You are what you measure.
So goes the expression. An expression I personally believe in and the older I get and more experience I have, I think the importance of such a statement only grows. Measurement doesn't just show progress or results but shows insights and, perhaps most importantly, shapes behaviour. So measuring, when it comes to nonprofit's and fundraising, is a very under used tool and, hopefully, this post will be helpful in understanding measuring, how to go about it, and what are some things that you should measure.
Below, I'll list 4 metrics that are of utmost importance to the overall health of your fundraising program but I want to discuss four common mistakes I see with nonprofit's when it comes to tracking fundraising metrics:
- Trying to track too much too often
- Tracking the noise and not the signal
- Not tracking the really important things
- No ability to track the really important things
1. Trying to track too much too often
Particularly in the digital world, there is SO MUCH you can track. Average time on site, bounce rates, traffic source growth, page views, etc. And then you can segment and split up all this data - by source, by region, by time. It can be an intricate labyrinth that, even if all that data was useful or gave you insights (spoiler alert: not all of them do) just keeping up with the tracking becomes the task as opposed to understanding and interpreting them.
Some metrics won't even move very much in a week, month or even quarter so spending the time to update your spreadsheet, dashboard, or whatever it is you're using to track (another discussion) is truly a waste.
For our clients, we try to have no more than 9 key metrics for the year and we use tools like Fundraising Report Card to get other historical metrics once every 6 months (or quarterly at most) to keep us focused and our time spent tracking as lean as possible so we can spend more time interpreting and strategizing.
2. Tracking the noise and not the signal
This is a tricky one but the idea here is that you may look at the high-level metric, like total revenue, without looking at the underlying indicators which may be a more accurate reflection of your work and goals (like transactions). Another example is tracking traffic instead of conversions for your website. You can get a lot of traffic but if no one is signing up for an email, 'engaged', or making a donation then, while there is value in the visit, it's not the true value you are looking at.
3. Not tracking really important things
That's what the 4 things is really about but donor retention is one of THE most important metrics for your entire organization. And yet, in my experience, very few organizations even know what it is and what it has been let alone can tell you what it is and what they're doing to change or improve it. The number of Facebook 'Likes' your page has is irrelevant if you are keeping donors at a 30% rate. Not all metrics are created equal and therefore they should not be treated, tracked, and discussed equally. It sounds simple but the hard work is figuring out the important stuff and being rigorous in tracking those metrics.
4. No ability to track the really important things
Now part of the reason some really important things are not tracked is because the systems, tools, and infrastructure won't allow for it. For online donations, for example, not having Goals or eCommerce tracking in Google Analytics won't allow you to see which traffic sources, campaigns, strategies, etc. lead to donations - or not. So you're flying mostly blind.
Lifetime Value (below) isn't the easiest thing to track - although modern CRM's are getting better - so then, because it's hard to track - something so crucial to your organization just doesn't get tracked. And while I have empathy, there is no excuse.
If you want to lose weight, you buy a scale - how else will you know if you're having success? Yet many organizations set goals like fundraising growth but refuse to 'buy the scale' and choose to use the abacus they already have. Or they get a third-hand partially broken scale. Or pay the milkman to tell them if they are losing weight (no offense to milkmen, just trying to pick someone who you shouldn't pay to tell you your weight).
So those are some mistakes I've seen organizations make when it comes to data and metrics, but what are some actual metrics they should track and care about Glad you asked! Here are...
4 Fundraising Metrics You Should Care More About
1. Lifetime Value
When I build campaigns I always choose One Metric That Matters. This is the one thing, more than any others, that I'm interested in because it is most crucial to achieving and showing success. I believe that Lifetime Value (LTV) is that One Metric That Matters for quality fundraising departments. Or it should be.
And the biggest thing that helps boost LTV? It isn't your fundraising ... it's your communications. You need to talk your donors more often, more specifically and about what THEY want to hear, not what you want to say. If you do, you'll start increasing their and your LTV and ultimately your overall fundraising results over time.
2. Donor Retention
I feel like some charity skeletons started making their way out the closet in 2013 and the horrendous donor retention rates from the past few years - and the seeming lack of empathy and effort displayed by organizations - was one of them. Look it's not like you should stop acquiring donors, please don't, but there has to be a greater effort to keep the donors you've been lucky enough to acquire.
