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

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.                               

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