I’ve acquired far too many “truisms” over decades in fundraising. Most are over-generalizations with many exceptions. All contain a nugget of truth.
A datum came in recently that brought one of the less frequently quoted to mind:
“The more it costs to acquire a donor, the less valuable the donor.”
The nugget of truth: When a great deal of persuasive power is required to bring a donor on board, that donor lacked a strong predisposition to your cause.
Persuasive power is costly. My strongest persuasive channel is face to face, which is also the most costly to implement with any donor.
My second strongest is phone. Third mail. Fourth email. Declining cost correlates dead-on with declining power to persuade.
True, true, true, but not necessarily supportive of the maxim at hand.
Some organizations spend more than they need to in acquisition from time to time. When you set up an exhibit at a community fair to recruit “drive by” donors, you collect people with modest interest at face-to-face rates. Many are just being polite. No donor value at all.
Sometimes you spend a lot of money wisely: very high-impact mailing to acquire donors for a capital campaign with immense appeal to a relatively small, very affluent audience. That’s what built the Reagan Presidential Library. (Granted that such efforts are most often used to upgrade rather than acquire.)
If your targeting is weak and your cost-power-contact is high, you validate the maxim. You’re spending a lot to acquire donors who lack strong predisposition to your cause and who thus drop off, quickly when you send them more modest appeals.
The wonderful exception that came to my attention lately:
Donors acquired by face-to-face fundraising have low attrition and great lifetime value.
This is the face-to-face approach pioneered by Greenpeace in Europe and used by many organizations in Europe and in recent years in the States. Stopping people on the street, asking them to sign a petition and then make a contribution.
Let’s speculate as to why these high-cost acquired donors are high value…
Many of those acquired are younger than the standard donor demos. They’re young people, under 30, many of who have never been effectively asked to give!
But they’ll stick only when the missions are in sync with the audience. Greenpeace and youth are a great match today.
I’m guessing now, but must assume that the organizations are doing good follow-up, collecting mailing and email addresses and CULTIVATING the donors effectively. These aren’t one-time snags.
And one factor that may skew the stats: face-to-face is proving a great means to get monthly giving donors, who sign on for automatic credit card or electronic-funds transfers. (This is working in Britain and Europe by many reports. I’ve heard nothing about the success rate in the US.)
F2F aside, I’ll still trust targeting and cultivation as the drivers in balancing cost and retention. Target well and cultivate effectively to get the best return on investment, short term and long.