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What’s in Our Net

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Summit Marketing’s acquisition strategies are designed to deliver a better overall first-time donor gift mix, higher donor retention, and provide greater net resources to fund your mission.

In a recent Central Territory acquisition test, one of Summit Marketing’s competitors acquired 29% more new donors than Summit. Exciting at first glance. But Summit’s lower number of new donors still resulted in new donors making higher total value gifts – and delivering 20% more net income for the mission!

 
In FY17, Summit Marketing new donor mix delivered:

Why is a balanced donor mix so important?

In a recent analysis of total annual direct mail revenue distribution for a divisional client:

  • 8% of donors – those giving over $500 – contributed 69% of total revenue raised.
  • 34% of donors – those giving between $100 and $499 – contributed 23% of total revenue raised.
  • 20% of donors – those giving between $50 and $99 – contributed 5% of total revenue raised.
  • 38% of donors gave less than $50, contributing only 3% of total revenue.

This real-world example of the benefit and challenge of donor concentration holds lessons – and warnings – for us all. While it’s wonderful to find a few donors capable of making very large donations to help pull the financial weight of the mission, it is also inadvisable to rely on so few to help the many in need.

Our natural inclination is to rebuild the donor file – a worthwhile and important goal. But it is increasingly critical to understand donor giving behaviors to predict the return on investment from these efforts. Refilling the donor file mainly with those making small donations – then hoping for them to somehow make large net contributions – is a plan historically proven to drain dollars and starve your mission. This strategy will not produce better results over time, in a country where the gap in income and wealth is unfortunately increasing.

A Summit Marketing analysis of a competitor’s 2017 acquisition effort for a metro Area Command showed a net loss of over $86,000, driven by a mix delivering 40% of its new donor gifts under $20.  Unfortunately, the same Area Command is on track to lose money with its new donor acquisition class again in 2018, with a mix delivering 35% of new donor gifts under $20.

So not only did our competitor’s acquisition efforts fail to add fuel to the Command’s mission, they also siphoned off additional resources that might have funded help for those in need.

 
Hidden talents.

In Matthew 25:14-30, Jesus gives us the Parable of the Talents to explain stewardship. Two of the three servants in the parable delivered their master a profit from the investments they made on his behalf, and so were deemed trustworthy and rewarded with greater authority and the approval of their master. But the third servant, who buried his single talent, so he could deliver a no-risk “break-even” when his master returned, was deemed unworthy and was cast out.

We are all called to be good stewards and are responsible for making the most of the resources and opportunities directed and entrusted to us, working in earnest and taking carefully calculated risks to move your organization and its mission forward. A plan that rationalizes failure as success or squanders time, money and energy is unworthy. We must, and as Summit has proven, we can, do better.

 

Let’s find out what’s in your net.

Does your acquisition strategy change every year? Are you disappointed with the results? Summit Marketing can help.

If your acquisition efforts have delivered mostly new donors who make only small, one-time gifts and never upgrade, or you’re having trouble creating retention or building lifetime value with your current donor mix strategy, let Summit Marketing show you the holes in your net.