I started working at World Vision when I was 23 years old. Thinking about it today, it’s hard to believe that I’ve been in this “industry” for so many years, or, should I say, decades! During that time, lots of things have changed. The ability to use predictive modeling in addition to traditional Recency Frequency Monetary (RFM) segmentation. The use of HubSpot to implement unique donor pathways through marketing automation. Email name acquisition. But some things haven’t changed. The most basic questions: How much did it cost and how much income was generated? These questions are as relevant today as they were decades ago. And they are particularly relevant when it comes to new donor acquisition.
Pretty much everyone looks at the cost of an acquisition mailing, for example, and how much income was generated by that mailing (first gift income). However, the most important metric isn’t first gift Return On Investment (ROI), it’s lifetime ROI — looking at the cost to acquire a donor in relationship to the lifetime value of that donor. That’s how you should evaluate your acquisition spend. If you spend $100,000 to acquire new donors, how much income is generated over the lifetime of the donors acquired (over 10 years, for example)? I have seen many examples of ministries who cut their acquisition budget based on first gift ROI, when they were actually generating 4:1 lifetime ROI’s.
As a marketer, your single largest expense is for new donor acquisition. The effectiveness of those campaigns should be evaluated on how much income is generated over the long haul. While it’s important to look at first gift ROI because of current year cash flow, your primary concern should be to generate long-term donor value.
That’s how your ministry will be funded in the future.
I think it’s always good to carefully consider the best ways to acquire, cultivate, retain and measure the true value of financial partners who support Kingdom work. If you’d like some help thinking it through, I welcome your email to rstarks@masterworks.agency.