MGO return on investment (ROI) is a big topic these days, with leaders and managers asking what level of return they should expect from their MGO, and why some MGOs consistently have a low ROI.
These are reasonable questions. A MGO does have to deliver net revenue to the organization they work for – otherwise, the organization’s programs won’t be properly funded.
But what’s reasonable? And what are the top reasons some MGOs consistently have low ROI?
Let’s start with what’s reasonable as shown on the graphic below:
These ratios assume that all the MGO costs are included in the calculation: salary, benefits and operating costs. Don’t calculate ROI just on the salary. That doesn’t give you a real picture.
A new program is a “startup” through Year Two. A “moving toward maturity” program is Years Three and Four. A “mature” program is Year Five and following. All of these goals/stages can be reached sooner, but this is a good baseline.
We’ve seen a new program do better than 1:2 or 1:3 – and a mature program can go as high as 1:23! But, as a rule, these are the best rule-of-thumb numbers.
So that’s what is reasonable. Remember, there are all kind of variables you need to take into account.
Now to the second question: What are the main reasons for low ROI? Jeff and I think there are 12 basic reasons. If you have others, let us know. Here they are:
- Just starting out – this one is obvious. It’s a startup, which means the first-year ROI is quite low.
- MGO not suited for the job – the requirements of the job don’t match the skills and motivations of the MGO.
- Unqualified caseload – the caseload of donors has not been qualified. If this is the case, two-thirds of the donors are not even talking to the MGO, forcing low production.
- No match to donors’ passions and interests – a MGO who does not know the passions and interests of their donor won’t realize the true giving of that donor. This reality will drive the numbers down.
- Few or no donor offers – with only general information to present to the donor, the MGO cannot possibly be effective in fulfilling the donor’s passions and interests.
- Little or no impact information – there is hardly anything worse that not being able to tell the donor that her giving has made a difference. This forces ROI down.
- Poor thank you and stewardship – treat a donor poorly, from receipting through donor care, and ROI will go down.
- No personalized plan for each donor – a general, non-personalized approach to the donor will not yield good economic results.
- Authority figure pressure – pushing the MGO to “get the money” results in the MGO pushing the donor to “get the money,” resulting in a donor who gives less and eventually goes away.
- Authority figure distractions – tasking the MGO with jobs other than managing a caseload of qualified donors reduces revenue production.
- Non-profit brand problems – if the non-profit has negative or unclear information or image problems in the marketplace, this will reduce MGO ROI.
- Lack of MGO recognition and thanks – we have seen this happen so often. A MGO does a great job, but the authority figure doesn’t recognize and affirm it. This wounds the MGO’s spirit and reduces ROI.
If you are experiencing low MGO ROI, take inventory against these 12 reasons, and other ones you might have. They are relatively easy to fix, with the exception of the marketplace brand problems. And fixing them will yield a higher ROI, a happier MGO and a fulfilled donor.
PS – For more information about the timeline you can expect for revenue in a new program or with a new MGO, click here to get our worksheet “How Long Does It Really Take?”