1. Lifetime Value - a personal odyssey John Whitehead WaterAid September 2011

3. Cash Gifts v. Committed Giving It is much harder to model lifetime value for cash donors than for regular donors. Cash donors lapse after each gift, and you may only receive one or two gifts a year per donor. Regular donors continue until cancellation and for monthlies you receive 12 gifts a year.

4. How simplistic can you get? One year value = annual value of the Direct Debit Four year value = 4x annual value of the Direct Debit

5. But we all know about attrition and how many donors you can lose in the first year.

7. Version 1 Baseline Lifetime Value Simple Excel Model Initial DD value, factoring monthly attrition

8. Version 2 Baseline model plus the following factors, with associated costs. Channel Recruitment costs Annual stewardship costs Gift Aid rates DP opt-out rates Upgrade propensity Cash appeal responsiveness

9. Over what period? I year? 5 years? 10 years?

10. The relative performance of different channels does depend on the time horizon Face-to-face may well break even first by virtue of the high average gift value. Even after two years inserts probably have a lower ROI than either DRTV or F2F. At WaterAid inserts start to pull ahead after three years. We look at net LTV after 5 years, by which time inserts lead DRTV with F2F in a poor third place. But in detail, some DRTV segments and some insert segments deliver similar 5year LTV.

11. However… …At the end of 5 years you could well have lost less than 30% of your insert donors... …nearly 50% of your DRTV donors… …and 75% of your F2F donors. So the story continues beyond 5 years

12. Does “donor half life” help? We lose 50% of our face 2 face donors in 12-14 months We lose 50% of our DRTV donors in 60- 64 months But to lose 50% of our inserts donors takes over 120 months Sadly, unlike radiation, the decay rate is not steady, so this judges channels like F2F too harshly...

13. 5 Year Survival Rate A channel with a high annual value and a high attrition rate may have a similar, or better 5yr LTV than a channel with a low annual value but a low attrition rate. But you may have many more of the lower value donors left at the end of 5 years Reporting the 5 year survival rate alongside LTV helps tell the full story.

14. Our 5 year survival rates are something like this

15. It’s all about survival folks!