Twitter Updates

    follow me on Twitter

    June 19, 2008

    I still think a penny is worth something

    I hate it when I have to do math, but all this negative chatter I have been hearing here and there about "Causes," poo-pooing the $2.5 million it raised in its first year has forced me to whip out my calculator.

    Here is how it goes: sure, "Causes" may have raised $2.5 million, but with 12 million members, that comes to just a little more than 20 cents per member. Twenty cents! Why that's nothing! Who needs 20 cents, right?

    Well, I do. And my clients do. And I am sure lots of other organizations do. Cause guess what-this is basically 20 cents NET per name because you had to do NOTHING to get the money. You did not have to pay anyone to design a creative piece (mail or email), you did not have to pay anyone to rent a bunch of names, put them through merge, send them to a lettershop or your email provider, etc, etc, etc, and just like that, 2 cents per person magically appears in your bank account. So your CPM was ZERO. Now granted, the 20 cents is an average and there are over 20,000 organizations that this $2.5 million is spread over, but we gotta work with averages here.

    And frankly, as I think most of us nonprofit fundraisers are well aware of, a positive 20 cents net per name in acquisition is a god-sent. Most of us lose money acquiring names. We calculate how much money we are willing to lose in acquisition, not how little positive net we are willing to live with. And even with "warm prospects" like your lapsed donors or names not acquired through direct marketing, breaking positive net in acquisition can be a struggle.

    Another factor to consider is that the $2.5 million raised was donated by about 40,000 of the 12 million users. That's an average gift of almost $63!! I will take that kind of donor any day.

    With 40,000 out of the 12,000,000 members making a donation, thats a "response rate" of about .3%. Not impressed? What kind of open rate, never mind donation rates, is your organization getting for emails? I bet you've mailed a few lists with that kind of response rate in DM and I bet you didn't end up netting 20 cents on them.

    So, some people out there can keep muttering about how $2.5 million is really not worth it. But I hope those of you who got some of that cash are busy figuring out how to develop long-term relationships with all those people who bothered to give you, on average, less than a quarter. I hope you are more focused on how to "renew" donors who aren't actually part of your house file than on finding reasons they are not worth the effort.

    No comments: