We all know the term metrics and how they tie into organizational goals. Many of us even actively choose and implement metric tracking into our marketing strategy.
But what about indirect metrics? What do they even mean, and are they important enough for your nonprofit to pay attention to? Read on to find out.
Why indirect metrics matter for nonprofits
Most nonprofits focus on direct metrics to guide them through their budgeting process. Often, they look at figures like the number of emails and mailers sent, how many gifts were received, and gain/loss metrics (like net revenue and cost per dollar raised).
This data indicates how a given program is performing. However, it doesn’t explain why you’re getting those results.
“Donors aren’t response rates and average gifts,” says Suchi Otta, Vice President of Analytics at Pursuant. “They have reasons for engaging with your organization. Indirect metrics help you understand more of that particular picture.”
For example, we at Pursuant worked on an acquisition program for a large nonprofit. Looking at just their direct mail channel, the direct metrics (ROI and response rates) indicated direct mail was not successful because the donor-acquisition cost averaged between $40 and $45 (which is steep!).
But when we factored indirect metrics, the average value over three years equaled about $85 per donor or twice the acquisition cost. The retention rate for those direct mail donors was also three times greater than donors who contributed to an event. A decent percent of the donors acquired through direct mail became planned-giving donors to the organization—equaling close to $20,000 in lifetime value.
So while the acquisition cost may have been high, indirect metrics unearthed the program’s value. Without indirect metrics factored in, direct mail could have quickly appeared to be too expensive a channel for the resulting short term yield and entirely disregarded by the organization when it brought value!
In other words, direct metrics don’t always provide the full picture. Indirect metrics provide a more in-depth understanding of outreach efforts.
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