A few weeks ago, Kevin Schulman here ignited a firestorm by suggesting a F2F model where the canvassing vendor does some or all the financing for this new donor acquisition.  There were some well-thought-out concerns about the history of financing acquisition and about the viability in today’s marketing.

Regardless of on which side of that debate you fall, I’d like to argue that the incentive structure for most F2F firms gives them incentives that are different from your nonprofit’s incentives.

Let’s take a firm that charges an acquisition fee of $275 for a $25 monthly donor.  Which would they rather have?  1000 donors with a retention of 60% or 800 donors with a retention rate of 80% (after clawback)?

And which scenario would you rather have?

The math for the firm is simple.  They get $275,000 for 1000 donors or $220,000 for 800 donors from the nonprofit.  They clearly want what’s behind door number one.

For the nonprofit, at the end of a year, you have 600 donors in scenario one and 640 donors in scenario two.  And you paid more for scenario one than in scenario two.  More longer-term donors at a lower price?  Sign me up for scenario two.

Put more simply, the vendor’s incentive is for quantity; your incentive is for quality.

I talked about this last week in micro.  There the example was one canvasser who brought in quantity and another who brought in quality. The illustration also had the benefit of being an actual case story with only the names changed to protect the innocent (and, in the case of the quantity-over-quality firm, the guilty).

Nor is F2F the only channel where this happens.  Your telemarketing vendor or list broker or online advertising guru looks like a guru when s/he can cut cost-to-acquire by 20%.  But at what cost?

That’s yet another reason why it’s important to require quality measures at point of acquisition.  Your vendors will push back, saying it’s to difficult to ask a few questions  after a telemarketing call (it isn’t) or that requests for feedback will suppress response rate (they don’t) or that it’s impossible to tell the value of a donor until time has played itself out (not with good modeling and the right information).

It’s this pushback from vendors that makes it so important to have this quality measurement information.  You need to change the incentive structure – to make sure that those responsible to acquire also have a responsibility to retain.

When you have this information, you can make great strides in retention, as you can see in the example below.  But you must be the one to do it.  After all,  you’re the only one with the incentives to do so.

Do your vendors provide quality metrics at the point of acquisition?

Nick