Busting Myths: “Multi-Channel Donors are More Valuable”

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This is a longer one. If you don’t like details, skip to the ending.

The Question

For at least the last 10 years, I have heard it said often that donors who give through more than one channel are more valuable than those who give to only one channel. Let’s take a deeper look with a typical org’s data.         

Where the Myth Began

First up is the misleading calculation that has been used to justify that Dual-Channel donors are more valuable than Single-Channel donors – Lifetime Value of Single-Channel vs. Dual-Channel Donors:

Simply comparing the LTV of Dual-Channel to Single-Channel donors paints what appears to be a clear picture: Dual-Channel donors aresignificantly more valuable.                                

While technically true from one perspective, in the actual spirit of the analysis, it is false. Dual-Channel has an inherent bias in that it requires a donor to have 2+ gifts, thus inflating their value against many single-gift, Single-Channel donors.              

An Insightful Tweak                       

A more rigorous look controls for the problem above by comparing the value of donors who have given 2+ gifts.                                

When you look at it this way, Dual-Channel donors ($847) are still more valuable than Direct Mail Only donors ($258), but in this case slightly less valuable than Online Only ($936).

What Does This Mean?

Does that mean you should stop cultivating your Online donors in the mail for fear of downgrading them? Absolutely not. Online Only donors are generally harder to retain than Direct Mail. In fact, Online donors are lot less likely to give multiple gifts in the first place. 44% gave a 2nd gift within 3 years vs. 70% for Direct Mail on this file.              

Maybe you’re wondering about one last question – Do Online donors ever convert to Dual-Channel? Actually, yes! Among donors who do give a 2nd gift, Online-Acquired were actually more likely than Direct Mail-Acquired to switch channels on this same file.          

In Conclusion

The numbers don’t really show a ‘Multi-Channel’ donor to be more valuable than an Online Only donor when you make it a fair fight.  Far more important than Multi- vs. Single-Channel is that a donor who makes a second gift is much more valuable than one who only gives one. If Direct Mail is responsible for many of the second gifts from Online-Acquired donors for your org, it’s still very important to cultivate these folks through the mail until they lapse.                               

2 Comments

  1. avatar

    Joe – These online donor values are impressive. Did this particular organization actually have a targeted digital acquisition program (meaning some sort of media buy)? Based on what I’ve seen, I’m guessing not. These numbers are inline with what I see when a client simply captures donors online that could have been driven by any number of channels. The more accurate way to look at these numbers from a media planning perspective is to break-out unattributed online acquired donors from digitally targeted online acquired donors. If my assumption is correct, you are creating a false view of the fundraising world, because you’ve just made direct mail acquisition look like a waste of money compared to digital marketing. Please clarify.

    Reply
    • avatar

      Hi Andrew, thanks for your questions.

      I think you’re reading into a few things I’ve not said and I’m happy to go into more detail.

      For all our Direct Mail acquisition efforts, we match back to the prospect address and include several types of online and other gifts toward their net revenue calculation. For this particular client, about 30% of their new online donors in FY19 so far received Direct Mail solicitations during the period they made their gift. That’s a pretty typical number nowadays. Naturally, this impacts the way we evaluate Cost-to-Acquire and the relative value of DM Acquisition vs. other channels overall.

      If you’re thinking I’m de-valuing Direct Mail, it’s because you’ve never heard me wax poetic about DM donors. They are harder and harder to come by, but as opposed to their online and event peers, they actually retain YOY and usually they’re the channel most responsible for generating future General-to-Major upgrades. I love them!

      Reply

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