picture.

Further, I would contend that while it’s important, it’s not strategic, i.e., it doesn’t provide a milestone you can use to assess progress toward your organization’s central business objective(s).

As Stephen Covey would say, First Things First.

A more strategic perspective would be to base your acquisition (or reactivation) efforts on what you can afford to spend. This is determined by calculating your CTA and LTV.


CTA: Cost to Acquire (Also referred to as CPD: Cost per Donor)

How much do you spend to acquire a new donor?

For a single mailing, you can look at the total cost of the mailing divided by the number of new donors.

Thus, if you spend $1,000 to mail 500 pieces and generate 10 new donors, you’ve spent $100 per donor.

Many organizations hold down acquisition costs by creating a special version of a donor package to help underwrite the cost of the mailing. If you’re mailing a package that costs 40¢ per piece, send it to 500 prospective donors and generate 10 responses, you have a much more palatable $20 cost per donor.

While you can track this by individual mailing, it’s more helpful to annualize it (consider a full year’s expense) to use as a budgeting tool.

Can you afford to spend $100 to acquire a new donor? Or even $20. You won’t know unless you compare that cost to LTV.

LTV: Lifetime Value (or Long Term Value)

On average, how much does a new donor generate over an extended period of time?

Calculating LTV is a bit more complicated. Essentially, it’s a means of averaging total revenue from a group of like donors over a three to five year period. As a simplified example:

If you acquire 100 new donors this year and that group gives a total of $2,500, the one-year return is $25 per new donor.

If, in year two, 40 of those donors give again for an additional total of $1,200, the two-year cumulative return is $37. ($2,500 + $1,200) ÷ 100 = $37.

If, in year three, 35 of those donors give again and give a total of $1,050, the three-year cumulative return is $37. ($2,500 + $1,200 + $1,050) ÷ 100 = $47.50.

And so forth. Which gives you a usable benchmark against which you can compare your cost to acquire.

LTV is one of the most strategic numbers to monitor, because it also forces you to track some other important metrics: conversion (how many new donors make a second gift), retention (how many of last year’s donors make a gift this year) and average gift.

Fodder, perhaps, for a future post!