Average Gift Size is a BAD METRIC.
Salvatore Salpietro
?? Chief Community Officer @ Fundraise Up | ?? Unlocking Generosity Through Donor-Centric AI Tech | ?? Vespa-Riding Nonprofit Tech Evangelist, Speaker, Polyglot | ?? Star Trek, Star Wars, Lego Fan | ?? Connect > Follow
Average Gift Size (or Average Order Size).
Your team is living and dying by it. Why? WHY? It's wrong.
Pop Quiz
Let me give you some examples and we'll go from there.
Add a zero (or three) to each of those numbers if you're a larger nonprofit.
Quiz: Which one is the best for the organization and the beneficiaries?
Answer: Depends on what you're measuring and valuing. Average Gift Size? Example 1 wins. If you're looking at total revenue, then obviously example 2. If instead, you are looking for a number of relationships you're forging, example 3 is what you want -- but you have to know your lifetime value of a donor first. Conveniently #3 is also the higher revenue amount.
The Dollar Menu
How does McDonald's measure their success, in your best guess? Total Revenue? Number of Customers? Average Order Value? Probably total revenue. That's all the shareholders really care about. That's probably all you should care about, too.
领英推荐
When McDonald's rolled out the dollar menu, their AOV (average order value) dropped. Probably significantly. I'm sure someone is responsible for pushing AOV higher, and I'm also sure they were not pleased. So, some recalibrating needed to happen there. I digress...
McDonald's rolled out the dollar menu to do a few things:
What happened? Exactly that. They had an influx of customers that have shallower pockets (students, low income, me when I'm penny-pinching, etc.). Revenue exploded! Also, the lifetime value of each customer went up because relationships were forged earlier on with a wider audience.
What also happened is that the Average Order Value dropped while the stock price went up.
Think Like A Business
If your average donation value goes down while your revenue is going up -- REJOICE! You are now attracting donors that may not have otherwise given because you were pitching amounts that were too high. You're now working with younger donors, also. You're not LOSING any of your other customers. You're ADDING new ones (that can give less).
This is a difficult thing to adjust internally at a nonprofit. I've been there. But it's necessary. You must think in broader terms, providing donors with a consumer-level giving experience (run away from the nonprofit-level giving experience). You have to show a college student that wants to support you for $10 that they're welcome -- your $10,000 donor will be pleased to have them join the club. That's why they're giving to you anyway, isn't it?
Some of this work can be done with technology, like Fundraise Up. But no technology in the world can change the views internally about these metrics. You'll need to be that champion internally to make that happen. Imagine if the nonprofits in our world operated with such revenue-focus as McDonalds? We'd have a lot fewer hungry people on this planet.
Founder @ GrowBetter | Donor Cultivation, Fundraising
6 个月Your McDonalds example is brilliant. Absolute gold. Where did you find this info??? I struggle to find good blogs with useful marketing DATA in the for-profit space. I find that almost everything in their space can be carried over into ours for fundraising.
IT Director | Sales, Marketing & Online @ Berlin Packaging | Salesforce, Prosci?
3 年Love reading you Sal Salvatore (Sal) Salpietro
I help nonprofits maximize their technology investments.
3 年I thought you were going somewhere else with this but I agree with the premise that AOV is flawed. I would ask, what exactly does knowing that the average gift size for 2020 was $250 whereas in 2021 it was $190 tell me exactly? To your point, if I have 500 gifts in 2020 that make up that $250 but I have 1,000 gifts in 2021 (and more total revenue), then it’s meaningless. The one time where it might be relevant is when comparing campaigns. Let’s say you’re doing an A|B test and the AVG for B is higher than A. Is it an indicator that if you went broad with the B campaign messaging that it would maintain that average? No. But it might be an indicator that the messaging hit a chord more profound than the A messaging.
Bravo for getting people engaged with metrics. I have one complaint, don't hate on a metric, it is not bad or good. It is simply a calculation. The trouble is that not everyone understands the metric. Most of the comments are from people that do understand the metric. These are not the people you need to reach. I fear that the passer by who doesn’t understand metrics sees the “Average Gift is Bad” headline and walks away with wrong message. So here is my attempt to get the right message out there. Average gift increasing is not always good if your overall revenue is stagnate or decreasing, and/or you have less donors. ? Average gift decreasing is not always bad if your overall revenue increases and/or you’re engaging more people. This can all change when you introduce the cost of getting these donations into the equation… baby steps. Glad to see the engagement you have achieved on fundraising metrics. Onward!
ChemoCars Co-Founder / Structured Finance, Alts, Capital Markets
3 年FundraiseUp is an amazing tool for nonprofits…Better than other platforms (that often charge a lot) by a mile. Keep it up!