A Sweet Spot

05 Sep A Sweet Spot

Quick Question: How would you go about doubling your operating revenue in the next five years or so?

In a recent Learning Center thread, a writer asked for information about membership numbers and growth rates. She explained that she was “not wanting to promise wildly inaccurate numbers and also want to know what type of growth rate for which to realistically aim.” Several people, including me, responded with experience and ideas – all of which were helpful for the question she asked. But was she asking the right question?

I was reminded of the story of a person climbing a ladder. S/he was trying to figure out how to climb faster and more efficiently without falling off – probably not wanting to promise wildly inaccurate ascension rates. But the better first advice was to make sure the ladder is leaning on the right wall.

So why are we concerned with how many members we have? Or the growth rate?

Clearly, if you are starting with none to very few, these metrics are important, but let’s say you already have 200-300 members – which describes many, many land trust organizations.

If you were looking to the number of members as a measure of community engagement or political support, I’m with you. And there are lots of methods of “counting” members that can serve to puff up the reality, such as counting individual adults instead of households or using a 15- or even 18- month count instead of 12.

But if your particular “wall” relates to increasing operating revenue – and most of ours do – membership numbers and growth rates might not be the best metrics.

The missing metric is average gift.

So, to go back to the opening question, you could double your operating revenue by doubling your membership, by doubling your average gift, or by some combination of both. Where is the Sweet Spot?

As an example, let’s take an organization that has 300 members. Typically, there would be 10-15% – say 45 – who are giving more than half of the total. This is a variation of the Pareto principle, where 20% give 80%.

If I were interested in doubling my operating revenue in the next five years, this is the group I would look to first – the 15% who are already giving the most.

This group makes up a Sweet Spot.

Can you motivate your $250 and $500 members to give $1,000? Can you motivate your $1,000 members to give $1,200 ($100/month) or even $2,500 to $5,000?

$10,000?

Every individual success you have in this area is a huge win for the operating budget. But more importantly, it moves the bar for everyone else. If I’m giving $100 now and the top end givers are giving $500, I feel pretty good. If the top givers are giving $10,000, maybe I take a second look at $250, or even $500.

This is why donor clubs work. This is why getting on the phone and out the door is much more effective than sending out more mail. You can’t meet individually with every member of course, but you can meet with the top 20%. And success here will affect the entire membership.

In fact, focusing your fundraising attention on this group, even at the expense of recruiting new $35 members or increasing your growth rate will move the operating budget needle further faster than anything else you could do.

That is, of course, if the objective is to raise more money.

Cheers,

-da

PS: OK, so for all of you non-sports fans, the “sweet spot” is the point along the barrel of a baseball bat where the same swing will send the ball the farthest out into the field.

Photo by zhangkaiyv courtesy of Stocksnap.io.

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