If you don’t know the destination, how will you know when you get there?
It seems we spend a lot of time during the month of January taking stock of where we’ve been the past year and setting ourselves up for success in the year ahead. This is a great time to consider which investments you can make in your programs that will strengthen your fundraising efforts. But in an increasingly multi-channel environment, how do you know which KPIs are the best ones to track to know whether you are gaining ground or lagging behind?
Here at Good Works, we publish a Canadian Direct Mail Benchmarks Study each year (you can check out our most recent report here!). This original Canadian research from across all verticals in the charitable sector not only provides a great perspective on how the sector is performing but, more importantly, measures donor behaviour. We track eight key metrics in the report but I suggest that if you’re new to tracking metrics, that you start with these three:
The number of donors or prospects that respond to a given mailing in relation to how many individuals you mailed. Make sure that you track your responses by individual mailing and year over year. Remember that recency is key when it comes to house mailing lists (too lapsed = weaker response) and taking time to review list recommendations is critical when it comes to acquisition. It also goes without saying that you should make sure that your lists are clean (when did you last run an NCOA?) as you never want to pay for packages that won’t reach their destination.
Average Cost to Acquire
Do you know how much it actually costs you to acquire a new donor? If you don’t, this is a number that’s worth calculating. Total mailing costs divided by the number of new donors acquired will give you the magic number and you will want to track this on an appeal to appeal basis each year to determine your ROI. Acquiring new donors is certainly an investment, so not only do you want to be strategic about how you acquire new donors, but you want to make sure that you love them and keep them. Knowing the cost to acquire may make you think twice about your package components including things like premiums – are they really driving the results that you want? Rented lists are also pricey so make sure that they are strategic and yielding the response that you want. If not, switch it up!
This is a metric that you want to track closely as it will provide clues as to the health of your donor file and retention efforts. The calculation is the percentage of returning donors in year #2 divided by the total number of donors in year #1. Simply put, if you are losing more donors that you are retaining, your donor file is in decline and your revenue is sure to follow. A low rate of renewal indicates a high churn and you’ll need to get to the “why” of it. Do you have a disproportionately high number of older donors? Have your stewardship and donor love efforts been lacking and the spark that your donors once had for you has fizzled? If your donor retention is weak, you’ll want to look at both first-time donor retention vs. returning donor retention to find the leaks in your program.
As you get more comfortable tracking metrics, you can start to include other indicators that can further inform your program strategy.
Or, you can let us do the heavy lifting and take part in the Good Works 2020 Canadian Direct Mail Benchmarks Study. Not only will you get the latest Canadian data, but as a thank you for participating, you’ll receive your own free custom report! Sign up here: https://bit.ly/36rzSq9