We work in fundraising. So when we think about return on investment or ROI, the “return” part of that acronym usually has something to do an increase in gifts and dollars given. Of course, for those of us whose fundraising experience extends beyond running a bake sale, we know there’s more to a nonprofit’s budget than what comes in via fundraising from donors. There are expenses – not just employee salaries, but phone programs, direct mail resources (from printing costs to the fees associated with actually mailing the items), costs associated with stewardship activity, and more. When we reduce those costs, the savings are no different than an equal amount coming in via fundraising. In fact, it may be even better since revenue generated from savings can often be considered “unrestricted.”
A well-orchestrated social media strategy can produce significant savings in areas like direct mail, stewardship activity, and phone programs. Which is why savings from a reduction to, for example, a phone program due to a greater reliance on email or social media is one way of measuring the ROI of your social media. For more on different ways of measuring the impact of your social media activity, check out this infographic on the MDG blog. Pay special attention to the four points in “The New Game Plan” section at the bottom of the infographic. One of those points asks if you’re better prepared to react to issues that affect brand reputation (as a result of your social media strategy). Having a greater hold of your brand or reputation is highly valuable and certainly demonstrates a return on investment – even if it can’t be directly quantified in fundraising dollars or new donors acquired.
So how might your nonprofit organization or institution measure online and social media activity beyond the easily trackable donors and dollars raised figures? The following are a few suggestions:
Listen to your data and adjust your direct mail program accordingly: How many of your donors give exclusively online? If someone gives online – especially if they give repeatedly online and never give via mail – then you’re likely wasting resources by sending them direct mail pieces. That doesn’t mean you should never mail an online donor. Every new donor should receive a welcome kit via the postal service. But after that, if they never respond via mail, and especially if they continue to give exclusively online, redirect those mail resources to beefing up your online and social media strategy (including email, social networks like Facebook, and your organization’s websites).
Still don’t believe me? Check out the 2012 Nonprofit Social Networking Benchmarking Report. In that report, you’ll see the average value of a Facebook “like” is $214 in the 12 months following the acquisition of that like. How much did it cost to achieve that like? $3.50. How much does it cost your organization to acquire a new donor via direct mail? For many organizations, that direct mail acquisition cost is ten times the $3.50 it cost to acquire the donor via Facebook.
Still don’t believe me, part 2? Here’s a personal anecdote… My wife recently asked that we stop supporting an environmental nonprofit, because they repeatedly sent us massive packets in the mail. We have never sent a gift to that organization via the mail, but had made multiple online gifts. To recap … an environmental nonprofit sends their online-only donor enormous amounts of PAPER. A wiser approach would cutting mail to families like ours and instead investing those resources in a more robust online stewardship and fundraising strategy. The online approach would likely be less expensive. The savings from that approach should count towards your online and social media ROI.
Stewardship: Nothing allows you to stay in touch with a large number of donors on a daily, even hourly basis, like social media. More and more, we are learning about the value in keeping our supporters appraised of how their fundraising dollars are being spent to improve the world. Use online and social media to tell that story (from a DONOR CENTRIC standpoint) and you will strengthen relationships with current donors, plus attract new donors when your current donors share your stories with their friends and family via social networks like Facebook and Twitter.
How do you measure this activity? It’s not always as easy as counting donors and dollars, but there are metrics like awareness and perception. For larger organizations, tools like Radian6 can help with tracking these “soft” metrics. You might also consider donor attrition. If you make a serious investment in online and social media, has your attrition rate improved?
Think about all the metrics that matter to your organization and what you’re trying to accomplish through better stewardship. Then, line those goals up with online and social media activity. Track the two over time and you should be better able to understand the ROI of your online and social media activity as it relates to stewardship.
Tweet banks to replace phone banks: We continue to hear stories of institutions or organizations that are investing more and more in their phone programs only to see the same or lesser results. Why not replace some of those callers with social media conversation monitors? In higher ed – where phonathons are common place – take some of those student callers off the headset and put them in front of a keyboard. Especially during an online campaign, their activity could very well result in more gifts and dollars raised than they would be able to generate over the phone. At the very least, you’d be reaching a different and enormous demographic of people who don’t have or use landlines. Just how enormous is that demographic? More than half of all Americans. No, not just younger Americans …MORE THAN HALF OF ALL AMERICANS ARE UNREACHABLE BY YOUR PHONE PROGRAM EFFORTS.
Cutting back on your phone program in favor or more online and social media activity may produce ROI in the form of savings, but it will also likely lead to a much more easily quantifiable metrics like more money raised and more donors acquired.
For more on measuring the impact of your online and social media activity, connect with Justin Ware, BWF’s Director of Interactive Communication by clicking here.