The best way to measure your success in direct mail donor acquisition is to examine your cost to raise a donor rather than your cost to raise a dollar.

Your cost to raise a dollar is a perfectly valid metric in direct mail fundraising, of course. By dividing the cost of your mailing by the gross income, you arrive at a number that helps you compare different mailings, compare results across different years, and compare fundraising methods (such as direct mail versus banquets versus telephone fundraising).

But acquisition mailings are different than other fundraising letter mailings in one major respect—you are aiming to raise donors first, donations second. An acquisition mailing cannot be considered a success if it acquires no new donors, regardless of how much money it brings in.

That’s why you need to measure your cost to raise a donor, and watch that number over time to see how it fluctuates when you mail to new lists or mail new acquisition packages.

You calculate your cost to raise a dollar by dividing your net cost by the number of donors acquired. Let me illustrate.

You mail 1,000 packages at a cost of $1 each.
Total cost: $1,000

You generate a response rate of 1%.
Total new donors acquired: 10.

You raise a total of $750.
Which means you don’t cover your costs (common in direct mail donor acquisition).
So your net cost is $250.

Your cost to raise a dollar is $1.33.
Your cost to acquire a donor is $25.

If this sounds like an expensive way to attract new donors, remember that donors acquired through the mail tend to repay the cost of their acquisition with repeated gifts over time, provided that you acknowledge their gifts promptly and personally, appeal to their interests, and mail them often enough.

When you compare the results for your donor acquisition mailings over time, you’ll discover that some lists perform better than others and some packages perform better than others. Your goal is to find the lists and packages that acquire the most donors at the lowest cost.

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About the author
Alan Sharpe is president of Raiser Sharpe, a full-service direct mail fundraising agency that helps non-profit organizations raise funds, build relationships and retain loyal donors. Sign up for free weekly tips like this, and discover other helpful resources, at RaiserSharpe.com RaiserSharpe.com

© 2007 Sharpe Copy Inc. You may reprint this article online and in print provided the links remain live and the content remains unaltered (including the “About the author” message).

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