Raise More, Ask Less — Part 3
At this point it’s abundantly clear that simple ‘ask more, make more’ is a broken or at least badly dented concept—especially for those organizations that engage in 15 or more appeals/asks with their donors each year.
(For those still struggling to get their CEOs or Boards to buy in to a schedule of 3, 4 or 6 appeals a year, the first two Parts of this series may seem pretty esoteric. But later on I have some great stuff for you too.)
In Part 2, we noted that by paying attention to ‘ask tolerance’ — the reality that some donors do give more the more they’re asked, but a substantial number give less as the number of asks goes up — dramatic increases in net revenue can be realized.
In short, by using transactional analysis and statistical modeling, organizations that ask frequently (15 -50 times a year) can ask less, make same for some donors, and spend less and net more for many other donors on the file — generally 20% to 30% more.
Want to do even better than that 20%-30% improvement?
Even those organizations that send 30 or 50 appeals can indeed ask less and make more argues Kevin Schulman in the white paper he prepared for this Agitator discussion. [Download Kevin’s paper here.]
How do you do that? Kevin recommends we take a lesson from Domino’s Pizza. A new CEO was brought in to a Domino’s that had just had the two worst sales years ever. No growth. A highly competitive market.
The new CEO elects to conduct customer research — largely qualitative — and learns that the customers hate the pizza. I’ll let Kevin finish the story:
“This was tough to hear. Easy to ignore and even easier to rationalize away, which is exactly what happens every time a consultant or nonprofit staff person chooses to discount donor comments about the amount of mail, email, etc.
“Mr. Doyle [the CEO] is clearly not in the fundraising sector. Not only did he elect to internalize it, he made it public with nationwide TV ads showing customers complaining about the pizza. Then, Mr. Doyle appeared on the screen with an apology and a promise: ‘We hear you America. Sometimes you know you’ve got to make a change. Please give us another try.’ In the three months following those ads Domino’s had the fastest rise in sales in company history.”
Kevin goes on to ask if those of us in Fundraising Land hear our donors the way Mr. Doyle heard his customers? There are lots of industry chatter about being ‘donor centric’, but are we really listening?
Here’s an actual donor comment:
“You send me wayyyyy to much paper mail, and I need it to stop!!I love giving to you every year, but I can afford to give small amounts. When you constantly send me thick, expensive paper mailings asking for more donations, it’s a complete waste of my donation. It feels awful to see that my annual donation was probably worth less than what it cost you to send me all that mail. So wasteful. Please help it stop so I can feel like my money is going somewhere other than right back into my mailbox/recycling bin.”
I’m sure every Agitator reader has received such a comment. And I’ve worked for enough large charities to know they receive thousands of these comments a year. And I also know that what Kevin claims is also true:
“Most put their collective finger on the “mute” button, making it hard to find contact information, rarely soliciting feedback in a pro-active manner and never, ever doing continuous listening and interacting.”
I was more than shamefaced when I got to this point in Kevin’s paper, because for years I sloughed off these complaints about too much mail by nodding, then solemnly pronouncing, “You can’t please everyone.”
And frankly, I’ll bet that’s the general feeling among most of us who also label ourselves ‘donor centric’.
I have to confess I’m no longer comfortable with that easy, dismissive answer. Nor, as you can tell from the posts I’ve written on seeking donor feedback (here and here), do I believe we can continue to keep the ‘mute’ button on and ignore the ‘complaints’ of donors.
Why? Because I believe that the lousy retention and no-growth rates we’re experiencing are related to the way we treat donors. And then fail to listen to the voices of these donors whether they’re saying “stop sending me so much mail” or “I can’t figure out your donate page”.
Are ‘Complaints’ Really Complaints?
Consider another donor’s comment cited in Kevin’s paper:
“You don’t have to spend so much sending me solicitations nearly every month. My family will continue to donate with one simple reminder a year.”
Nearly a generation ago Ken Burnett, in his classic Relationship Fundraising, argued at the height of the ‘burn and churn’ era of direct mail, that we should spend far more time and effort determining and abiding by the donor’s desires.
