Are You Window Taxing Your Metrics?

Once upon a time, in a far off land (1696 and England, respectively), the king decreed that taxes would be assessed by the number of windows a building had. This had the advantage that British tax collectors, known the world over as people who make you just want to chuck tea into the nearest harbor, would not have to enter people’s homes.?

As a result, homes started having fewer windows, with some reported cases of people bricking up existing windows.?

In short, what you measure changes behavior.?

If you measure and hold folks accountable for increasing response rate, don’t be surprised when average gift plummets. Alternately, you could find your envelopes stuffed with more premiums than an 80s era Ed McMahon sweepstakes envelope.?

If you measure and hold folks accountable for ROI, expect the amount invested to decrease as people bet on sure tactics, channels, and audiences. You can probably get your mom to donate with little investment—every donor after that is harder and has a lower ROI.?

If you measure and hold folks accountable for reducing cost to acquire, you’ll be amazed how inexpensively you can acquire donors who won’t pay for themselves in the long term. Tactics like low ask strings and pursuing lists of prolific tippers make sense in this scenario and a few others.?

If you measure gross revenue, expect costs to skyrocket. If you measure only short-term metrics, expect long-term pain.?

And if you have two people managing two different channels (or, worse, two different vendors), the result can look like a game of attribution Hungry Hungry Hippos. Mail, digital, CTV, DRTV, telemarketing, and more each will lay frantic claim to “their” slice of the revenue pie, and resultant glory and additional future budgeting.?

That’s why we recommend paired metrics. For every response rate, there’s an average gift. For every retention rate, there’s a file growth.??

The other is to use metrics that are already composites of opposing pairs. Revenue per communication is generally better than either response rate or average gift because it includes both. Net revenue per communication is even better because it further balances costs.?

And the undisputed and undisputable monarch of metrics is the total net lifetime value of donors. It balances revenues and costs, present and future, and retention and file size.?

It’s fine to have a preference, e.g., when in doubt, we want a larger file instead of a higher average gift. But when you have strong metric pairs and an eye on overall lifetime value, you prevent metric gaming — people doing the modern equivalent of bricking up windows.?