I recently read an article in Direct Marketing News called “The hunt for new customers returns.” And it started me wondering how much of the nonprofit sector is also in the hunt.
But it isn’t so much whether you’re still engaged in acquisition – though I sincerely hope for the sake of your nonprofit that you are – but rather it’s how you’re approaching it. The trend in the for-profit sector is “…trying to do acquisition in a smarter way,” according to the article.
In a nutshell: Before the recession most companies focused on the gross number of acquisitions. Focused on getting as many new customers as possible and as quickly as possible – a volume game. Now acquisition efforts are “to target niche groups of prospective customers.” Focus on customers who will have “… high lifetime value, instead of acquiring larger groups of customers regardless of their long-term buying power.”
Is there a parallel for the nonprofit sector? I say YES. Afterall, why wouldn’t it hold true here as well?
Customers and consumers are also donors. Everyone is seeking value, relevance, and quality experiences from the retailers, businesses, charities and associations they choose to interact with.
In addition, for-profit businesses have to watch their bottom line in order to stay in business. Whatever prospecting and marketing they do has to be cost effective. The same is essentially true for nonprofits. The budget must balance to keep the doors open. Acquisition and marketing must also be cost effective.
What you might ask yourself as you think about a more focused approach to your acquisition:
What analytics do you have to help you target more prospects that mirror your best donors?
What are the right incentives to get more donors with a higher lifetime value?
What else do you need to do to win them over?
How can you ramp up the quality of your communications with them?
How can you correctly leverage direct mail, other print and billboard advertising, email, social media and mobile to make it easy for prospects to respond and engage with you? And to give prospects the ability to respond instantly regardless of the media (e.g., mobile gives you this ability).
How can you break down the silos within your organization and get every department and division talking collectively?
Seriously consider how you can target more prospects with a higher donor lifetime value than simply hunting for mass volumes of new donors.
Lots of low value one-time donors can be quite costly. For example: Think about all the house appeals you mail to them where they never respond. Think about the time spent analyzing how they can be persuaded to give a second time. Finally you move them to the lapsed donor file with another round of analysis. And eventually they cycle into your acquisition mailings again. A lot of money has been spent on them over the course of two years or so. What’s the ROI in that scenario for a $5 gift two years ago? I don’t think there’s any question that it’s negative.
Just to be clear . . . I’m NOT saying ignore all the low dollar donors. I’m NOT saying efforts to get a second gift or to renew lapsed donors should be ignored.
I AM SAYING that focusing on acquiring more of the best donors from the beginning will help your bottom line. They yield a higher ROI for your marketing and fundraising efforts. They make your job more rewarding all the way around.
Narrow your focus in acquisition and your nonprofit will probably enjoy better fundraising success. Worry less about merely getting a large volume of new donors. Concentrate more on getting the right donors.
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