Your Secret to Mindblowing Fundraising – Improve Donor Retention Just 10%

Double the value of our donors? That would be mind blowing, dude!

 

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 Jay Love, founder of Bloomerang, less than 45% of fundraising offices know this answer!

So, you’re not alone.  But you can do better.

Because knowing your retention rate enables you to move it to something better.

And I’m going to guess, if you’re like the majority of nonprofits, you probably need to improve your donor retention.

At least if you want to grow.

Or maybe even just survive.

Just a small change in retention, up or down, can mean thousands of dollars.

It’s your choice whether they’re your gain, or your loss.

Donor Retention Math

Did you know a 10% increase in donor retention can increase the lifetime value (in dollars) of your donors by as much as 200%?

This blew my mind the first time I read the research from Dr. Adrian Sargeant.

You see, if you just focus on donor acquisition, You’ll find your return on investment is negative. On average, it costs $1.25 to generate a new $1.00. You also lose first-time donors faster than you can acquire new ones. Pretty soon you’ll have too few donors to sustain your mission.

Attrition rates are sky high, and have been for more than a decade per the Fundraising Effectiveness Project.

Data for last year reveal, on average, more than half of all donors leave your charity in a given year:

• First-time donor retention – 20%
• Ongoing donor retention – 61%
• Total donor retention – 45%
• For every 100 new donors, 99 were lost
• For every $100 raised, a net gain of only $102 resulted due to attrition and downgrading

There’s a lot of competition for donor dollars, and with the advent of the digital revolution the fight for donor mind share has become fierce.

You simply can’t afford to continue with business as usual strategies if you want to sustain support over the long term.

Focus on Donor Lifetime Value — or Else

Lifetime value means donor commitment over time.

Here’s a way to calculate your predicted lifetime value using data in your database:

1. Calculate the average number of years your donors stay with you.

2. Calculate the average gift amount (for most organizations the average gift is between $100 – $200).

3. Multiply the number of years by the average gift amount to find the total contribution a donor generates over their lifetime.

Only when you know the lifetime value can you intelligently determine how much to invest to acquire a new donor and retain an ongoing one.

Prioritize Donor Retention.

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.

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:

1. How many donors did you have in 2017?

2. How many of the exact same donors donated again in 2018?

3. What % of your previous year’s donors were retained?

Wherever you’re at, you can improve if you put in place an intentional donor retention plan.

If you’re like most nonprofits, however, you’re spending the lion’s share of your time acquiring new donors. And they don’t stay longer than two years. That’s not enough to make them valuable to you net/net.

It’s time for a change.

There’s No Excuse for Status Quo

Sometimes clients tell me their retention rates are good, so they don’t need any advice about how to raise more money.  They’re doing swell!

Really?

I’d say a lot depends on your definition of ‘swell.’

• If you’re content patting yourself on the back for results that match the previous year, then… swell.
• If you don’t really need to raise more money because fundraising represents a miniscule percentage of your budget, then… swell.
• If you don’t have waiting lists, or new programs you wish to roll out, or services that could be much higher quality given a larger budget, then… swell.

Otherwise… I don’t really care that your acquisition and retention rates are above the average.

It’s better than the alternative, of course. But they could still be poor results for you. Because you may have lots of unmined potential and be leaving money on the table.

If raising more money could enable you to do more and help more, don’t you owe it to your constituents to endeavor to do so?

Sometimes it doesn’t take much to increase retention and upgrade giving.

What are You Doing to Inspire?

You’ve got to inspire folks to get them to become repeat, consistent, loyal supporters.

Say you brought in 1000 new donors last year.  Sounds good, no? But… those 1,000 will shrink to 200 this year. And to 122 in the next year. After five years you’ve got only 17 folks left.  I’m NOT KIDDING!  You’re on a treadmill. In and out. In and out. You won’t be able to get off until you rethink your overall donor acquisition and retention strategy.

The easiest thing for you to do is to just become a better friend.

Treat donors as partners; not as strangers or ATMs.

Show them their investment is paying off and their labors are bearing fruit.

Not just once, but frequently.

With donors, your absence does not make their hearts grow fonder.

Just like with family and personal relationships, donors need reassurance you appreciate them. Because, alas, giving is seldom its own reward.  Donors need you to re-enforce for them the ‘goodness’ that comes from their giving. It’s you who bring your donor the meaning they seek.

