As we Atlanta Falcons fans know, just because you’re ahead at halftime doesn’t mean that you’re going to win. More is not always more.
We all know that Acquisition Strategy is important for donor long-term value and for a non-profit’s long-term income, but HOW important?
I recently did some analysis for a non-profit, and the numbers were striking – especially when looking at the donor’s initial gift size and the subsequent LTV.
Due to a change in Acquisition Strategy, the new donor average gift jumped 48% from $46 to $68 between FY14 and FY15.
And the projected 5-year LTV for the FY15 new donors jumped 49% over the LTV for the FY14 new donors, from $159 to $237.
Not surprisingly, with the new acquisition strategy, the client had a decrease in number of new donors. But, with a 10% decrease in number of new donors, there is still a significant increase in revenue over 5 years:
5,000 new donors X $159 LTV = $795,000
4,500 new donors X $237 LTV = $1,066,500
If you factor in cultivation costs at an average of $7/year per donor (and the savings from not mailing the 500 donors NOT acquired) that’s a net increase of $289,000 over 5 years.
If you continue this same acquisition strategy for 5 years, that’s a net increase of $1,445,000 for those new donors.
So, all told, acquiring more valuable donors to start with makes a big difference down the road.