What Risks Are You Willing to Take?
The Irish satirist Jonathan Swift once quipped, “He was a bold man who first ate an oyster.” It makes you wonder, doesn’t it? Who was the person brave enough to crack open that shell and take a chance on something entirely new? This spirit of boldness is relevant to us as fundraisers and marketers—we’re probably not taking enough risks. Testing new ideas, challenging norms, and experimenting with innovative approaches are often the keys to success, yet how often do we find ourselves sticking with what’s safe? Are You Testing Enough? How many times have you embarked on a project you were certain would work, only to see it fall flat? Conversely, how many times have you doubted a new idea, only to be surprised when it took off? Testing isn’t just a good practice—it’s crucial. Even the most experienced pioneers in fundraising and direct marketing have been proven wrong and learned from their testing processes. Some of the best innovations come from what seem like the riskiest, most contrarian ideas. The key is to test everything: from your offers and messaging to your donor outreach methods and event strategies. The Importance of a Contrarian Approach Throughout direct marketing history, many of the greatest successes have come from taking a contrarian approach. Here are a few lessons learned from years of testing: Long letters can outperform short ones. Simple language and short sentences, even with highly educated audiences, are effective. Asking again from recent donors, rather than waiting, can bring in more gifts. Postal mail, while some say it’s fading, remains powerful. Testing is about embracing these unconventional approaches and seeing what sticks. You won’t know until you try, and the results might surprise you. What Should You Be Testing? The short answer? Everything. You can test: Different types of appeals or offers to your donors Various letter signers or subject lines in email campaigns Packaging designs, list segmentation, and reply devices Even the format and approach of events or new channels like ConnectedTV The opportunities for testing are endless, and testing helps refine your strategy, leading to better results and long-term success. So, what risks are you willing to take today? What can you test to uncover a breakthrough in your fundraising or marketing? Embrace boldness, and you might just discover the next great idea that will propel your organization forward.
What Risks Are You Willing to Take?
The Irish satirist Jonathan Swift once quipped, “He was a bold man who first ate an oyster.” It does make you wonder, doesn’t it? Who was that person brave enough to try something entirely new? Whether it’s cracking open an oyster, trying a mushroom, or experimenting with an unfamiliar dish like blood pudding—there’s a valuable lesson here for fundraisers and marketers: we’re often not taking enough risks. Are You Testing Enough? How many times have you started something you were sure would work, only to find it didn’t? Or maybe you doubted someone else’s seemingly outlandish idea—only to be proven wrong when it succeeded. These experiences highlight a key truth: testing is crucial. The most innovative breakthroughs often come from taking risks and experimenting with different approaches. It’s the contrarian ideas—the ones that defy convention—that can lead to unexpected success. The Power of Testing in Fundraising What should you be testing? Almost anything and everything. From the offer you present to donors, to the way you communicate with them, to the timing and method of your outreach—there’s always room to explore new approaches. Some examples of things to test include: Letter signers and formats List segments and targeting Postal mail vs. email outreach Event recruitment strategies It’s not just about direct mail—it can be your web page, email marketing, or even newer methods like ConnectedTV. Testing allows you to learn what works and what doesn’t, helping you refine your strategy and improve your overall effectiveness. The Importance of Taking Risks Fundraising, like many aspects of life, often rewards those willing to take calculated risks. If you only play it safe, you might miss out on significant opportunities for growth and innovation. Being bold in your approach—whether that’s testing new strategies or pushing the boundaries of what’s possible—can lead to unprecedented results. So, what risks are you willing to take? What tests can you start running today that might lead to breakthroughs for your cause? Taking risks isn’t easy. But the rewards can be enormous. Let’s embrace the bold mindset needed to drive real impact and Go Big!
Would a Purple Cow Get Your Attention?
