March 15, 2007

Lifetime Value and Fundraising

Most prospecting strategies concentrate on the capacity rating. This is generally an amount a person can give in an ideal scenario if your organization is their top philanthropic priority. This amount is generally compared to gift officer yield rates and/or target ask amounts to project portfolio performance.

In the for-profit arena, lifetime value is the preferred metric of customer rating. From an annual giving perspective, it makes sense to consider lifetime value in segmentation. However, if an annual giving directors only goal is the participation rate, are they likely to risk overall participation for the sake of high lifetime value acquisition? It is likely preferable for the big picture.

Customer lifetime value is a way of measuring how much your customers are worth to you, over the length of time that they remain your customers. The lifetime for customers will vary from industry to industry, and from brand to brand. The lifetime of customers should come to an end when their contribution ceases to be profitable unless steps are taken to revitalize them.

Here is an article with methodology for determining lifetime value

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