5Yr Value: The Metric that Tells You the Most About Your Fundraising

26 Feb 5Yr Value: The Metric that Tells You the Most About Your Fundraising

By David Allen, Development for Conservation

Three weeks ago, I asked you for data related to the value of your donors:

• Isolate the members and donors you have who made a first gift to your organization at some point – any point – during the calendar year 2014.
• Now add up everything that group has given to your organization – as a group – in the five years (including 2014) since then.
• Send those two numbers to me – the number of donors and the total amount they have given. The email address is David (at) DevelopmentForConservation (dot) com.

I used the two numbers to calculate the five-year “value” of new members. Here are the unfiltered responses I got:

Before I go any further today, THANK YOU!!! to all who sent me data. I got responses from 20 different conservation organizations ranging from those that recruited fewer than 20 new donors in 2014 to those who recruited more than 1,000.

Last year, 13 responded and 11 of those responded again, giving me comparative data for the two years as well.

I am so grateful – thank you!

And once again, I am impressed by the range of experience. Here are several observations from the data, together with information I requested in follow-up conversations:

• Of the eleven organizations for which I have two years of data, all but two increased the “5yr” value of their members from 2013 to 2014. Several of those increases were dramatic: $150 to $1,200 and $1,600 to $4,500.
• Most of the organizations reporting relatively high values reported (almost apologized) that their numbers were skewed by very large contributions from a few individuals. “Skewed?” No – not skewed. Recruiting very large contributions from a few individuals is the point.
• Most of the organizations reporting high values were also raising money for specific projects. I think this is important – money follows vision, so regularly engaging donors in real conservation projects will result in more money donated across the board.
• Several of the organizations reporting low values are depending on electronic communications tools – social media, eNewsletters, email solicitations, and so on. It’s not that these are without value, it’s that they are poor substitutes for paper and mail. Donors leave, and “5yr” values suffer.
• Gift members – people who are members because someone else gave them a membership – have very low “5yr” values. And that’s not really surprising – after all, they really aren’t even donors yet.

Overall, I would present you with three derivative metrics:

The Average 5 Year Value of the nearly 4,000 new members reported here was $822. This number is heavily weighted toward the five organizations that recruited 3,000 of those new members.

The Average 5 Year Value of members experienced by the 20 organizations, without regard to volume, was $1,196 (!!).

The Median 5 Year Value of members experienced by each organization was $1,110. This means that half the groups had “5yr” values greater than $1,110, and half had “5yr” values less than that.

So where do you fit in? And more importantly, how can you use this information?

I like the idea that we count things that help us make decisions, and we make decisions based on what we learn.

The “5yr” value of your members is not something that just “happens” to you. It is something you can affect. It’s something that you can influence. Standing on the scale every day can help you lose weight. Measuring the “5yr” value every year can help you increase it.

Here are several ideas for improving the “5yr” value:

• Focus on the first-year renewal rate (see The Importance of Recruiting First Renewals). The more people renew that first time, the better your “5yr” value will be. In my blog post from November 2016, I offered several strategies for improving this first renewal rate. They included:
  • Phone call “thank you’s” for joining.
  • Sending a special newsletter right after they join, jammed with information about how land trusts work and how they can plug in.
  • Focusing some proportion of the social media and email communications to people who have just recently joined and may not understand the significance of what they are seeing and reading.
  • Hosting special new member events such as information meetings or field trips especially for new members.
  • Checking in with them using a postcard at the three, six, and nine-month marks to remind them of the difference their contributions make in your programs. Mention especially any leverage their giving made possible, for example as match for federal or state funding.
• Don’t give up on lapsed members. Members lapse because they forget. They lapse because the project they were interested in is no longer in play. They lapse because they get distracted by some other philanthropic priority. Some also lapse because they hate you or they die, but this is not normally the case. So why not go with the “they forgot” theory? Send lapsed members three or four special letters – we miss you so much, or similar – each year. I guarantee that this will be cheaper for your land trust than replacing them with new member recruitment.
• Ask for more money. When you ask for a specific amount of money, you increase the chance that members will respond. And when you ask for larger amounts than they have given before, some will respond with larger gifts. Assuming you send multiple renewal letters, I have no problem asking for $100 in the first letter (for everyone who is not giving at that level or higher to begin with).
• Use paper and use the mail. Some organizations are not getting good renewal results because they have discontinued their quarterly paper newsletter. This is nearly always a mistake. Others are only using email for renewal notices. This is OK, but if you’re losing half of your members each year as a result, it may be costing you more than it is saving you.
• Space your electronic and paper communications throughout the year. And time at least one paper communication for 2-3 weeks right before the first renewals go out.

All of this costs time and money, of course, and we all have a lot to do already, but if you can document that the results over five years include an increase in giving worth hundreds of dollars per member, you can justify the cost.

Using metrics to help you make decisions includes helping you make decisions about how you spend time and money.

OK – your turn. What are you doing to increase your “5yr” value of membership?

Cheers,

-da