If you want to stand out and attract a loyal donor base, you need a strategy that cuts through the noise. One principle that can help you achieve this is positioning—a key part of building a powerful brand. In last week’s example of the Highland County Maple Festival, we explored how a small community positioned itself to draw 50,000 visitors to boost its local economy. But it’s not just about positioning—you need differentiation to make your brand unique, just like a Purple Cow. What is Differentiation? Differentiation is about visually standing out in the marketplace. It’s how you depict your “hole in the marketplace,” the unique space your organization occupies. Without strong differentiation, your message blends in with everyone else’s. Think about it—when your marketing uses generic images of meetings, receptions, or press conferences, you lose the chance to make your organization distinct. These are images everyone uses. Becoming the Purple Cow Marketing guru Seth Godin uses the idea of a Purple Cow to explain how important it is to be remarkable. In a field of regular cows, a Purple Cow would stand out, right? That’s what your branding and communications need to do. Highland County, for example, used differentiation by promoting the unique process of tapping maple trees for syrup in the heart of the Virginia mountains. Their messaging wasn’t just about another festival; it was about a one-of-a-kind experience tied to their location. Applying Differentiation to Your Cause How can you use differentiation in your fundraising or nonprofit marketing? Start by considering what truly sets your organization apart. If you’re focused on grassroots efforts, show real, active engagement in the community. If you work on public policy, illustrate the direct impact of your initiatives. Your visuals and storytelling should highlight the core of your mission in a way that no one else can. Build a Powerhouse Brand Differentiation is essential to creating a brand that commands attention and loyalty. When your audience understands what makes you different, they’ll be more likely to commit to your cause, support your initiatives, and keep giving. Are you ready to Go Big with your branding and fundraising strategy? Let’s dive into how you can leverage differentiation for success!
How Do You Allocate Your Fundraising Resources?
You’re determined to Go Big with your cause, but there’s a challenge: limited resources. Where should you focus your precious fundraising dollars? According to renowned fundraiser Roger Craver, here are the probabilities: 60-70% chance of securing additional gifts from existing donors. 20-40% chance of re-engaging recently lapsed donors. Less than 2% chance of converting a new prospect into a donor. Given this, the question becomes, Where should you invest? It might seem obvious—focus on existing donors with the highest likelihood of giving again. But while retention is critical, if you solely rely on current donors, your organization will likely shrink over time due to natural attrition. Some donors will inevitably stop giving due to changing circumstances. On the other hand, if you invest all your resources into new donor acquisition, the cost can be overwhelming, especially when only 2% of prospects typically respond. The Power of Donor Lifetime Value (LTV) The real key is understanding your Donor Lifetime Value (LTV). This metric helps you balance your investment between acquisition and retention, showing you how much a donor is worth over their entire relationship with your organization—not just their first gift. LTV transforms your approach. For example, let’s say a donor initially gives $100, but over the course of several years, they continue to give, ultimately contributing $1,000. Suddenly, the investment in acquiring that donor looks a lot better. How to Apply LTV to Fundraising Strategy Consider this: Would you be willing to spend $100 to acquire a donor who might contribute $1,000 over the next 10 years? Understanding your Donor Lifetime Value gives you the confidence to invest strategically in acquisition while retaining valuable existing donors. The path forward is a balance—acquiring new donors to grow, while keeping your current supporters engaged and loyal. So, do you know your organization’s LTV? If not, it’s time to calculate it. Once you do, you’ll have a powerful tool to make smarter decisions about where to invest your fundraising dollars. Ready to Go Big? Knowing your Donor Lifetime Value will empower you to allocate resources wisely, maximize your fundraising potential, and truly Go Big with your mission.
What Can Scrooge McDuck Teach Us About Fundraising?
