Prospect research metrics and ROI
Recently, I asked Prospect Researchers to complete a brief survey to help me understand how they measure the value of the work they perform. The survey consisted of four questions:
- What are the top three criteria used by management to evaluate your performance?
- What are the top five metrics used to place a value on or showcase your department’s prospect research efforts to senior management?
- What top three metrics would you like to add within the next 12 to 24 months to help place a value on or showcase your department’s prospect research efforts to senior management?
- What are the top three criteria used by management to evaluate the Gift Officer’s performance?
Not surprisingly, the survey results showed that a prospect researcher’s performance is most likely to be evaluated on the timeliness of their work, the quantity of research produced, and the number of new prospects they enter into their organization’s pipeline. These three metrics are easy to record and monitor and it make sense to measure them.
But are they the best metrics to use?
Based on the results of the survey, Gift Officers are most likely to have their performance evaluated based on the number of dollars raised, the number of gifts closed, the number of donor meetings scheduled, and the number of prospects who are actively being solicited. As you have probably noticed, there is not a lot of alignment between the metrics used to evaluate Prospect Researchers and the metrics used to evaluate Gift Officers. If the value of a Prospect Researcher’s work is being measured, why doesn't senior management evaluate it on the dollars they help raise?
To measure the value of their work, Prospect Researchers are naturally measuring the three criteria most often used to evaluate their performance: timeliness, quantity of research produced, and the number of new prospects added to their organization’s pipeline. Prospect Researchers are also monitoring and evaluating how they have contributed to moves management and the solicitation process, dollars raised that can be traced back to research provided, the number of prospects that have been rated, internal customer service, and the quality of the research provided. In the next 12 to 24 months researchers want to add more analytics, the number of gifts closed that can be traced back to research, and the return on investment to their metrics.
Return on investment (ROI) is an easy calculation: ROI = (gains-cost)/cost. Simple, right? Let’s take this equation apart and apply it to prospect research. The gains include the gifts received from prospects that we researched, or gifts from new prospects identified by pro-active research, etc. The cost of research includes prospect research salaries, cost of prospect research subscriptions, and training, etc. For example, let’s say that your department is able to trace back $1,000,000 worth of gifts to proactive research. And let’s assume you have one researcher who is paid $90,000 (including benefits), attends the APRA conference annually ($2,500 travel and registration), and spends $7,500 on subscriptions to access prospect research tools. Using the above equation, the ROI for proactive research, in this example, is calculated as:
ROI = ($1,000,000 - $100,000) / $100,000
ROI is generally expressed as a percentage, so multiple your result by 100. The ROI for this example is equal to 900%.
That’s pretty impressive, right? We hear all the time that money talks. And ROI talks the language that senior managers speak.
Prospect Researchers should begin to align their value metrics to the metrics used to evaluate Gift Officers. ROI calculations go a long way to aligning these metrics and it is a great measurement tool for showing the value of prospect research. To learn more about calculating Return on Investment, read Investopedia’s FYI on ROI: A Guide to Calculating Return on Investment