“Donor loyalty is not about the donor being loyal to you. It’s about you being loyal to the donor.”

— Harvey McKinnon

There’s plenty of research showing giving leaves people with a warm glow – an actual shot of dopamine triggered by the brain’s pleasure center.

However, most nonprofits struggle with maintaining those feelings after a donation has been made.

Develop a Culture of Gratitude  

Make this an institution-wide culture focused on donor experience.

You want everyone who comes into contact with your donors – no matter what department they work in – to make your supporters happy.

Think creatively about all the ways you can delight your donors, and show them they mean more to you than they even thought they did.

The other things you want to plan for are specific strategies for thanking, recognizing, interacting with and reporting back to your supporters on a consistent basis over the course of the year.

Commit to making involvement and investment with you a transformation experience – a journey, if you will – rather than a single transaction.

Be a Better Friend

Treat donors as partners; not as strangers or ATMs.

Show them their investment is paying off and their labors are bearing fruit.

Not just once, but frequently.

With donors, your absence does not make their hearts grow fonder.

Just like with family and personal relationships, donors need reassurance you appreciate them. Because, alas, giving is seldom its own reward.  Donors need you to re-enforce for them the ‘goodness’ that comes from their giving. It’s you who bring your donor the meaning they seek.

“Donor loyalty is not about the donor being loyal to you. It’s about you being loyal to the donor.”

— Harvey McKinnon

There’s plenty of research showing giving leaves people with a warm glow – an actual shot of dopamine triggered by the brain’s pleasure center. However, most nonprofits struggle with maintaining those feelings after a donation has been made.

Help Donors Bask in the Glow of Their Giving!

The best way to begin is simply to have a conversation with them.

• Provide contact info so they can reach you with inquiries
• Ask for feedback via email
• Seek input via questions you pose in your e-newsletter
• Ask for thumbs up or down on social media
• Send a brief donor survey
• Make a thank you phone call
• With major donors, set up an in-person visit (‘office hours,’ tour, site visit, event, coffee, lunch, etc.)

Do whatever you can to find out more about your donors so you can show them you know them.

Don’t automate, outsource or delegate everything.  Sure, these can be useful management tools. But be thoughtful and use common sense.

Can you imagine meeting someone at a coffee house for a first date, thinking they have promise, and then sending an automated form text as follow up? Or delegating the next contact or meeting to your best friend? Or hiring a company to call them to find out more about them?

Remember, good relationships are personal.

Develop a Written Relationship-Building Plan

If you want to build loyalty, you’ve got to build relationships.

Your donor’s second gift is so much more valuable than the first one. The third gift is more valuable still. And so on and so on.

I often say “if you want gifts you must give them.” So build a cultivation/retention/relationship plan that’s filled with lots of little gifts:

• Stories of impact.
• Useful content such as “how to tips,” white papers, recommendations, expert advice, etc.
• Fun, relatable content like jokes, entertaining pictures, recipes, inspirational quotes, etc.

Show interest in your donors and don’t leave them hanging.

The primary reasons donors leave are related to poor communication on the part of the nonprofit: Others more deserving (you didn’t continue to make your case); Thought you didn’t need them; No memory of every supporting you; Not informed about how the gift was used; Not reminded to give again.

Your 3-Part Donor Loyalty Plan

1. Begin with 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.

2. Focus on a second gift strategy:

• You need a donor welcome package.
• You need to pick up the phone and thank first-time donors (if not all, then above a certain amount).
• 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.

3. Incorporate ongoing communications:

• 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.

Want to Achieve Mindblowing Fundraising Results by Improving Retention?

Get my Donor Retention and Gratitude Playbook. You’ll get 6 separate companion guides (at a bargain if you buy the bundle)!  Or you can purchase them individually. Taken together, they are a complete Donor Retention ‘Bible’ — everything you need to raise more money by keeping your current donors and increasing their average gift! It’s filled with hands-on, practical information garnered from my 30+ years working in the nonprofit trenches. This stuff works! The Attitude of Gratitude Donor Guide alone is 98 full pages, with lots of ready-to-use samples and templates. You’ll save almost a third if you buy them all together. And you get another almost 50% off if you’re a Clairification School student!

Make this your year to increase donor retention just 10%, and the lifetime value of your donors by a mind blowing 200%!!!

 Photo: Flickr, Walt Jabsco