Do you think Scrooge McDuck, the famously wealthy cartoon character, would be an easy target for fundraising? Maybe you’ve thought that fundraising is just about finding wealthy individuals who are sitting on piles of cash, ready to give. If only it were that simple! In reality, successful fundraising is far more complex. It requires building relationships, understanding donor motivations, and most importantly, leveraging Donor Lifetime Value (LTV) to shape long-term strategies. The Myth of Easy Money Much like the fictional Scrooge McDuck, wealthy donors aren’t just waiting for you to ask for money. They usually have well-developed ideas about where they want their resources to go. This makes the work of a fundraiser challenging, particularly when trying to acquire new donors. But here’s where the power of LTV comes into play. When you focus on the long-term value of a donor, you’re not just thinking about that initial gift but the lifetime of contributions and engagement that follow. A Common Scenario: Maddie and PRoGI Imagine this: You’re the Vice President for Development at a nonprofit organization called Paving the Road with Good Intentions (PRoGI). Your boss, Malcolm Triestodowell, just got off the phone with a concerned board member, Madeleine “Maddie” Gottrocks. Maddie and her husband, Sam, are generous donors, and she’s now raising concerns about the cost of fundraising. “How can we be spending more on direct mail than we’re bringing in?” Maddie had asked. She thinks it’s a waste, and you need to explain why it’s not. Here’s the key: New donor acquisition is rarely profitable right away, but when you calculate Donor Lifetime Value, you can see that what seems like a loss at first can turn into a massive gain over time. The Importance of Donor Lifetime Value When Malcolm mentions Maddie’s concern about fundraising expenses, your response is crucial. You need to explain that investing in new donors upfront often costs more than you initially get back. However, over time, those donors contribute far more than that initial gift. For example, let’s say PRoGI spent $125,000 on a direct mail campaign and only raised $50,000 from new donors. That looks like a loss—until you factor in lifetime value. Those new donors will continue giving in future years, and their total contributions will eventually far exceed the original investment. And it’s not just the individual giving. New donors often bring in others through their networks, helping the organization grow even more. Moving Forward When faced with a situation like Maddie’s concerns, here are some steps to take: Educate your leadership and board about the long-term benefits of donor acquisition. Use specific data to show how past donor investments have paid off over time. Calculate and track your Donor Lifetime Value. Knowing the long-term financial impact of your donors helps you make informed decisions and invest wisely in fundraising strategies. Leverage relationships. If Maddie is passionate about a specific fundraising strategy, consider her ideas, but also explain how your current efforts are part of a broader strategy for sustained growth. By understanding and applying LTV, you can navigate tough conversations with donors and board members and position your organization for long-term success.
The Power of Donor Lifetime Value: A Lesson from PRoGI
“You were right about Maddie and Sam,” Ponos said to Malcolm Triestodowell, president of PRoGI. “Over the years, the Gottrocks have been incredibly generous donors.” This conversation between Ponos, the VP for Development, and Malcolm reflects a key insight that many nonprofits might overlook—the importance of donor lifetime value. It’s not just about the first donation; it’s about the cumulative impact over time. Ponos continued, “Their first gift was $2,500 back in 2008, and there were a few years where they gave only $1,000. But since then, the Gottrocks have contributed a total of $71,500 to PRoGI.” This scenario plays out every day in nonprofits across the country. Organizations often look at one-time gifts, but they miss the long-term potential of those donors. Understanding and leveraging donor lifetime value can change everything. What is Donor Lifetime Value (LTV)? Donor lifetime value measures the total contributions a donor is expected to make over their engagement with your organization. It’s a crucial metric for guiding strategy, determining how much to invest in donor acquisition, and fostering long-term relationships. In the case of PRoGI, Maddie Gottrocks’ initial gift was just the beginning. Ponos explained how Maddie’s outreach to 65 friends in 2016 yielded only seven donations, totaling $3,100. It seemed insignificant at first glance. But fast forward, and those seven donors have now given a combined $51,250. And the ripple effect continues—one of Maddie’s friends, Mrs. Dineros, endorsed PRoGI for a $25,000 grant from the Scrooge McDuck Foundation. This is the true power of understanding and maximizing donor lifetime value. The Key to Long-Term Growth: Invest Now, Reap Later Malcolm, the CEO, initially saw Maddie’s appeal and other fundraising efforts as short-term disappointments. He couldn’t understand why some campaigns seemed like “losses.” But as Ponos pointed out, the return on investment is not immediate—it’s exponential over time. For example, PRoGI once ran a direct mail campaign that cost $75,000 but generated only $28,000 in initial donations. At first glance, this looks like a $50,000 loss. But those initial donors have gone on to contribute $145,000 over the years, more than covering the initial shortfall. This is why understanding LTV is so important. It helps you see the bigger picture and make informed decisions on where to invest for long-term growth. How to Apply LTV to Your Strategy Focus on Retention: The first gift is just the beginning. How you thank, engage, and steward your donors afterward determines whether they become long-term supporters. Think Long-Term: Immediate returns are great, but the real value lies in building relationships that grow over time, just as PRoGI saw with their direct mail donors. Segment and Prioritize: Identify your high-value donors and focus on cultivating those relationships. Look for ways to move them from one-time givers to major supporters and even legacy donors. Start Building Donor Loyalty Today If PRoGI had ignored Maddie’s seemingly small appeal or abandoned their direct mail efforts, they would have missed out on significant long-term donations. Understanding and applying donor lifetime value enables your organization to Go Big by maximizing the potential of every donor relationship.
