Donor Churn: How To Stop It Before It Starts
Few organizations truly understand why donors leave, let alone know when the donor makes the decision to leave.
As a result, millions are spent in the mistaken belief that donor churn (aka ‘attrition’) can be solved through navel-gazing ‘best practices’ labeled with all sorts of nonsensical terms like ‘stewardship’, ‘engagement or loyalty touchpoints’, ‘ask/no ask’.
None of these ginned-up strategies has worked. In fact, most have had the opposite effect — churn increases.
And for good reason. They’re almost always applied after the donor’s decision to abandon ship. Too little too late. The horse is out of the barn.
That’s why The Agitator is pleased to give our readers an advance look at a brilliant, new paper by our colleagues over at DonorVoice.
Click on image to enlarge.
It’s titled: “Donor Churn: How to stop it before it starts and why current approaches prevent this from happening.” You can read it right here.
Stopping churn — and increasing retention — begins by understanding and accepting the fact that current ‘best practices’ are deficient. Instead make the effort to put in place the proven fixes outlined in the DonorVoice paper.
Tests show that the effort is worth it. In fact it amounts to a true ‘silver bullet’. Look at these tested upsides:
- 3X increase in acceptance of additional offers;
- 50% decrease in attrition;
- 35% increase in net income.
I urge you to read and understand the detail presented in the section “Four Issues That Get In the Way of Fixing Donor Churn.”
- Thinking churn can be addressed when donors call to quit or with a reinstatement program.
- Believing churn can be fixed by sending more communications dubbed ‘engagement’ or ‘loyalty’ touchpoints, meaning those with no hard ask.
- Only assigning value to transactional data and being forced to guess at the ‘why’ of donor behavior.
- Treating donor service as a cost center and a burden.
You’ll find a fix for each of these four issues in the paper.
Fortunately, as the paper notes: “Slowly, ever so slowly, the nonprofit sector is waking up to the realities of donor churn and attrition. Leading organizations — distinguished by their mindset, not size — are re-examining the way they think about donors, non-transactional data, relationships and service.”
They are systematically tackling the four issues that undermine retention and growth.
They are discovering the silver bullet.
Roger
P.S. We’ve asked Kevin Schulman and the folks at DonorVoice to schedule a webinar for Agitator subscribers on stopping churn. It will be scheduled for early December. As soon as a firm date is set we’ll notify our subscribers.
4 responses to “Donor Churn: How To Stop It Before It Starts”
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 […]
Read Full Answer
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 […]
Read Full Answer
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 […]
Read Full Answer
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 […]
Read Full Answer
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 […]
Read Full Answer
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 […]
Read Full Answer
Roger:
Excellent post from our colleagues at DonorVoice. I agree that the retention numbers are increasingly bad and really resonated with the non ask touch points. Looking forward to the webinar.
Thanks so much for sharing this link. I like to think of myself as a smart, tech-savvy person but, for what it’s worth, I had a very difficult time figuring out how to download the report. Perhaps it’s a user problem on my end but I thought I’d offer the feedback in case others are struggling but not saying anything.
Thanks for sharing Donor Voice’s paper on Donor Churn, which I think gives some very good advice to those of us who focus on donor retention. It contributes to the Agitator community’s growing body of work on retention, and builds on the Bain & Co. report, which has received wide readership in our sector.
I also appreciated the paper recognizing that monthly donor retention differs from trying to get a new one-off donor (a ‘warm’ lead, in the Agitator’s world) to give again, and again thereafter. As such, my comments today are limited to the retention of donors who have agreed to give regularly (usually monthly) via an automatic payment method – usually direct debits or credit cards.
Kevin and his Donor Voice colleagues are spot-on to recognize that fixing attrition before its ‘trigger’ requires organizations to deliver interactions that generate positive experiences for their regular givers, from the point-of-recruitment and onwards
But my experience as someone who works with large international and non-governmental organizations who raise funds across dozens of national markets –and do so primarily through regular giving – leads me to disagree with two main assertions of this report:
First, that transactional data will never let us know whether a particular interaction contributed positively or negatively to the experience being delivered to most donors. And secondly, that trying to address the final trigger or ‘churn point’ is high cost and low benefit, or “too-little-too-late.”
The impact of the various interactions that a charity initiates – essentially the one- and two-way communications by which a regular donor’s experience (positive or negative) of the organization and the needs they address is built – can indeed be measured. Simple control vs. treatment / A vs. B split-testing of such interactions, and rigorous analysis of the data they generate can, and does, lead to improved retention.
For example, the impact on the subsequent retention and long-term value of sending a welcome mail pack (and other similar “loyalty” touchpoints, as they are referred to in the paper), or of making an upgrade / cross-sell telephone call (and other “engagement” asks and offers) can indeed be tested and measured, and the data they generate analyzed to significantly improve monthly donor retention. And I agree that donor surveys – in effect, a two-way engagement offer that is part of the larger loyalty-building experience – can help to identify and fix bad experiences and build on positive ones.
Likewise, by asking regular donors for more money (an upgrade, an additional one-off gift, etc.), the offer – simply by making it – will generate at least three distinct new groups of donors (those that said yes; said no; or could not be reached with the ask …) And in addition to the immediate response metrics such asks generate, the subsequent retention of each group can then be measured by analyzing the regular payment patterns (or missed payments) that follow. In my experience, these patterns are generally similar across countries and organizations: asking for the right thing, in the right way, and at the right time (as determined by testing) usually improves retention – even with those who say no to the ask or offer.