Besides donor retention being linked with LTV, here's another reason why you should care about keeping donors around: they can be great advocates and, increasingly, even fundraisers for you. People share and take action when they are moved emotionally but they won't do that publicly unless they trust the people or organization they are sharing about or taking action for.
Keeping donors around is, at its core, about trust and the more trust you can build up with more people, things like peer fundraising, volunteering and sharing about your organization are more likely to occur.
3. Total Transactions or Number of Donations
For many of our campaigns we don't have access to donor retention or Lifetime Value stats and metrics for our clients so transactions or donations ends up often being our One Metric That Matters (note that it's not the total dollars raised here but rather it's the number of donations made). We do this for many reasons but the number of donations is what I call a "cascading variable".
A "cascading variable" means it is something that if you have success with it there is a great chance that success will "cascade" down and lead to success in other key areas. This is also why I don't like having total funds raised as the main (and definitely only) goal. You can set a $50,000 goal, get one unexpected cheque for $45,000 and boom. Success right? For the total goal but you have no idea about things like retention, acquisition, Lifetime Value, etc.
In theory, if you have more and more people making donations you are more likely also having success in retaining your donors, boosting Lifetime Value, acquiring donors and even reaching your total funds raised goal. It can cascade. It also has the benefit of being pretty simple to track and more comparable year over year.
4. % of Donors Who Care Less About What You Spend on Admin
Okay, that isn't really a statistic that is used (if you do, I'd love to high-five you right now) but it is something that continues to be imperative to the future success of not just your organization but our industry. Yes, more people are talking about it and it is more common to hear donors talk about how dumb the "overhead myth" is but we can't let up.
Great organizations produce impact - that's what donors should be demanding out of the organizations they give to - and that can take investment. So when you get the chance to talk about this subject, take that as an opportunity to help the donor, yourself, your organization and the sector overall.
What To Do With These MetricsGreat so you've got some new or renewed interest in some old metrics - but what do you do with them? Here are three, non-technical things you should do with these metrics:
- Track Them
- Think About Them
- Set Goals & Share Them
1. Track Them Regularly
Unless you are a really large organization, tracking these on a quarterly basis is probably good to balance the time to get the data and being able to extract any value from it. Lifetime Value and Donor Retention can be a bit tricky to get a read on until a full year is complete as most organizations have some very key quarters/seasons which heavily skew their data. But whether it's once a month or once a year, make sure you track these metrics.
2. Think About Them Beforehand
Before a board meeting, a new campaign, or in staff meetings, keep these metrics in mind. Will this decision help improve Lifetime Value? Donor Retention? Transactions? Donors care more about us and less about admin?
See the value of metrics are that they are a measuring stick to show what's working and how you're impacting behaviour but you need to think about HOW you want to change behaviour BEFOREHAND. If you look back 6 months and see donor retention is up (or down) but didn't do anything with intent then knowing donor retention is up or down is practically irrelevant.
3. Set Goals & Share Them
When things are made public - even just to a few people - there is immediate accountability. It's why I think more people should post their giving and donations publicly but also why goals, metrics, and even the performance of employees (in some situations) should be accessible. If whether I went to the gym or not was guaranteed to be on the homepage of the New York Times each morning, there's a much better chance I'll get my ass to the gym!
If you tell your board - heck even a friend or colleague - that you're going to try to improve donor retention from 45% to 55% well now there's more accountability and pressure, in a good way, for you to implement strategies and make decisions that will help you reach that. I'm personally a fan of using bonuses - financial and non - with nonprofits to help incentivize employees (no your mission is not enough for everyone) and if the organization, teams, or people shared goals around donor retention publicly and/or had a bonus if those goals were achieved, I think you'd see employees behaviour change and therefore donor retention, or whatever metric you choose for that matter, change as well.
It's never too late to start tracking the right metrics - and stop tracking bad or vanity ones - and Lifetime Value, Donor Retention, and Transactions are three you should focus more on. Then if you can set up the tracking, think about them as you make decisions, and set goals in public then you'll be headed in the right direction with some (more) accountability. Good luck!
Originally posted on re: charity and can be read here.