Now along comes Kevin, backed by research conducted by DonorVoice and by Agitator readers and others, arguing the same point as Ken Burnett. “The thousands of comments like these [the donor comment above] are clear indicators — better than any behavior data — of two very important factors: 1) Preference and 2) Intent.”
The Intent in that comment is to keep giving. “We’ve analyzed tens of thousands of donor comments…and found that the vast majority of the ‘too much stuff’ comments are not complaints at all. They are attempts to help the charity. They have an expressed intent (implicit or explicit) to keep giving.” [Emphasis is mine]
The Preference is merely for less stuff. “It is almost always vague and general. The donor preference stated with a high degree of specificity — e.g. I just want to get 2 direct mail appeals, one renewal mailing, the annual fund, no reports, the e-news 4 times a year and a matching gift offer at the end of the year — does not exist.”
Of course, the key to using this information lies in what we elect to do with it, according to Kevin. “This vagueness is an opportunity to put together a thoughtful, specialized set of communications.”
“Unfortunately, ‘special’ is not a part of how this gets operationalized. Instead, this donor and others like her get coded in the CRM system and get the same stuff they used to get — just less of it. Often, the preference isn’t even acknowledged, just coded into the database and marked as ‘task completed’.”
Tomorrow, in the 4th and final part of this series, you’ll see examples of how some Agitator readers are Asking Less and Raising More.
Please keep your questions, comments, agreements and dissent coming our way.
Roger
6 responses to “Raise More, Ask Less — Part 3”
Behavioral Science Q & A
Integrating an individual giving appeal with other communications from a charity can have both positive and negative effects, and the outcome largely depends on how it’s executed. Advantages of Integration Brand Consistency: Maintaining a consistent appearance and messaging across all communications can reinforce the org’s brand identity and strengthen brand recognition and trust among your […]
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I’m not aware of any in-market tests specifically comparing recurring vs. gift frequency language. I suspect the answer might not be the same with all gift frequencies, nor with all people. It sounds like a great opportunity for you to test and find out what works for your audience. Based on the literature, here’s a couple […]
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Based on what we know from existing data, those renewal notices can actually be pretty effective in getting people to donate. They tap into our psychology – creating a sense of urgency, reminding us of past support, and using personalization to make the message hit home. They’re playing on our natural tendencies to feel obligated […]
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Interesting question. I had a quick look at the testing done on this topic. On the positive side, in all cases, over half of donors decide to cover the fee. In some cases, it goes as high as 65%. Not a negligible percentage at all. Here’s another test from iRaiser showing consistent results (see point […]
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There’s just one thing to consider when designing a supporter journey: the supporter. More specifically, you need to take into account: Who the supporter is i.e. their identity, which is the reason they support this cause, and their personality, which describes the way they “see” and process the world. These will determine the kind of […]
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I’m not an expert in this but a quick search surfaced this article on the effect of tax reforms on 2019’s charitable giving. The researchers didn’t find a reduction. Actually, they observed an “increase in charitable contributions in 2019, even with the lower tax rates and the dramatically smaller number of taxpayers who itemize their […]
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I’ve witnessed a kind of fear among many organizations worrying that, if they don’t continuously mail donors, someone else will. It’s kind of like being in line at the grocery store. If I get out of that line, someone else will get my spot. “Out of sight, out of mind” goes the thinking.
Lester,
I think you are identifying an important mental barrier or point of view that prevents considering that which is being suggested in these posts and the paper; the plausible argument that the mail/email/asks that go unresponded too deserve “soft” credit in contributing to future response.
The counterpoint to that is twofold. If this thinking holds water – and it may, to a point – why not keep mailing people forever? Why stop at 24 months or whatever time frame is considered “lapsed”? We know reinstatement response is higher than cold list so might it be even higher if we didn’t go totally dark between the time period that someone “lapses” and when we elect to contact them again for “reinstate”? Do the mailings magically stop working for soft credit at 24 months?
The other equally plausible – and reinforced by feedback from donors (not complainers who don’t donate but good donors who give) – is that all those extra mailings/asks have a negative impact, not a positive one.
But for those who believe (with no basis) the “complainers” are a different and small group of non-donors then they should feel obliged to continue mailing in month 25, 26, etc.. and yet they don’t.
