Time to Update the 5-Year Value of New Members Metric

15 Feb Time to Update the 5-Year Value of New Members Metric

By David Allen, Development for Conservation

For the last several years, about this time, I have posted about a metric I’ve wanted to collect data on – the 5-year-value of new members.

I’ve been asking everyone to look back at the donors who made first gifts (ever) to your organization five years ago and the amount of money that group of donors has given collectively since then.

The division of those two numbers provides an average: the average amount of money a donor recruited five years ago gave to the organization in the five years since their first gift. That’s the 5-year-value of a new member.

Of course, many of those new donors never gave again. Some gave two or three years in a row and then dropped out. And still others gave, dropped, and came back. But the 5-year-value still works as an average.

In 2019 BC (Before COVID), I heard back from 22 different organizations. The range of experience was from $174 at the low end to nearly $4,500 at the high end. And the median was about $1,100. Both 2020 and 2021 were interrupted by the Pandemic. (It’s not too late to recapture that data.)

PLUS – Many land trusts reported record numbers of new members both years. It will be interesting to see how they give over their first five years – data we can report on in 2024 and 2025.

Regardless, let’s do it again!

Here’s what I will need from you, if you’re willing to participate:

• Isolate the members and donors you have who made first gifts to your organization at some point – any point – during the calendar year 2017.
• Now add up everything those donors have given to your organization – as a group – since then (1/1/2017 through 12/31/2021).
• 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.

Note that I do not reveal the names of the organizations when I report on the data.

AND

If you’re willing, I’d like to catch up with the data from the last couple of years as well – again:

• the number of donors who made a first (ever) gift to your organization in 2015 and the total amount those donors gave between 1/1/2015 and 12/31/2019; and
• the number of donors who made a first (ever) gift to your organization in 2016 and the total amount those donors gave between 1/1/2016 and 12/31/2020.

Note that if you gave me data last year, I won’t need it again, but if you didn’t … The larger the data set the more interesting the results will be.

If you also did this exercise in past years, compare the current number with your past results. Are they similar? If they differ dramatically, can you explain why? What can you tell from the trend line, if anything?

Also isolate what it cost you to recruit those members and donors each year. What did you spend on recruitment? Did you try different recruitment strategies? For example, direct mail versus recruitment at events versus friends of Board members? If so, did you use source codes?

Can you now determine whether the 5-year values were different with the different strategies? (If so, I’d love to hear about your experience!)

And now is a good time to isolate what you spent on recruitment in 2021, too, before it gets too lost to recreate later. It will help you with your 5-year metric calculations in 2025! Hint: if you are not capturing source codes already, it’s not too late to start. And you’ll be glad you did five years from now.

This are some of the points I make in workshop presentations:

• A 5-year value between $500 and $800 is a pretty normal. If your numbers are lower, you can probably do better. I’ll bring those ideas back in a future post.
• It can cost as much as $150-200 to recruit a new donor, depending on your method of recruitment. Many recruitment efforts cost less than this, but they can be difficult and expensive to scale.
• The 1-year Return on Investment (ROI) is often negative; it often costs more money to recruit a new donor than that person actually contributes in their first year.
• BUT – the 5-year ROI is pretty good.
• And (hopefully!) none of this includes planned giving.

It’s like a black box with $150 inputs on one side, $800 outputs on the other, and five years of donor communications, engagement opportunities, and renewal notices in between. The more times you plug in $150, the more times you pull $800 out the other side – five years later.

And finally, what are you doing to help improve your 5-year values? What have you tried that is working? What have you tried that isn’t (yet) working?

May I share your experience with others?

Cheers, and have a great week!

-da

PS: If you’ve sent me information about your new donors from 2017 and you’re still hungry for more, try running the same analysis for all 2017 donors. How many donors made donations of any size in 2017 and how much money did those donors gave in the five years since (2017-2021). The division there will tell you the average 5-year value of all your 2017 donors.

PPS: Your comments on these posts are welcomed and warmly requested. If you have not posted a comment before, or if you are using a new email address, please know that there may be a delay in seeing your posted comment. That’s my SPAM defense at work. I approve all comments as soon as I am able during the day.

Photo by Jim Degerstrom courtesy Pixabay