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Comments

NadanuOnline

Good article. Direct mail is dying and there are many more cost effective ways to acquire donors (or customers for for-profit businesses). Online networks are gaining momentum and Facebook and Twitter are changing the way people interact with charities and other non-profit organizations. It all comes down to adapting to the environment and facilitating the donation process from beginning to end.

Benjamin

Touch points (nnumber of times a contact sees your organization's name) can be expensive when considering it takes repeated exposure to a name before it sinks into the recipient's memory long-term, or before they take action. Advertising media such as print, banner ads, and TV spots can be quite expsnive touch points! (Sometimes it is several dollars per viewer for TV). The Advertising Specialties Institute recently published a study on the cost per impression (CPI) of promotional products over their useful cycle, and calculated a cost per impression of $0.005. Yes, it really only costs $0.005 per impression for a promotional product over its lifetime. The most useful promotional products were found to be hats, pens, t-shirts, and tote bags based on their universal appeal among the audience and the number of times they were used by the recipients. Interesting facts for non-profit organizations struggling to keep afloat in economic times at hand.

Steve

A helpful tactic in acquiring new donors is making sure you thank them. Are your giving them something of a perceived value that shows your gratitude? Think of donors like customers for a business. It costs more to develop new donors than to keep current ones.

George

Hi, Stephen

I recently visited the DonorPower blog and saw your thread about “real cost to acquire a donor”. It is certainly an interesting topic. I have some thoughts that I would like to exchange with you. But first, let me ask a question. So bear with me.

Based on my understanding of your article, the concept of “real cost to acquire a donor” can be interpreted as “Cumulative cost to acquire a donor at the list level”.

If that is the case, again in my view, "real cost to acquire" can be calculated from “Cumulative acquisition cost on a list, historical and today” / “Cumulative # responders from that list, historical and today”.

If you can agree with my formula above, in the example you presented on the blog (copied below), I think the “incremental cost to acquire” for Donor B should include not only the historical cost spent on that 1 responder ($14.4)that you show, but also on the 99 non-responders.

That is because the sunk cost should be measured on the entire population of the list we mailed in that campaign (the 100 names under discussion). And it would be impossible that we mailed only that responder 48 times in the past but mailed none of the 99 non-responders historically.

Would you agree with me, Stephen? Thanks.

George

Danny DeMichele Entrepreneur

I think what you are doing there is looking at the aggregated campaign level outcome.

Michael Kaiser-Nyman

I disagree - there have been significant advances made in donor acquisition. In the last few years, statistical modeling has been increasingly (though still rarely) used to build new prospecting lists. Now, you can match your donor list to a consumer data file, create a "look-alike" model that scores off-list individuals on how similar they are to your donors in terms of demographic variables and consumer behavior, and buy a list of brand new prospects - not a rented list that's already been mailed dozens of times by similar organizations. Also, more people are using telefundraising as an acquisition tool. I'm working with a client that's calling through its non-donor members and converting 25% of them into donors.

StatsNinja

That is a great observation, and it is a popularly held belief by many people. But again, I think what you are doing there is looking at the aggregated campaign level outcome.

You are essentially taking a point in time campaign level view of the situation. Saying, if I spent $0.30 on every single person I mailed (say 100 names to keep it simple), and I only got 1 responder (1%), then equally distributing that $30 cost to acquire acrossed the entire universe.

But beneath that single campaign event, 10 of those 100 people you have touched, making it up here, 50 times prior, and 10 of those 100 people you have touched only 5 times prior.

Aren't those 10 that you've only touched 5 times a better future investment for you? That is, if you had a mechanism to know that -today-?

What this theory proposes, is that we stop evaluating at a campaign level, and begin evaluating at an individual donor-centric level. That changes the math, and changes the way we would have to evaluate outcomes.

Dan Shaw

The cost that you are here associating with Donor B (48 contacts @.30 a pop), I already wrote off in the cost of acquiring donors in those 48 campaigns.
If I think I'm paying for Donor B now, I must have acquired all those donors in 48 flights at a bargain.
No??

The comments to this entry are closed.

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DonorPower Blog is penned by Merkle's Power Blogging Team, led by Greg Fox, our senior vice president of strategy. Working with Greg is a police line-up of guest "artists", fundraising pros all, who like to pose as blogatorialists when the sun goes down. You can reach this blog, and any of our regular contributors, at
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