A couple months ago, I argued that cost to acquire (CTA) was one of only two metrics that matter in a deep, comprehensive way. (The other one, for those who like spoilers, was donor lifetime value.)

And yet, CTA can lie.  If one acquisition mail package has a response rate of 1.1% and an average gift of $28, you’d pick that over another with a response rate of 1% and an average gift of $25, right?

All other things being equal, duh.

Here’s the trap – all other things are seldom equal.

I worked with one organization that had a mix of mail acquisition tactics with the big difference being premium-acquired versus non-premium-acquired.  Not shockingly, premiums acquired people in greater numbers, so the donor file was about 60% premium-acquired/40% no premium.  Also, not shockingly, the people who had been with the organization 5+ years and/or the people who had given $100+ were 40% premium-acquired/60% no premium.

In short, premiums acquired more donors and worse donors.

So if you looked at cost-to-acquire by package only, the premium packages won every day of the week and twice on Sundays. But, if you look at value to the organization, the packages without the premiums acquired the types of donors who stick with you and create value without requiring a bevy of tchotchkes.

How does this apply to identity?

Let’s assume that you have a donor identity of people who are directly connected to your mission (e.g., they have the disease you are working to cure, they have adopted a pet from your shelter, etc.) and those who aren’t.  Let’s further assume that those directly connected to the mission are worth twice as much as those not directly connected.

If your “better” performing mail piece was only acquiring those without a connection to the mission and the “worse” piece was acquiring those with a direct connection, it’s clear that you would want to take the lower response rate and average gift to acquire and retain better donors.

This is not a challenge restricted to mail programs.  With online, we measure click-through rates, opens, and impressions often without knowing whether the right people are clicking, opening, and impressed upon.  The face-to-face street canvasser who doesn’t measure commitment likewise is using age as a proxy for quality, if quality is measured at all.

Working from a cost-to-acquire basis obscures all of these weaknesses.  As a result, you can make decisions that look good in the short term, but bite you a year later when your retention efforts fall upon ears that were always going to be deaf.

Retention begins at acquisition – by acquiring the right donors, you’ll make your retention job much easier.

But how do you know if you are acquiring the right donors?  While it’s a good strategy to look back on the acquisition campaigns of yesteryear to determine if the donors ever paid off, it’s not exactly a way to improve your campaigns in real time.

That’s why we’ve advocated for getting feedback from your donors immediately upon acquisition.  When you know things like the donor’s commitment, satisfaction, and identity, you can also make strong predictions about who will retain and how much they will be worth.

Yes, it’s great that you can focus in on donors who are high on commitment, but low on satisfaction, as a well-timed call from donor services can create real value.  But it’s even more important focusing your acquisition strategies on the donors who will matter most and retain best.

Nick