Costing Big Bird

Today I have a question. How do you cost how much a database is worth to you?

When people build business cases for boards they often quote how much more efficient their new database will be. In my most recent circumstance, Barry was so bad that there was no argument he needed replacing. However I find myself thinking, now that I have big bird, how will I measure the ‘savings’ he brings to the business.

If there are any data monkeys out there who have database return on investment down pat, I’d love to hear from you!


Posted on September 20, 2011, in Data, Fundraising, Not for Profit and tagged , , , . Bookmark the permalink. 2 Comments.

  1. I wouldn’t claim to be an expert on ROI, but I think I can give some basic notions. Your answer will be a combination of a number of factors, but they basically boil down to money saved and additional income generated.

    On the savings side, you need to look at everything that you did on Barry that you can do faster on Big Bird, and convert time savings to money. If something took you three days before but can now be done in one, that’s two day’s salary saved. In practice, you’re not going to just work two days a week less – rather it’s two days that you can now spend on other activities that you couldn’t do before – but that doesn’t really affect the calculation. Also think about “scrap and rework” costs – how much time did you spend redoing things when they didn’t go right the first time? And don’t just think about your own time (unless you’re the only person using the system) – make sure to factor in efficiency savings for everyone.

    There will also be more indirect savings. For example, does Big Bird have tools or functionality that will allow you to find duplicate records more easily? You should be able to put a figure on savings from not mailing them any more. Better reporting and analysis may also allow you to show that certain campaigns (or segments within campaigns) aren’t generating enough money to justify continuing with them. Which leads into income.

    The income side may be harder to calculate, and you may not be able to put a figure on it until you have used the new system for a while. A lot of it will come from improvements in your campaign segmentation. The flip side to knowing what doesn’t work is knowing what does, and being able to do more of it. Having a better, more consistent view of your supporters should allow better targetting of cross-sell activities. You should also be able to reduce attrition rates, both by identifying what activities supporters to stay with you and, less tangibly, by giving a better supporter experience (e.g. by using salutations correctly and more accurately recording supporter contact preferences).

    • Wow! Thanks for the comment. I had thought about time studies on one system to the other but completely forgotten that I could track any improvement in donor retention / attrition rates. Thanks so much for taking the time to comment.

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