The Stew Leonard’s Strategy: Lessons for Donor Lifetime Value
Do you know about Stew Leonard’s, the supermarket chain hailed as the “Disneyland of Dairy Stores”? With just seven locations across Connecticut, New York, and New Jersey, Stew Leonard’s has cultivated an almost cult-like following among its customers. Why? One major reason is their focus on customer lifetime value, with the typical Stew Leonard’s shopper contributing more than $50,000 over their lifetime. What can you and I learn from Stew Leonard’s approach to building loyal customers, and how can we apply these lessons to strengthen donor relationships? The Power of Donor Lifetime Value (LTV) Just like Stew Leonard’s measures the lifetime value of a customer, nonprofit organizations must understand the lifetime value of their donors. Knowing this number provides critical insight into: Strategic Planning: You can make informed decisions on how to allocate resources for acquisition, retention, and growth. Long-Term Growth: Donors are not just one-time contributors; they represent long-term partnerships that fuel your mission. Impactful Stewardship: Once you understand LTV, you can refine your approach to keep donors engaged and inspired. Stew Leonard believed that losing one unhappy customer didn’t just mean losing a single transaction; it meant losing tens of thousands of dollars in potential future revenue. The same concept applies to donors: every donor relationship represents a long-term opportunity for growth. Key Takeaways for Fundraisers Personalized Stewardship: Just like Stew Leonard’s stores focus on delivering high-quality products and customer experiences, nonprofits should focus on meaningful and personal donor engagement. A simple “thank you” or acknowledgment can make a huge difference. Retention is Crucial: Stew Leonard’s motto, “Anytime you are not 100% satisfied, we will refund you as quick as a flash,” shows their commitment to retention. In the same way, nonprofits should ensure donors feel valued and appreciated to prevent attrition. Value in Every Interaction: Every donor interaction should be treated as an opportunity to reinforce trust and deepen their connection to your cause. Consistent communication, updates, and involvement help build long-lasting donor loyalty. How to Calculate Donor Lifetime Value Stew Leonard’s could lose $50,000 by disappointing just one customer. For nonprofits, knowing the value of each donor helps you avoid similar losses. Calculate your donor LTV by factoring in: Average Donation Size Frequency of Donations Donor Retention Rate Planned or Legacy Gifts With this knowledge, you’ll be better positioned to maximize each donor’s lifetime impact and tailor your fundraising efforts accordingly. Start Thinking Long-Term The key to long-term fundraising success lies in understanding and maximizing Donor Lifetime Value. Just as Stew Leonard’s built an empire by focusing on every individual customer, nonprofits can go big by nurturing their donor relationships for the long haul.
Unlocking the Power of Donor Lifetime Value
Do you know the lifetime value of your donors? Understanding your Donor Lifetime Value (LTV) is key to unlocking tremendous growth for your fundraising efforts. With this knowledge, you can develop effective strategies that maximize the long-term value of every donor, helping you to Go Big! LTV represents the total value a donor contributes over their entire relationship with your organization. This metric is critical because it allows you to: Invest wisely in new donor acquisition. Enhance donor retention and long-term engagement. Allocate resources effectively for events, major gifts, planned giving, and stewardship programs. How to Calculate Donor Lifetime Value Calculating your LTV helps you build a clear roadmap for growing your organization. By understanding how much a typical donor will contribute over time, you can make informed decisions about: Which strategies will deliver the best return on investment. How to focus your efforts on retention, major gifts, and planned giving. Where to allocate staff and resources to build stronger donor relationships. Knowing your LTV enables you to tailor your fundraising plan to achieve sustained growth, turning one-time contributors into lifelong supporters. Why Donor Lifetime Value Matters When you focus on the lifetime value of your donors, you shift from short-term thinking to long-term success. Rather than measuring success by immediate returns, you gain a deeper understanding of the long-term potential every donor represents. This approach helps you: Boost donor retention by creating meaningful engagement strategies. Cultivate major gifts by building strong, lasting relationships. Identify opportunities for planned giving and legacy donations that can significantly impact your mission. Maximizing LTV isn’t just about raising more money—it’s about creating lasting, transformational change. When you prioritize the donor’s journey and foster ongoing engagement, you ensure the long-term health of your organization. Start Growing Your Donor Lifetime Value By focusing on Donor Lifetime Value, you empower your organization to create meaningful, lasting relationships that fuel its growth. Every interaction becomes an opportunity to build trust and deepen the commitment of your supporters, ultimately leading to larger gifts and increased impact.