And while the impacts on retention and long-term value of sending so-called loyalty communications (or not sending them) are more difficult to measure – because they do not generate immediate response – they too can be tested, analyzed, rolled-out or stopped. So for the paper to say that charities have “ginned up” on internally-conceived, in-market tests to improve the communications that drive their positive donor experiences – and that none of them have worked – seems more than a bit unfair to me, and to the fundraisers who have built sophisticated regular giving programs with excellent retention through rigorous testing, data-analysis and a drive for continual improvement. In short, I find it hard to believe that, with few exception, no-ask touchpoints do not impact on loyalty. I have seen many examples of how improved loyalty communications have significantly reduced churn, and I’m sure that other Agitator readers have too.
Second, I believe it’s inaccurate to suggest that a significant amount of churn cannot be mitigated by effective ‘saving’ efforts that are triggered when a monthly donor calls to quit or, as is more likely, their next expected donation is simply not received. This is because, with monthly giving, a significant percentage of failed payments are due to banking or transactional issues: temporarily blocked, or over-limit, or just-expired credit cards, for example, or due to bank account number changes.
I have seen many cases where, once saving programs have been put into place, regular donor retention increases significantly. Yes, much of the gains are due to correcting the payment transaction problems of donors – many of whom had no idea that their last payment ‘failed’ and certainly want to keep on giving. And for organizations that excel and the ‘science’ and ‘art’ of saving, even regular donors who do want to stop can be convinced to continue: by adjusting their gift amount, or payment frequency, or through a temporary suspension of payments – and by asking them why they want to stop giving, and then addressing their reason – or complaint – for doing so.
As such, I fully agree with Donor Voice that asking our regular donors why, and listening to their answers, is so important to building retention – and why donor saving and servicing should be united into a revenue-generating center that builds long-term value, and loyalty.
Don,
Good to hear from you and I’m glad you got the paper. I’m also glad to hear the Bain version that inspired ours has “made the rounds” in the sector too.
Your critique is both thoughtful and well reasoned. Thank you. I hope you and I can connect in a separate forum to more fully discuss. Until then, I wanted to offer up a clarification and a couple observations.
The industry data – globally – shows retention is on a downward trend. There may be examples of charities improving retention year over year but they are the rare exception, not the rule. In short, churn is a problem that is getting worse, not better.
As a qualitative, experiential point, I don’t know of a charity with “excellent” retention of their monthly donors but expect that depends on how one defines “excellent”. Most (not all, I’m sure) lose 50% of them in the first year and that would seem a scenario with room to improve and yet the trend data say it is not happening.
Doing business differently would seem a mandatory requirement. A/B testing of welcome kits and upgrade ask’s and everything else under the sun is pretty standard practice as I’m sure you’d agree. Similarly, we know of many charities who have done extended, multi-month pilots with a test track that is 100% ginned up internally. Meaning, there is no theoretical or even practical, data derived basis for what goes in the test track except, more often than not, a view that it should include more “loyalty comms”.
What does this suggest about the the comms that do ask for money, they are not builders of loyalty? There is zero basis for this premise based on work we’ve done – across countries – that identifies the touchpoints that cause loyalty and lifetime value whether they ask for money or not. In our work we’ve found the answer is a) different for each organization and b) found zero evidence that no-ask comms contribute and ask comms do not.
So, why would one set out to improve loyalty and value by creating a test track that only includes more no-ask comms as the test? The presence of the ask (or not) is not the determinant of success for loyalty and value and yet the sector, by virtue of what these so-called “loyalty programs” tend to look like clearly assumes otherwise. This is why these programs do not work.
Guesses going in and faulty premises to boot in a world with infinite options yields incredibly low chances of sustained success.
An important clarification, our assertion is “…transactional data cannot, no matter how much you torture it, tell you why something happened.”
Yes, I can A/B test two upgrade appeals and deem one the winner by virtue of response. I can wait for time to pass by and deem one of them better on retention rate. This method never provides any data for the vast majority of the file – the non-responders. They are all “0’s” with a “1” meaning someone took an action. We don’t know what caused the 1’s to be different from the 0’s (chances are, nothing but randomness) and we have absolutely no way to discriminate among the 0’s. Some of the zero’s will respond at a later date. Is that because of the A/B test they received? Did it have any weight or bearing on the decision to give? What about the commercial or advertisement they saw in between? And what about the donor service interaction they had in between or the website visit or the myriad of email comms they got between the A/B test and their next recorded transaction?
The world of “attribution” and cause and effect as is typically done in the sector – using only transactional data and only a portion of it – is incredibly error prone and often misleading. There are some charities who have done more complicated survival analysis with a stream of 1’s and 0’s over time to identify “cause and effect” but this too excludes troves of data (behavior and qualitative) and still leaves guesswork at the end about why.
I’ve likely typed too much already. My apologies. Let me just end by reinforcing your closing line, which is brilliant (and copied below). My only strike out would be removing “regular” (this all applies to cash givers as well) and to underline “servicing” and define that as something that should occur around all the touchpoints and across departments. If “servicing” is understood and operationalized to be nothing more than a skeletal staff and budget to passively wait for the phone to ring with complaints then we’ve missed the mark and the opportunity. Servicing is (or can be) the new fundraising.
“asking our regular donors why, and listening to their answers, is so important to building retention – and why donor saving and servicing should be united into a revenue-generating center that builds long-term value, and loyalty.”