Today we welcome a special guest on the blog: Stelter Chief Client Strategy Officer, Michael Hutney. Michael joins us to share his insights on how to measure success in your planned giving marketing program.
I love all things about golf. The game. The peace. The courses and their beauty. I also love that there is a place in golf for the nerd in me—as golf is a data-driven game.
As I watched Gary Woodland win the US Open last weekend, I started to think about why he won. And it boiled down to this: As he practices, he pays attention to the right data and focuses on the areas of his game that will help him win a major golf tournament.
“Drive for show… Putt for dough.”
Most people are wowed by how far golf professionals can hit the ball. And it is impressive! Many touring professionals can blast their drives well over 300 yards and many amateur golfers believe it is the professional’s ability to achieve these long distances that separates them. Wrong! It is accuracy and precision that separates the weekend hacker from the touring professional. Distance with purpose, not distance itself.
En lieu of celebrating how far they can drive the ball, professional golfers pay attention to data that speaks to accuracy and precision. Data points such as “carry distance” (the distance the ball travels in the air, not the total distance), trajectory, arc and curve all reveal more telling information about the quality of the performance than the final distance.
Sunday evening, as I prepared for the work week ahead, I was reminded that I had several discussions on my calendar with a common theme: How do we measure success in marketing planned gifts? For years, metrics associated with annual giving have been used to gauge the success of planned giving marketing campaigns. Specifically, response rate (number of inquiries) and cost-per-lead.
Outside of philanthropic intent, however, planned giving and annual giving do not share much in common. Annual giving is accessible to most Americans, has a low cost of entry, does not require much guidance or assistance and can be completed in mere moments without help from anyone else. In contrast, planned gifts require time, effort and often the help of others.
Yet with these distinct differences, we choose to measure the effectiveness of our marketing campaigns using the same metrics (response rate and cost-per-lead).
As planning giving is more about quality than quantity (although quantity would be nice…), measuring the financial impact of the marketing program yields greater insight into its effectiveness. Simply put, measuring the value of leads generated versus merely the quantity of leads generated will provide greater insight into the effectiveness of the program.
Consider this scenario:
A nonprofit spends $50,000 per year to market planned gifts to its more loyal and engaged donors. In the course of the year, 100 tangible leads are generated from the effort. That would equate to $500/lead. By annual giving standards, that is incredibly expensive and unsustainable.
But let’s take a closer look at the leads themselves and their financial potential. If we measure the value of the donor overall—and the value of the gift specifically—a much clearer picture of the effectiveness of the marketing spend comes into focus. In this scenario, the nonprofit was able to close 10 planned gifts valued at $750,000. If we compare the value of the gifts ($750,000) to the cost of the marketing program required to discover these gifts ($50,000) we see a very different return on the investment (ROI). The formula below is typically used to measure ROI:
Using this formula, the nonprofit earned 1400% ROI on their marketing investment, or earned $14 for every dollar spent on the marketing program. That is a very healthy return.
And that is the power behind planned giving. The quality of these gifts, the financial impact to a nonprofit and the potential for the gift to transform any organization separates planned gifts from their annual counterparts. By measuring the financial impact of the gift, we are better able to understand the effectiveness of the effort it took to earn that gift.
If we continue to measure how far we hit the ball, versus the quality of the shot, we will overlook the most important clues to success. Only a handful of people ever win a major golf tournament, but we all have the ability to excel at raising planned gifts.
How do you measure your planned giving marketing program’s success? We want to hear what your nonprofit is measuring.
This is a great article. In a seemingly what-have-you-done-for-me-lately environment, what have you found to be the best way to get those in the organization standing in the gallery 320 yards from the tee box to understand the long-range plans?
Chris, Great question! And a tough one to answer.
In order to differentiate PG from the Annual Fund, I think it is more important than ever to position planned giving in the “strategic gift” category while the annual fund is a transactional gift.
Being able to frame PG around questions such as, “How can a planned gift (or several planned gifts) transform our organization? What value do these gifts bring to our organization? What value do we receive when a donor includes in their estate plans?” can alter the perception and position planned giving as ongoing “capital investment” versus “operational funding” that the annual fund provides.
As we know, a planned gift is an invitation into a donor’s family. And that courtship takes time, patience, understanding, listening…and more time.
Very good article, Michael. It emphasizes the “long view” rather than short term gains.