I’ve enjoyed reading the first three parts of this series. But, then again, I’m a fundraising nerd. Suggest improved practice based on data, and you’ve hooked me.
However, there is one aspect to this series that disappoints me. The series has focused on the impact of multiple appeals on individual current giving, particularly the Nth appeal. While it is certainly important to consider this, there are two things glaringly missing from the analysis: How do multiple appeals affect long-term donor retention rates? How do multiple appeals influence donor Lifetime Value (LTV)?
Sending out 15 appeals per year MIGHT be the way to maximize net income in a given year. However, if we looked closely at the long-term data, we might find that donor retention rates actually improve if we ask less. And we might also find that major gift and planned giving numbers go up when fewer current giving appeals are made. Or, maybe not. Until we look at the impact of multiple appeals on donor retention and LTV, we will not have a complete picture.
I’ve raised these issues and shared additional data from Andrew Olsen at The Russ Reid Agency in my own post: http://wp.me/p1h0KY-JN .
Michael,
I have been part of many different analyses on this subject, and I come to different conclusions then both Olsen and Roger, but that again is only in the nuance. I say again, please do not let the nuance of this argument kill it.
My research has shown that if you mail more you will get more, and you will also spend more, but in general can raise more net revenue. However you will also simultaneously propagate ill will from some donors. The two things can and do exist at the same time. Fortunately we do not have to guess at what the impact of an additional mailing or ten is. The one thing non-profits have plenty of is data.
In our Contact Cadence/Audience Audit for example, we do in fact measure both short and long term gains. I have also done some research calculating the correlation between number of mailings in a year and retention, and there is a positive correlation.
I have not however looked at Life Time Value as it relates to the number of solicitations one gets during their life time as a donor. However from the research I have completed I think the answer would be similar to the retention correlation.
In any case I second your call for data as the tool to help drive these decisions, and the good news is, most organizations have this “small data” already.
All of the above makes perfect sense. Admirable, analytical sense. Thank you, Michael, Roger, Kevin and Lester. But in our industry’s quailing, flailing quest for “what works every time” – i.e., the physical laws of the donor-verse – there’s something else at play, I think, that is hard to quantify and therefore ignored: relevance of communications to the donor’s sense of self. ¶ This is personal. This is non-quantifiable. But … as a donor to 20 or 30 causes a year, I can attest that causes that make me feel part of something wonderful, causes that love me up one side and down the other, are always welcome in my home. The others … well, I stop giving. I don’t have a connection. Domino’s asked its customers if they liked their pies. Those customers said, “Your pies taste like shit.” And so Domino’s changed its ways. Does Domino’s deserve a lot of credit for finally doing customer research? Hardly. They were decades late to that dance. My take-away isn’t, “Like Domino’s, talk to your customers.” (Though, of course, that, too: donors are customers, so talk to them.) My take-away is: Stop making shitty-tasting pies. Dear charities: your donor communications are your pies. Stop delivering shitty-tasting ones.
If we continue to only examine this question of impact of our communications (e.g. solicitations,”stewardship”, “engagement”) by looking at response, clicks and conversions then we’ll never get a complete or accurate answer. And more importantly, a different perspective on how to run the business.
The problem with just response/behavior data is – as Michael indirectly hints at – is that we don’t measure our failure, only our success and even then we don’t do that very well since the “winning” test with marginally higher response rate, net, cost to raise a dollar (whatever…) doesn’t tell us anything about the non-responders and how much loss may have been incurred in the form of future revenues not received.
The reality is that very few donors stick around and those that do make very few donations per year (very few). This suggests massive inefficiency with a model that says the answer is spend more to make more and the incredibly oversimplified analysis that supports it.
But, it also suggests a model that is ineffective, which is very different from inefficient. We have ample evidence that the mass market, treat them like widgets approach with – as Tom Ahern points out – no understanding of personal identities, motivators, preferences and needs leaves enormous sums of money on the table in the form of churn, which reduces LTV.
There are exceptions in the sector, just not many. Identity, motivators, needs and preferences actually can be measured just like response rate. This means we can understand our failure and the impact it has retention and lifetime value.