Whether you raise funds for your not-for-profit organisation via digital, paper or telemarketing channels, it is essential to measure your actions to be able to know if your fundraising strategy is effective, or not. And much like a recipe, it’s difficult to plan the correct fundraising strategy if you don’t have the right measurements!
Some indicators are common to these 3 channels: digital, mail, and telemarketing. Others are more specific, but remember that it is mandatory to look at these indicators by channel, and not as a whole, because these 3 channels perform completely differently from one another.
In this article, we will not revisit the well-known global indicator, rate of return, average donation or fundraising ROI (Return on Investment) used to measure loyalty operations as well as prospecting operations.
1. The cost of recruiting
Net income from a campaign / # of new donors acquired.
In telemarketing and mailing, it is interesting to measure the cost of recruiting while in the process of prospecting. Simply divide the net income generated by a campaign (gross donations minus the campaign cost) by the number of new recruited donors. This indicator is interesting to look at for each of the files used for prospecting because there can be large variations from one file to another.
You can also apply this calculation to your campaigns dedicated to donor reactivation: if your reactivation cost is higher than your recruitment cost, then it will be more efficient for you to minimize your reactivation campaigns.
In digital fundraising, this indicator is more complicated to measure because the sources of new donors are less clear than those for telemarketing or paper campaigns.
2. The Consolidation Rate
Net income / # of new donors acquired
For all channels, the consolidation rate, in other words, the number of donors who have made a second donation, is an essential indicator for evaluating the effectiveness of your campaigns.
The idea here is to know, according to the entry channel (the first donation) how many new donors have made a second donation. It should be calculated 6 months, 12 months, 24 months and then 36 months after the donor’s first donation. Here again, it is interesting to calculate it according to the origin of the file (for mail and telemarketing campaigns).
It can also be interesting to measure it according to the type of campaign (if your script or if the premium used in your prospecting email is not always identical) or according to the amount of the first donation. You will learn a lot from such an analysis.
But above all, keep in mind that the earlier a donor makes a second donation, the more likely you are to keep them active for a long time!
3. The Churn Rate
Knowing the churn rate (or the percentage of donors you lose within a certain time period) of your base is also essential. To calculate it, you need to calculate in your database the number of active members you had as of January 1, 2020, for example. Then this same number on January 1, 2021. Then, calculate the number of new donors recruited over this period as well as the reactivated donors and apply the following formula:
(Number of active donors as of 1/01/2020 + number of reactivated and new donors in 2020) – Number of donors as of 01/01/2021 = number of lost donors
(Number of lost donors / number of active donors as of 01/01/2020) X 100 = churn rate (%)
Churn rate should be calculated on a yearly basis, however, recurring donors should not be included in this calculation to have a more accurate picture.
For this type of donor, in fact, the calculation should be done with a slight variation. Instead of considering a 12-month period, we recommend a monthly follow-up for the first year, then every 6 months, especially if regular donations are made by credit card (which commonly expire every 3 years).
Churn should be calculated every year in order to estimate how many new donors your not-for-profit will need to recruit over the course of the year in order to keep your asset base the same.
For mailing and telemarketing channels, an annual follow-up is sufficient. In digital, a follow-up every 6 months is required, especially if regular donations are made by credit card.
The average annual contribution per donor as well as the frequency of donations per donor (excluding regular donations of course) are also interesting indicators to watch.
4. Lifetime Value
The ultimate indicator is the Lifetime value.
It measures the value over time of the donors recruited by taking into account all the expenses made on the donors (prospecting and loyalty expenses) and all the income generated since the first donation by these same donors.
Here again, the analysis must be done by channel and then more precisely by type of recruitment message, by premium, by file used, etc.
Only this analysis is capable of shedding light on the channels on which you should invest and a key performance indicator to help build your fundraising plan.
In telemarketing, the reach rate and the rate of promise confirmation are two other indicators to consider.
In digital, you will also need to consider these performance measures:
- The unsubscribe/spam/complaint rate.
- The conversion rate: number of donations/number of “I donate” pages viewed
- The monetisation rate: Number of donations over the campaign period / overall traffic on the campaign
- Within an emailing cycle, the average open rate.
- If you have a media plan in place, you will need to calculate the impression rate, the click rate, the cost per click, the view rate, in addition to the conversion rate and average donation.
As we mentioned before, one of the great advantages of digital charity fundraising is the possibility to test several approaches and evaluate the best strategies. Knowing the right performance indicators to measure and having them easily available is essential to building the most effective fundraising strategy, adapting it when necessary, defining your strategic goals, and optimizing your not-for-profit’s investments. Make sure to take the time during the budget planning period to calculate and study them. The longevity of your fundraising strategy depends on it!
Have you established and calculated your indicators? Congratulations! Now feel free to read our article: build the perfect annual digital fundraising plan in 5 steps.