How to use the Lifetime Value (LTV) by Acquisition Cohort and Initial Segment analysis

This analysis calculates the lifetime value (LTV) of donors based on their acquisition fiscal year and initial giving segment. It uses data from your organization’s donor database, specifically focusing on gift amounts and dates. By segmenting donors according to their giving level in their first year, this analysis helps identify patterns in donor behavior and their long-term value to your organization.

Key metrics include average and median lifetime value, total lifetime value from each cohort, and the percentage of each cohort that remained active in the last full fiscal year. Additionally, it tracks the average and median number of subsequent giving years, which shows how many years donors continued to give after their initial contribution. These insights are crucial because they not only highlight the financial contributions of different donor segments, but also indicate the effectiveness of your engagement strategies over time.

You can use this analysis to inform strategic decisions on fundraising efforts and donor relationship management. For instance, if you notice that donors from a particular acquisition year have a higher lifetime value, you might prioritize targeted communications or campaigns aimed at nurturing relationships within that cohort. Understanding which segments yield the best long-term value can also guide resource allocation for donor outreach and retention initiatives.

I recommend running this analysis annually or biannually to stay up to date on donor trends and behaviors. Development officers and fundraising directors should review the findings to adjust engagement strategies accordingly. For actionable application, consider focusing on cohorts with lower activity rates in the last fiscal year; develop tailored re-engagement strategies to rekindle their interest and support.

To measure the success of applying insights from this analysis, track the retention rates and average giving amounts of the re-engaged cohorts over subsequent years. Also, monitor changes in the lifetime value of newly acquired donors as you implement new strategies. Over time, you should see a positive shift in donor retention and overall contributions, providing evidence of your data-driven fundraising approach's effectiveness.