Purple Papers from DirectLine Technologies, Inc.
Understanding Acquisition ROI:
How do you measure ROI and why does it matter?
Whether you seek members or donors, budget cuts are constantly impacting our industry. Being able to
evaluate the results of any acquisition campaign, using ROI as a factor of success, is becoming more
important every day. At the same time, the long-term value of that new donor or member goes well
beyond the initial cost of acquisition.
Are your results generating the same rate of return as shown in these industry averages? How do you
generate the most commitments and the most revenue in the shortest amount of time?
First it is important to define ROI. Return on investment (ROI) measures the gain or loss generated on an
investment relative to the amount of money invested. It is critical to have a standard formula for that
measurement. The best practice formula is:
(Return minus Investment)
Investment
x
100
=
ROI %
Using this formula, the following tables illustrate the results of the most popular methods of Acquisition in
fundraising and membership1:
Direct Mail
Acquisition
eMail
Acquisition
Telephone
Acquisition
Average Cost = $0.72/unit
Average Cost = $0.005/unit
Average Cost = $2.48/unit
Average Units Mailed = 30,000
Average Units eMailed = 30,000
Average Records Called = 30,000
Average Cost/Mailing = $21,600
Average Cost/eMail = $150
Average Cost/Campaign = $74,400
Average Rate of Return = 3.4%
Average Rate of Return = 0.12%
Average Rate of Return = 12.95%
Total Paid = 1,020 gifts/members
Total Paid = 36 gifts/members
Total Paid = 3,885 gifts/members
Revenue @ $50 each = $51,000
Revenue @ $25 each = $900
Revenue @ $137 each = $532,245
Return on Investment/ROI = 136.1%
Return on Investment/ROI = 500%
Return on Investment/ROI = 615.4%
Investment in a quality engagement program that includes prospect-centric, two-way dialogue is
critical to the success of any campaign. The average commitment from telephone acquisition is highest
because the prospect can ask questions, thus receiving persuasive responses, and the prospect is then
involved in the decision of how much to commit. Direct Mail and eMail play a role in the many
engagement touch points, but do not allow for a two-way dialogue and have a ‘check the box’
commitment level pre-determined.
At every conference we all discuss, “What are your acquisition costs?” and “How are you measuring
your results?” After an exchange of statistics you may walk away wondering about your organization
and ask yourself, “Are we measuring the ROI on all of our projects?” Use this handy guide from
DirectLine Technologies, Inc. and you’ll be able to respond with confidence. Or better yet, give us a call
and we’ll help analyze your ROI and develop strategies to ensure sustained growth in the coming year.
1 Statistics based upon calculated averages with the exception of Average Rate of Return. Average Rate of Return is based upon Direct Marketing Association Response by
Selected Media reports 2012
~ Contact: Martha Connor ~ [email protected] ~ 209-593-6324 ~
~ DirectLine Technologies, Inc. 1600 N. Carpenter Rd, Bldg D ~ Modesto, CA 95351 ~ www.directline-tech.com ~