Different people are different.

Wow.  That was a quick blog post.  Seth Godin, eat your heart out.

“What’s that, Roger?”  You think we should talk through the implications of that pity declaration a bit more?  OK…

Different people are different.  Likewise, different donors.  Donors vary by preference, channels, identities, and more.  Thus, Lifetime Values vary by these same things.

That means if asked if you would rather get a mail donor with a Cost To Acquire (CTA) of $40 or an online donor with a CTA of $30, your answer should be “it depends on their lifetime value.”

So how do you segment by Lifetime Value?  We’d start (of course) with donor identity.  This is often the most predictive of lifetime value, because it’s about who the donor is, not what channel they may have happened into.  We’ve posted on how a disease charity’s donors with the disease had double the average lifetime value of those who didn’t have the disease.(also here). Moreover, we’ve seen how this value varies by more than channel segmentation does.

That said, there’s a great deal you can learn from acquisition source for lifetime value when you don’t have identity information Two pieces of data came out recently along these lines.

The first is from Steve MacLaughlin and Blackbaud.  They just published (and by published, I mean tweeted) donor retention numbers across channels:

Understanding donor retention across different channels is key to fundraising success. https://t.co/TWkWnD8DAp pic.twitter.com/2reUKM2Y10

— Steve MacLaughlin (@SMacLaughlin) January 19, 2019

Since the biggest factor in Lifetime Value is retention (if you are curious why, we’ve done the math with the ten-percent genie here), some of these are stark differences.  A good number of folks who segment by online versus offline will be surprised to see first-year retention on email as a third higher than on digital ads (I know I was, at least!).  Similarly, DRTV and F2F can often be lumped together as sustainer acquisition, when the retention differences are significant.

They also found that payment method mattered with first-year retention at 30% for cash/check, 34% for credit card payment (but not online inputted), 67% for direct debit (no surprise there), 27% for online payment, and 20% for everything else.

The second bit of data is from public broadcaster WETA.  The full piece is up here and is well worth a read. They looked at Lifetime Value by different means of acquisition — and saw stark differences:

For example, a direct mail donor looks very poor in year one; were you looking just at that, you wouldn’t pay for another stamp.  But because of higher retention rates and increasing average gifts, mail donors passed online donors for value in year five (and don’t look back, as they tend to also be more likely to leave bequests).

One category of particular note is “Passport”.  That’s WETA’s streaming service that you can get at the $5 per month level.  Originally, WETA thought these donors of less value than a $10/month pledge donor through on air TV or radio campaigns.  However, these donors had higher retention rates (55% versus 37% for TV) and their giving was more automatic because they weren’t giving to get the tote bag or Hamilton’s America gift set.

(I sympathize; while I might not become a recurring donor, I personally wouldn’t throw away my shot to get a Hamilton gift set.)

This also illustrates the value of a content-based reciprocity-focused approach to getting constituents that we talk about here.  You may not have the content library of a WETA, but you can create content that is of enough value to get someone’s contact information.  In an example I’ve given before and will give again, I’m an Autism Speaks donor because, ten years ago when my daughter was first diagnosed, their 100 Day Kit helped us figure out which way was up.

These data show content approaches can be valuable and on mission.  If this can be a way of the future for acquisition, the future looks a little brighter.

In fact, we have a video on this very topic:

Of course, both identity-based segmentation for Lifetime Value and content-based acquisition rely on the same thing: people being willing to give up their personal information to have a more customized relationship in the former case and have any relationship with you in the latter.

Will people give you their info?  That’s what we’ll talk about on Friday, along with a relevant discussion of the sex lives of Danish people.  You won’t want to miss it.

Nick

Postscript: I spoke with Brandon Hemel of WETA who did the additional analysis: my apologies to him and to you, the reader, for not having spoken with him before publishing. He wanted to give the piece some additional context, namely:

1. Looking at donor value on an individual basis, Passport donors were less valuable than pledges and online donors because of the lower average gift, but they still have a very high sustainer retention rate ~ 73% after 12 months of giving. The original graph shows the total donor value and thus takes into account the higher quantity of Passport donors. Still a very strong showing for the Passport donors because of the lower acquisition costs (compared to direct mail or canvass), but not as good as I made it look initially. Direct mail and canvass net income values are negative in year one because it does factor in acquisition cost.

2. Brandon also let us know that this was the best single year for Passport donors – they’ve worked hard to get the lifetime value to this level. And shows that a lot of low dollar sustainers can be high value for your organization if they have a reason to keep giving. However, your mileage may vary looking to replicate their success.

Thank you to Brandon for reaching out to give additional context to our readers and, once again, my apologies for not having these in the original.