How Do You Measure Success in Acquisition?
May 08, 2013 - by Bryan Evangelista
Your fundraising acquisition campaign is out the door. Gifts are coming in and you are excited and ready to analyze the results of the campaign. But with so many statistical measures to consider … how do you truly measure success?
Two of the most common metrics people look at are response rate and average gift, but limitations exist when looking at these for acquisition, most notably because neither factors in costs:
Is response rate (gifts/quantity x 100) your key indicator? It's definitely important — the goal of an acquisition campaign is typically to acquire as many new donors as possible, and response rate is defined as the percentage of the mailing quantity that responded. But what about the value of those donors? What about cost?
Is average gift (gross income/gifts) your key indicator? That's important too, because another goal of acquisition can be to acquire donors with a high initial value, and average gift is defined as the average size of the contribution. But what about the number of new donors acquired? What about cost?
So — what about costs? You can spend a lot on attention-getting carrier envelopes and fancy premiums that help improve performance, but if it costs too much to acquire the donor, is it worth it and ultimately successful?
This is why investment per donor (which we measure as net income/gifts) is the most important metric of all when evaluating success in an acquisition campaign. Investment per donor provides the most complete measure of success because of the variables it takes into account. Rather than focusing solely on response or average gift, it considers them both together along with costs, and measures the actual investment the organization is making in acquiring each new donor.
This is not to say that response rate and average gift shouldn't be considered as valuable metrics. They are strong indicators of package success, but it is important to remember that they only tell part of the story. If your organizational goals aren't specific to JUST increasing the number of new donors, or JUST improving average gifts, investment per donor should be looked at to measure the overall success of an acquisition campaign.
Note: Investment per donor is typically a negative — since acquisition traditionally does not produce net revenue — so the lower the number, the better the performance! Most organizations average between a $30-$60 investment per donor, but these values do vary depending on the list market and mission. It is also important to note that investment per donor should only be used as a key performance metric for acquisition campaigns. Appeal campaigns have a different key performance metric — net per thousand — since these campaigns net profit.
If you have any questions about this article, or have a difference of opinion you'd like to share, please email Bryan Evangelista, Account Supervisor, at email@example.com. He is a self-professed data nerd who loves to talk about stats!