The Long Term Value of a Donor (and a little dating advice)

If you’re the leader of a nonprofit, you probably know that  the initial value of a new donor is usually no more than between $15 and $50.  While that doesn’t seem like much, the truth is that an initial gift can lead to more support over the lifetime of that donor relationship.

This concept is called Donor Long Term Value (LTV).   So at a basic level LTV translates into how much a donor gives over the lifetime of the relationship that he/she has with a particular organization.

So how does an organization take a one-time gift of $15 or $25 and turn that into more?

Similar to investing in a relationship that brings value over time, nurturing the donor relationship is no different, it takes time, authenticity, and care.

Since Valentine’s Day is looming, let’s provide a little dating analogy.  Let’s say you go on a first date and as luck would have it, the date goes well.  The next day you attempt to connect with that person because a) you want to talk to them and b) you want to let them know how much you enjoyed the time together. Then the process of getting to know the other person progresses.  So you want to know — What movies and music do they like? What’s their favorite color?  Where do they like to vacation?  Before you know it you have a lot to keep track of but you love it, and you go out of your way to remember the details (small and large).  And in return (in a healthy relationship) you will get the same (or more) in return — and then this continues to grow.

Managing the relationship with a donor is quite similar.  What makes it hard is as an organization you have to go about this process of building relationships with what could be thousands (if not more) of individual donors.   To compound the challenge, you have thousands of other groups wanting to “date” and “form a relationship” with the same people you are looking to build a relationship.   In many cases they are already “married,” with some studies reflecting about 86% of giving each year earmarked to a particular cause. That means there is only 14% of the donor universe available for dating – or about $40 billion – it’s competitive for sure.

For the vibrancy of your nonprofit it’s imperative you reach these donors and get them to go on another date with you (give again).  Why? Because retaining donors is more cost effective than acquiring new donors. With some studies showing only 27% of first-time donors give again, but close to 60% give again if they’ve given twice – getting that second date is critical!

So what does this mean?  It means you have to be smarter, more efficient and rely on tools to help you reach and engage more people.  While you may not be able to show up at every house or personally call every donor (though you should call larger donors), you can personalize your donation acknowledgments and thank donors in their preferred method (mail, email). Make sure you authentically learn and keep track of your donors’ passions, their interests, and their goals. Be where they are and engage them there.

So, how do you accomplish this? The good news is there are powerful tools that can help you turn that first interaction into a fruitful, long-term relationship that brings long-term value to your organization.

We’d love to hear from you.   Feel free to email me directly (I can try and give dating advice too, but may be better suited to talk tools and solutions for nonprofits).

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