The Key to Donor Retention: Plugging the Leaks
Do you remember Ponos? She’s the dedicated VP for Development at the fictional nonprofit, PRoGI (Paving the Road with Good Intentions). Recently, Ponos faced a major challenge—defending her new-donor acquisition strategy to a skeptical board member, Maddie Gottrocks. Thanks to a tip from John Davis, VP of Growth at the Leadership Institute, Ponos was able to demonstrate the value of PRoGI’s long-term donor strategy using a Donor Performance Calculator. Her data showed the enormous power of Donor Lifetime Value (DLV), emphasizing how investments in new-donor acquisition pay off over the long haul. But there was a problem. The retention rates for PRoGI’s donors were worryingly low. While most organizations retain 45-60% of first-time donors, PRoGI was struggling to keep more than 30-35% of their donors coming back for a second gift. Even worse, only 60% of these donors made a third contribution, compared to the industry standard of 80-90%. Why Is Retention So Low? The challenge Ponos faces isn’t unique—many nonprofits struggle with donor retention. As Mitch Nozka insightfully pointed out, it comes down to two things: The “Faucet”: You need a strong strategy to bring donors in. This includes direct mail, advertising, and digital communications. The “Bucket”: You need to keep donors engaged once they give. If there are too many holes in your bucket, they’ll leave. Mitch nailed it. If your donors don’t feel valued, heard, or surprised by your level of care, they’re likely to walk away. Plugging the Holes: Why Donors Leave Retention is all about building strong relationships. Something as simple as a handwritten thank-you note can make all the difference. If donors aren’t impressed or properly acknowledged after their first gift, they may leave without ever realizing their full Lifetime Value. This idea was highlighted in a 2014 experiment conducted by John Davis at the Leadership Institute. By sending $50-99 donors a jar of honey—previously reserved for $100+ donors—he found that gratitude increased future giving significantly. The takeaway? Gratitude matters. And showing it early can stop donors from slipping through the cracks.
What Makes a Donor Walk Away After Their First Gift?
Have you ever been ghosted by a donor? It’s frustrating, especially when you don’t know why they stopped giving. This phenomenon is more common than you might think—many organizations struggle to keep donors engaged after their first contribution. In fact, barely half of first-time donors ever make a second gift. This statistic highlights a major challenge in donor retention, but also an opportunity to strengthen your approach and build lasting relationships. The Power of Donor Lifetime Value When we talk about long-term donor relationships, we need to think about Donor Lifetime Value (DLV). Every donor has the potential to become a lifelong supporter. Consider the stories of major gifts that started small—like my friend Bill, whose initial $250 contribution eventually grew into a $4 million estate gift. Or the $25 million estate gift from John Engalitcheff, and Joan Kroc’s incredible $1.5 billion donation to the Salvation Army. These mega-gifts aren’t typically spontaneous acts of generosity. Instead, they’re the culmination of years of relationship-building and trust. It starts with the first gift, but the real value comes from nurturing that connection over time. Why Do Donors Stop Giving? Losing a donor after their first gift can cut off not just future contributions, but the potential for a major or legacy gift. So, what causes donors to walk away? We’ll explore the key reasons in the next blog, but for now, I’m curious—what do you think is the biggest reason donors stop giving? Is it poor communication? A lack of follow-up? Or something else entirely? How to Keep Donors Engaged To prevent donors from ghosting you, you need to build a strong foundation of trust, communication, and gratitude right from the start. In the next post, we’ll dive into specific strategies to help you retain those first-time donors and turn them into lifelong supporters.
