Campaign and cash reports are essential for day-to-day program management. But the following five metrics go beyond average gifts and response rates to provide a comprehensive view of your program and illuminate your strategic priorities. This is how you get the 10,000-foot view that should be driving your strategy and investment decisions.
Critical to measuring the productivity of your program, donor retention reflects both the quality of the acquisition program and ongoing donor commitment. To get the full picture, measure overall donor retention, first-year retention, and multi-year retention. Overall retention takes the pulse of your file, first-year retention measures the initial commitment generated by your acquisition strategy and the strength of your first year strategy, and multi-year retention reflects the reliability of your core donors, thereby serving as an essential indicator of file health or trouble. It’s true that retention rates can fluctuate based on investments, key events, and major strategy changes in acquisition.
Donor value (subsequent revenue after the initial gift) is closely linked to retention. While retention focuses on how many people have given gifts over subsequent years, donor value also incorporates revenue, for a fuller picture. Donor value is a key metric of file health and donor productivity, and it is extremely helpful for ROI analysis, because it indicates how much each individual donor from each join group is worth, over time. A good starting point for understanding long-term productivity is to track donors’ gross revenue after their initial gifts – typically after one, two, three, four, and five years on file. And, use the five-year value to determine trends versus other organizations and industry benchmarks.
Gifts Per Donor
Gifts per donor measures overall donor engagement. Are donors renewing, but not going beyond renewal gifts? That would be low engagement and a sign that your appeals program could need strengthening, or you may need more purposeful cultivation. Or, are they renewing and giving to special appeals? Then you’re doing a good job of engaging those donors. If you can move the bar on this metric, you can also improve your broader strategic picture (i.e. donor value). It is especially important to keep an eye on gifts per donor as your file size grows or contracts – so track this metric on a rolling basis (quarterly, annually). Income Per Donor
Income per donor is similar to gifts per donor, in that it gives you a broader sense of the direction in which your program is heading, versus a snapshot like member counts. Income per donor is the driving metric for a solid five-year forecast, because it can give you a reliable picture of future revenue. Like gifts per donor, it’s important to watch income per donor as your file size changes – so check in with it on a rolling basis (quarterly, annually).
Return on Investment
And here’s the big metric for buying in your stakeholders: return on investment. ROI incorporates both the initial investment in acquisition and subsequent net revenue, and it should reflect both an organization’s tolerance for risk and the length of time it can wait for positive net revenue. ROI gives you a read on package and list performance – how are those new donors performing now that they’re in the door? – as well as a sense of your overall acquisition program’s return on investment. You can target a time frame for your return on investment (e.g. we want to recoup our investment in 48 months) or try to improve on an existing number.
As we move beyond the unsustainable models of lean and skeletal nonprofits, it is critical that we understand these five metrics. Not only do they report on the health of your programs today, but they also provide a strategic lens for the smart business decisions that will strengthen your donor files and raise more net revenue for your important causes.