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Jul 30, 2015

The Age of Acquisition

This graph is beautiful. One look at the correlation between the age that a donor is acquired and their LTV is like taking that first sip of coffee in the morning. Ahhh. The r² on this relationship is over 0.85. That means that age alone accounts for 85% of the variation in the LTV.

Of course, upon your second sip of coffee you might choke on this graph. Most organizations are acquiring donors well into their 60s or 70s. A donor acquired at age 50 has twice the LTV of one acquired at age 65.

Think about that. Twice. The. Value.

Of course, this is just one organization. Your organization might be different.

What this really means for this organization is that they can spend twice as much to acquire an age 50 donor, realize more net revenue while still maintain acceptable long-term ROI ratios.

If this graph isn’t making you re-think your donor acquisition approach, well, perhaps you need to wake up and smell the coffee.

*** UPDATE ***
This blog generated a lot of feedback. Primarily around the channel acquired. So, I re-ran the analysis to control for channel acquired. The graph below is of those donors only acquired by direct mail and excluded any donor whose first gift was $10,000 or more. Alas, not as beautiful as the one above, but still, the r² on this relationship is 0.50 and a 50-year old DM acquired donor is worth 1.76 times that a 65-year old DM acquired donor.

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