Silver and Gold: The Relative Value of New and Old Donors

“Make new friends, but keep the old. One is silver, the other is gold.” Many of us learned that couplet as children, and may have come to appreciate the sentiment behind it more and more over the years. So I wonder, does the same sensibility hold true for donors the same way it does for friends? Are new donors the silver to an old donor’s gold?

Fortunately, the verdict seems to be in on this one. The consensus among industry leaders is that, shocker, gold donors are more valuable than silver donors by nearly every metric. An aptly-titled blog (The Neglected Gold Mine of Lapsed Donors) from DonorVoice’s The Agitator goes as far as to say “If your organization positions its lapsed-donor efforts at a lower priority than other efforts, then it’s time for new thinking.”

Approaching the question through the lense of cost, the AnalyticalOnes’ Guide to Fundraising Metrics notes “it’s always more expensive to acquire new donors – you must buy a list or purchase advertising of some sort – than to reactivate a lapsed donor.” They tend to favor reactivating lapsed donors for more emotion-driven considerations as well: “a lapsed donor gave to you at least ONCE in the past. It could have been 10 years ago.That means that donor has more of a relationship with your organization than a prospective donor who has never given to your organization before.” The article from The Agitator echoes that sentiment: “Lapsed donors are more likely to respond than individuals with no prior relationship to your organization. Yet despite their obvious value it continually amazes me that renewing or reinstating lapsed donors often draws far less creative energy, thought and spend than acquisition efforts.” Indeed, a donorCentrics report by Target Analytics demonstrates that the 12-24 month donor value for reactivated donors is higher than that for new donors. Clearly, the cost to reactivate is generally lower than the cost to acquire, and the delta is typically significant.

So, now that we know that focusing on reactivating lapsed donors, as opposed to acquiring new ones, costs less and has a higher yield, what’s the prescription? Say it with me: “IT DEPENDS!” But in all seriousness, the importance of offsetting donor attrition in any nonprofit demands critical and contextual thinking about how to effectively engage your prospects at scale. The good news is, we’re pretty confident focusing on lapsed donors is a great place to start.

If you’re interested in reactivating your lapsed donors, we are working with a number of select nonprofit partners on targeted campaigns to bring old gold back into the fold (say that five times fast). The process starts, as it usually does, with analyzing your data to identify individuals who have given in the past, but not recently. From there, we work with the organization to strike a balance between standardization (to drive scale) and customization (to drive engagement). As we’ve mentioned in past posts, you can’t be afraid to experiment. Just yesterday at the 2018 Bridge to Integrated Marketing & Fundraising Conference we heard from Disabled American Veterans, who takes a regimented approach to testing with great results. To wit, in one experiment DAV sent nine differing donor-centric packages to lapsed donors in order to determine a best-fit for their organization. If your organization is interest in following DAV’s lead, we’d be thrilled to help you test some alchemy, and make some gold.

Silver and Gold: The Relative Value of New and Old Donors
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