5 Keys to Prospecting on a Budget
As a recovering fundraiser, I am acutely aware of the importance of a vibrant acquisition program. Acquisition is an essential part of any fundraising program, as it:
- Replaces constituents that do not reactivate
- Adds additional sources of revenue
- Injects new blood into your file, introducing new opportunities and growth
- Feeds your funnel, including new major- and legacy-giving prospects
A vibrant acquisition program is indicative of an organization on the rise, while a slow decline in active file counts is unsustainable. I know, fundraising 101, right?
If you have observed any industry data over the last six years or so, you also know that acquisition is getting continuously more difficult and more expensive. Since 2001, the number of nonprofit organizations that are competing for mind and wallet share continues to increase significantly (some estimates have it around a 45 percent to 50 percent increase), and the number of donors and total revenue have remained relatively flat. As a result, the pools are overfished and donors are saturated with acquisition requests and renewals. Yet, as organizations have tightened their belts over the last few years, one of the first budget items to go is the acquisition budget, largely because organizations historically have not been able to quantify the impact of acquisition on the immediate bottom line — it's a short-term money-losing proposition in the eyes of management.
Less budget, more costly, critically important to the long-term health of the organization — sounds pretty dire, right? This is one scary trend that I dare not minimize.
As brilliant fundraisers, we must get smarter about how we can overcome the acquisition quagmire — and reverse these trends. Here are some suggestions.
Build the business case for budget
We generally use the wrong metrics to show the value of acquisition to management. Metrics like donors acquired and break-even duration don't tie back to short-term revenue or show the impact on long-term organizational health. We must change the way that we approach the business case to secure the funding necessary to keep the organization healthy.
This is a long-term investment — use long-term metrics. Measuring the "long-term value (LTV)" of the constituents acquired helps you show the value of the acquisition program over time to the organization as well as helps you make smarter decisions about how to pursue acquisition in the future. Measure the LTV at various intervals, including lifetime, and roll it up to both the list and the marketing effort. You may find, for example, faith-based lists convert less donors but are extremely profitable long term, or that certain catalog lists have a high acquisition count but negative LTV. Taking the long-term view may hurt short-term statistics, but remember the big-picture goal is long-term organizational health.
Use cheap names, focus on those closest to you
Focus on opportunities in your file first. You don't need a Ph.D. to know that you'll always get better results from those who have a relationship with your organization.
Your file is full of them, and you may not even know it. They may include:
- Lapsed donors or members
- Event-related (peer-to-peer fundraisers, participants, attendees, facility visitors)
- Online subscribers (e-newsletters, e-commerce, banner ad clicks)
- Service beneficiaries (alumni, job placement recipients, professional services recipients)
- Active non-donor constituents (advocates, volunteers, partners)
Organizations are hesitant to cross-pollinate programs for fear of blowback, but these folks have an affinity to your organization and many are just waiting to be asked.
Here are a few suggestions that have worked for a number of organizations:
- Know your people! Use a model with prior cross-program conversions to identify and segment these groups. Knowing a good profile of those likely to convert helps you make smart decisions about how you manage the conversion process.
- Have a plan. Using what you've learned from your data, build a plan around the patterns that you identify. Know when to push, and know when to pull back. This means constantly measuring and adjusting your strategy.
- Test! I can't stress this enough. What do you do when you're done testing? Test some more. Find what works, find what doesn't and try something different.
- Be smart, but don't give up. Just because advocates didn't convert on the first few appeals you sent them doesn't mean they don't want to give. Change the messaging, make the ask softer or combine it with an advocacy ask.
Identify major or legacy donors
Showing management that certain large contributors or legacy intentions came to the organization as a result of an acquisition effort can have a powerful effect on conveying the value of a strong acquisition program. This can be done from a financial perspective, as one major donor can make a huge impact on the organization. I've worked with a handful of organizations where eventual board members came to the organization initially through direct-marketing acquisition. Similarly, I've worked with a few organizations that have acquired individuals that eventually had influence outside of direct financial contributions, including politicians, public figures and thought leaders.
These anecdotes, while not representative of the overall program, can make a huge impact in making the business case to management for the appropriate investment.
Use data to get smarter
While there is a lot to learn within your own data, it's also important to use outside sources to help build the overall file and identify outside constituents that have an affinity to the organization.
Capturing information about origin lists, channels, interactions and demographics can help you to build predictive analytics around your acquisition program. Models around list rentals, timing, channels, count and recency of non-financial interactions, and demographic makeup can help you make smarter decisions around where to focus your investment.
Ensure that you are focused on the right channels and the right mix
Direct mail continues to be one of the more successful acquisition channels. It takes a little more of an investment than online but typically yields more institutional (as opposed to single-issue) supporters, longer-term support and higher LTV.
That's not to diminish online acquisition, as it yields higher first-time donations as well as higher short-term ROI. The conversion strategies just are different for the online-acquired constituents, as their donation patterns are set more quickly. Immediate sustainer offers seem to show one of the more profitable follow-up offers to convert online-acquired constituents.
There are additional acquisition channels that are more costly with varying degrees of success, including canvassing, telemarketing, DRTV, DR radio, among others. Conducting a marketing mix analysis, using predictive analytics, can help to you understand and maximize the investment in acquisition that is the best fit for your organization.
While there is no magic bullet, there are opportunities for us to learn more about our files, about the industry and best practices, and think in a more innovative way to capture new contributors. We can only do this through better (note: better, not necessarily more) information. Posing the right questions is the best place to start: What is the value of acquisition in the short and long term? How do I measure value? Where do opportunities exist?
If there is one glaring point, it is that we cannot continue to approach acquisition in the same ways we have in the past. In order to do this, we must apply some focus and financial investment to ask and answer the right questions, develop and test various strategies, and continue to make the case around the importance of this vitally important, yet woefully under-resourced, part of our overall program.
Timothy Grailer is product manager at Blackbaud.