The document discusses frameworks for donor acquisition and investment in channels. It analyzes different channels based on metrics like cost per acquisition, lifetime donor value, and internal rate of return. Online channels perform best across all metrics but further understanding is needed of how channels interact, as activity in one channel like TV may drive sign-ups in another like online. The key approaches outlined are investing strategically, optimizing the channel mix based on financial value, maintaining multiple channels, and exceeding the minimum donor replacement rate to ensure growth. Currently spending is below the minimum replacement rate required to stay flat, so investment would need to increase if return on investment remains the same.

1. Volume vsValue
A Framework for Donor Acquisition in a Tough Market :
Mathew Neville
Director of Public Engagement, World Vision UK
8thOctober 2014

2. Key Objectives of Presentation
Our focus on the volume of supporters has the potential to actually destroy value
1.The Value of our base and not the number of supporters should be the key metric that drives behaviour
2.But what is value and how do we measure it?

3. A Framework for InvestmentUse all four of the following approaches
1.Strategic value: does the plan have the right amount of investment into areas of strategic value that will reach the target audience through own-able channels and will reduce exposure to risk?
2.Optimising the mix:does the plan focus on the channels that deliver the best financial value and is the econometric impact fully understood?
3.Maintaining multiple channels:does the plan contain investment into multiple channels to ensure that we don’t become overly reliant in one area?
4.Exceeding the minimum replacement rate:does the plan include enough budget and activity to recruit more acquisitions than cancellations when projected ROI is taken into account?

4. The Strategy Map
4 fundamental questions in defining strategic value Who is our target Audience?
How will we sustain competitive advantage? What is our position in the market?
What is the operating plan? 1
2
3
4
Inspire the UK to take action that transforms the lives of the world’s poorest children:
= Raise Income & Influence

5. A Framework for InvestmentUse all four of the following approaches
1.Strategic value: does the plan have the right amount of investment into areas of strategic value that will reach the target audience through own-able channels and will reduce exposure to risk?
2.Optimising the mix:does the plan focus on the channels that deliver the best financial value and is the econometric impact fully understood?
3.Maintaining multiple channels:does the plan contain investment into multiple channels to ensure that we don’t become overly reliant in one area?
4.Exceeding the minimum replacement rate:does the plan include enough budget and activity to recruit more acquisitions than cancellations when projected ROI is taken into account?

6. 6Optimising The Mix -CPA
CPA analysis tells us to invest in channels that have the lowest cost per acquisition
CPA
1
Non-TV Advertising
#1
2
F2F A
#2
3
F2F B
#3
4
Festivals
#4
5
Girls Night Out
#5
6
TV
#6
•Advertising, and F2F A and B look like best investments
•TV CPA is nearly double F2F so looks like bad investment

7. 7
Optimising The Mix -LTDV
LTDV tells us to invest in channels that generate the most cash over the lifetime
•LTDV is income less CPA and all associated service costs
•Girls Night Out and TV look like significantly better investments compared to CPA
•F2F B is only 1/6thas valuable as GNO
•TV looks like an attractive investment
Lifetime Value
1
Girls Night Out
#1
2
Non-TV Advertising
#2
3
TV
#3
4
F2F A
#4
5
Festivals
#5
6
F2F B
#6

8. 8
Optimising The Mix -IRR
IRR uses a combination of cost, LTDV and time value of money.
•IRR uses 10 year value over CPA
•Non-TV advertising still looks like best channel
•F2F A is now more attractive than TV despite generating less cash over lifetime
IRR (Total)
1
Non-TV Advertising
#1
2
Girls Night Out
#2
3
F2F A
#3
4
Festivals
#4
5
TV
#5
6
F2F B
#6

9. 9Optimising The Mix –Unrestricted Impact
IRR uses a combination of cost, LTDV and time value of money.
•Picture changes when you realise that three channels actually have a negative impact on unrestricted cash
•What are the future implications of this?
IRR (Unrestricted)
1
Non-TV Advertising
#1
2
Girls Night Out
#2
3
F2F A
#3
4
Festivals
#4
5
TV
#5
6
F2FB
#6

10. 10
Optimising The Mix -Ranking
Interesting to consider how different measurements will impact decision making
IRR (Total)
1
Non-TV Advertising
#1
2
Girls Night Out
#2
3
F2F A
#3
4
Festivals
#4
5
TV
#5
6
F2F B
#6
Lifetime Value
1
Girls Night Out
#1
2
Non-TV Advertising
#2
3
TV
#3
4
F2F A
#4
5
Festivals
#5
6
F2F B
#6
CPA
1
Non-TV Advertising
#1
2
F2F A
#2
3
F2F B
#3
4
Festivals
#4
5
Girls Night Out
#5
6
TV
#6
•A focus on CPA only could actually destroy value further down the line and erode unrestricted cash
•Should each channel have a ‘hurdle rate’?
IRR
(Unrestricted)
1
Non-TV Advertising
#1
2
Girls Night Out
#2
3
F2F A
#3
4
Festivals
#4
5
TV
#5
6
F2F B
#6

11. 11Optimising The Mix –econometric understandingOnline is the best channel no matter what measurement you use –but why?
CPA
Lifetime Value
IRR (Total)
1
online
#1
1
online
#1
1
online
#1
2
Non-TV Advertising
#2
2
Non-TV Advertising
#2
2
Non-TV Advertising
#2
3
F2F A
#3
3
Girls Night Out
#3
3
Girls Night Out
#3
4
F2F B
#4
4
TV
#4
4
F2F A
#4
5
Festivals
#5
5
F2F A
#5
5
Festivals
#5
6
Girls Night Out
#6
6
Festivals
#6
6
TV
#6
7
TV
#7
7
F2F B
#7
7
F2F B
#7
•How should we understand the inter-play between channels – especially the most valuable? How is activity in one channel (i.e. TV) driving sign-ups in another channel (i.e. Online)?

12. A Framework for InvestmentUse all four of the following approaches
1.Strategic value: does the plan have the right amount of investment into areas of strategic value that will reach the target audience through own-able channels and will reduce exposure to risk?
2.Optimising the mix:does the plan focus on the channels that deliver the best financial value and is the econometric impact fully understood?
3.Maintaining multiple channels:does the plan contain investment into multiple channels to ensure that we don’t become overly reliant in one area?
4.Exceeding the minimum replacement rate:does the plan include enough budget and activity to recruit more acquisitions than cancellations when projected ROI is taken into account?

14. A Framework for InvestmentUse all four of the following approaches
1.Strategic value: does the plan have the right amount of investment into areas of strategic value that will reach the target audience through own-able channels and will reduce exposure to risk?
2.Optimising the mix:does the plan focus on the channels that deliver the best financial value and is the econometric impact fully understood?
3.Maintaining multiple channels:does the plan contain investment into multiple channels to ensure that we don’t become overly reliant in one area?
4.Exceeding the minimum replacement rate:does the plan include enough budget and activity to recruit more acquisitions than cancellations when projected ROI is taken into account?

15. 15Spending at the Minimum Replacement Rate
We have under-spent our minimum growth requirement and our minimum replacement rateBlended ROI has been 3.8If ROI stays flat, we must spend 26% of income to stay flat* The alternative to this approach is to increase ROI2
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