NonProfitEasy’s blog is dedicated to covering nonprofit CRMs and the fundraising topics surrounding them. From time to time, we like to bring in a fresh perspective for our valuable readership. So, we reached out to Claire Axelrad, Principal of Clairification, for some new insights.
Imagine what it would mean to your mission if you doubled the lifetime value of all of your current supporters.
Do you know even know what percentage of donors you’re retaining? According to one source, less than 5% of fundraising offices know this answer! So, you’re not alone. But you can do better.
Knowing your retention rate enables you to move it to something better. Did you know that a 10% increase in donor retention can increase the lifetime value (in dollars) of your donors by as much as 200%? This is research from Dr. Adrian Sargeant… plus Penelope Burk revealed this years ago in her groundbreaking “Donor-Centered Fundraising.”
Lifetime value means donor commitment. Your donor’s enduring passion for your cause. And you’ve got to inspire folks to get them to become loyal supporters.
What are you doing to inspire? Attrition rates are sky high.
Say you brought in 1000 new donors last year. Sounds good, no? But… those 1,000 will shrink to 400 this year. And to 160 in the next year. After five years you’ve got only 10 folks left. I’m NOT KIDDING! You’re on a treadmill. In and out. In and out.
Attrition is getting worse and worse. AFP and The Urban Institute study revealed the depressing data. After reviewing millions of records in thousands of databases, they found that average donor retention was 39%. So, yes, attrition was 61%.
Do you have a donor retention program? A donor retention budget?
If not, be afraid. Be very afraid. And use your fear to scare your leadership straight! Show them the data. Share the study with them.
If you’re not adding resources to build relationships with your donors – and keep them over time – you’re being pound wise and penny foolish.
Here’s a simple way to calculate your donor retention:
How many donors did you have in 2012?
How many of the exact same donors donated again in 2013?
What % of your previous year’s donors were retained?
Anything over 50% is excellent these days. So pat yourself on the back! If it’s less, don’t be surprised. And know that wherever you’re at, you can improve if you put in place an intentional donor retention plan.
Here’s a way to calculate lifetime value:
This is the total net contribution a donor generates during their total giving to you, over their lifetime. You must know the average number of years your donors stay with you, plus the average gift amount (for most organizations the average gift is between $100 – $200). And the average number of years of giving from the thousands of organizations surveyed by AFP and The Urban Institute is 1.9 years.
Whoa! Wouldn’t you like those folks you acquire through direct mail or online to stay with you longer than that?
If you’re like most nonprofits, you’re spending the lion’s share of your time acquiring new donors. And they don’t stay longer than two years. Treadmill city! It’s exhausting… no wonder you’re so tired.
If your retention is not what you’d wish it to be, take a look at your donor acknowledgment program The easiest thing for you to do is develop a culture of gratitude. Make this an institution-wide culture.
Your second gift is so much more valuable than the first one.
You need a second gift strategy.
- You need a donor welcome package.
- You need to pick up the phone and thank.
- You need to send a hand-written note.
- You need to get first-time donors engaged with you in other ways.
- You need to reinforce the decision they made and show them the impact of their giving.
You need a donor relationship strategy.
- You need effective donor communications that tell inspiring stories.
- You need to always think from your donor’s perspective.
- You need to use digital marketing and peer-to-peer tools.
- You need integrated marketing and fundraising plans.
- You need a comprehensive stewardship strategy.
- You need to connect with donors frequently.
- You need to use the word “YOU” a lot.
- You need to ask donors about their preferences.
You need a robust gratitude program:
- You need to be prompt – thank within 48 hours.
- You need to be personal – no ‘form’ letters – people build relationships with other people; not with organizations.
- You need to change your thank you letter frequently.
- You need different thank you letters for different campaigns.
- You need different thank you letters for different donor segments.
- You need to thank more than once, preferably from different people.
You need to treat all donors – offline and online – equally.
Someone who happens to give online is not worth less to you than someone who gives through the mail. Don’t have a two-class thank you system. The immediate email thank you is great, but it’s not enough.
Do you know why donors leave you?
Find out. The number one reason retail customers leave is lack of interest by the business in them. (this was followed, in this order, by death, relocation, won over by competitor and handling of complaints). What are you doing to show interest in your donors?
The primary reasons that donors leave are related to poor communication on the part of the nonprofit: no memory of ever supporting you; asked for inappropriate sum; feeling other causes are more deserving; not reminded to give again and weren’t informed about how the gift was used.
If you want to build loyalty, you’ve got to build relationships. Loyalty is also important because your repeat donors are the ones who make legacy gifts. And legacy gifts are major gifts. Having them can make a HUGE difference to your bottom line. (in fact, anyone who lets you know they’ve moved is 10 times more likely to leave you a legacy gift – are you capturing this information?).
Find out more about your donor. Learn what they like. Be open and receptive. Respond when they reach out to you. Listen for cues. Be helpful. Show them their impact. Show them that you know them. Be personal.
A strong donor retention program is going to rely on proper nonprofit CRM management. Check out our list below to make sure your organization is on the right track.
Claire Axelrad, J.D., CFRE was named Outstanding Fundraising Professional of the Year by the Association of Fundraising Professionals and brings 30 years frontline development and marketing experience to her work as principal of Clairification. A sought-after coach and consultant, Claire writes monthly columns for Nonprofit Pro and Maximize Social Business. Clairification was named “Best Fundraising Blog of 2013” by FundRaising Success Magazine. A member of the California State Bar and a graduate of Princeton University, Claire currently resides in San Francisco, California. Contact Claire via her blog or connect with her on Twitter, Pinterest or LinkedIn.
Claire Axelrad, Principal of Clairification