Stop measuring donor retention if you’re not going to invest in it

October 15th, 2018

I have seen it in countless organizations. They measure retention annually, fret about it when they see it dip, and then… nothing. No change in strategy, no investment in research, and no investment in a defined retention strategy. If a change in strategy is made, it is usually to increase acquisition investments and/or increase solicitation volume. More! More! More!

Measuring retention is the first step. The next and more important step is investing in it. Acquisition is important; you need to invest in growth, and you need to offset natural attrition. However, it can be 10 to 25 times more expensive to acquire a donor than it is to retain one.

The high cost of acquisition is not the only reason to focus on retention. Consider a study done by Bain & Company that found that as little as a 5% increase in retention can lead to revenue gains in excess of 25%. Moreover, the most recent Blackbaud Next Generation of American Giving Report revealed that while the total dollars donated is growing, the population of givers is shrinking. A shrinking donor population is an even greater reason to focus on retaining as many donors as possible. Plus, long-term value analysis reveals retained, multi-year donors are your most valuable donors.

Organizations need to dedicate a certain amount of budget and strategic focus solely on retention. The top producing nonprofits that are successfully retaining donors are putting in place specific programs with a dedicated budget. And organizations of every size can learn from their lessons. I did. In my former position at an international relief organization, I lobbied the board for additional funding, most of which we would invest in a specific retention budget. We conducted a deep dive into the history of the program, identified specific pain points, reviewed the entire donor journey and touch points in all channels, and then developed an annual strategy not just geared to raising money, but also at improving retention. We knew that one way we could increase revenue was by making small, incremental improvements in retention. And we did. We were able to increase overall retention by 10%, which resulted in the first year of positive revenue growth in nearly four years. So how did we do it?

Make the case

We started by making the case internally. We pulled together examples to show the executive team and the board that top organizations know how to protect their base of donors and understand how to keep their most essential donors for longer periods. Top organizations also realize that there is a healthy (and even acceptable) level of attrition among donors and that losing low-revenue donors can be okay, as long as you protect the core donor cohorts that drive the bulk of your revenue. We showed how 1-2% improvements in retention on our most valuable donor segments could increase revenue.

Use data and analytics to inform your strategy

Once the additional funding was approved, we went to work. First, we dug deep into the data. We analyzed retention by segment and by channel to uncover strengths, weaknesses, and opportunities. By digging deeper, we found specific segments and points in the donor journey where the drop off rates were high. Our analysis took us even farther back in the donor journey to the very beginning, our acquisition strategy. We dove deep into the long-term value of all of our acquisition efforts by source and by channel. As a result, we adjusted the timing of our efforts and developed a dual track acquisition strategy to allow for rapid, but also sustainable growth.

Focus on donor engagement

Data is not the only tool that should guide your strategy. We looked at cost-effective ways to produce content that was engaging, that connected the donor to the mission, and that ultimately put the donor at the center of the experience with the women they were impacting.

For example, we implemented a thank you gift for our most valuable donors that also connected the donors to the mission. Donors were sent small gifts that were handmade by the people in our program. We included the story behind the gift, explaining that because of that donor’s generous gift, a person now has a thriving business producing handmade items. That empowered the donor to use that small bracelet to tell the story to the next potential donor.

Remember, you are not your target audience

It is always good to stop and remind ourselves that we are not the target audience, the donor is. Many times, we fall into the trap of placing our preferences on donors, thinking we know best. The best way to guard against assuming false donor preferences is by talking to your donors. You can accomplish this in several ways. Surveys are a perfect way to gather donor feedback. Also, talking to your donor services team on a regular basis and allowing them to relay what they are hearing on the phones and through emails with donors is useful. After all, donor services is on the front lines with your donors every single day. You will find nuggets of gold in almost every complaint.

After you inform your process with feedback from your donors, the next step is putting yourself in their shoes. We did this by mapping out our donor journey by donor segments. We uncovered holes in the experience. We also realized the content did not connect the donor to the individual stories driving the mission.

We overhauled the donor journey, mapping out the timing for sending specific content. We reinstated physical letters, which had been pulled from the program to save money, and integrated them with our digital communications. We connected stories of individuals impacted by our mission with the content the donor received. And we encouraged the donor to engage more with us. Not a single one of these pieces of communication asked for money. Sure, we always made it easy for the donor to give by including a donate button or a return envelope, but the point was to create a more engaging experience and increase retention.

Retention takes a village

Increasing donor retention should be an organizational effort, not just the priority of the fundraising team. Your donor-centric direct response team should be your organization’s learning center. Report donor feedback to the entire organization, because that will allow each team to learn how to adapt and perform better. Always remember that donors are the investors in the work you do. It is up to the entire organization to keep your investors informed about how you are putting their investments to work.

Work closely with your donor services team so they are armed with knowledge of the programs as they speak to donors on the phone. Work with the teams that execute your programs so that you stay up to date on what to report back to your donors. And work closely with your communications team so that when audiences overlap, your messages are aligned. There is no easy button. It takes the entire organization to commit to retaining your donors. After all, without them, your mission is just a dream.

Collin Ward
Sr. Vice President
Newport One

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