“Hold The Line!”

January 30, 2015      Admin

My recent post — Acquisition Addiction — has caused a bit of reader consternation that The Agitator might view the ‘acquisition’ and ‘retention’ sides of fundraising as an ‘either/or’ proposition.

I don’t want to leave that impression.

Of course nonprofits need to prospect for new donors.

However, what I am interested in (and I know I speak for Roger, given that he’s written a book called Retention Fundraising) is redressing an imbalance in priorities as we see them today in many, if not most, nonprofits.

That imbalance is, in our judgment, over-weighted on the side of acquisition.

Consider this scenario.

I’m your boss, the fundraising-savvy CEO (maybe that’s a stretch) of your organization.

I call you into my office in January and say:

“Liz, I’ve been looking at those close-out numbers you gave me for 2014 and see that while we gained 20,000 donors/members in 2014, we seem to have lost 30,000 of the 100,000 we started with in January 2014, so we’re down 10,000 for the year. We moved backward in 2014 … we now have 90,000 donors. You need to hold the line! How are you going to do that in 2015?”

If your answer doesn’t begin with a discussion of how — and by how much — you’re going to improve retention, I’m going to be very edgy … you’ll be able to tell by my facial tick.

And worse, if you try to reassure me that you have a new aggressive prospecting program in mind — with spiffy new creative from our fundraising agency — that will produce a bit of net growth even in the face of a pesky 30% attrition rate (“You just need to live with that, boss, it’s the sector norm.”), I’m probably going to begin looking for a new fundraiser.

Any acquisition strategy should begin with a retention improvement strategy.

That’s the only point I was trying to make.

Tom

 

10 responses to ““Hold The Line!””

  1. BRIAN WEINER says:
    January 30, 2015 at 6:30 am

    Tom…

    With all due respect to retention and acquisition, which have been capably represented in this column and others, it is recapture strategy that is critically important.

    Our experience over the last 13 years has proven that no development plan is complete without an effective concept for recaptures.

    To date, we have experienced measured recapture rates over 9% on donors lost less than 48 months…and that is based upon thousands of appeals since 2003.

    With an effective recapture strategy, Liz would likely be down less than 1,000 donors from her hypothetical pool of 100,000…and the value of historic donors to her organization is obvious; they simply yield more and become valuable opinion leaders if re-engaged properly.

    Tom…time for a column on recapture.

    All the best,
    Brian Weiner, President
    The One to One Group
    Boston, Raleigh, Sarasota

  2. Simone Joyaux says:
    January 30, 2015 at 7:49 am

    To me, recapture is about loyalty in the first place. Why did we lose them? What didn’t we do…. (Competent relationship building with great thank-you letters, a welcome package, marvelous donor-centered newsletter, and a dash of extraordinary experiences beyond those thrown in.)

    So yes, let’s recapture… Because we shouldn’t have lost them in the first place… that’s loyalty.

    I had an interesting chat with a state public charities regulator. He was furious with the cost of acquisition. I told him that the cost of acquisition didn’t matter…. it was the retention that mattered. And that, actually, was his point. He didn’t care about how much it cost to acquire as long as NGOs were retaining. And he was FURIOUS that NGOs didn’t work hard on retention. He was FURIOUS with churn and burn.

    His fury …. also applicable to smart bosses and boards and donors and and …. worries me. When will NGOs get their act together to behave like smart businesses? Customer-centered. Donor-centered. Consumer oriented.

    Loyalty is the Holy Grail — as Tom and Roger and so many of us say — of fundraising and any business. And if we focused more on retention, we might not have to focus on recapture. And we wouldn’t be losing more than we’re recapturing or acquiring.

  3. Brian Weiner says:
    January 30, 2015 at 7:59 am

    Simone, even the most gifted fundraisers lose donors. We all know this. Moreover, the reality of lost donors is staring every organization in the face…today! Retooling for tomorrow is a road that has been well traveled by you and others.

    The solution for “Liz” and her “here and now” reality is to recapture and, more importantly, reignite the passion and support of her past donors. Loyalty IS the holy grail, yet even the most loyal of us are distracted by other causes.

    A lapsed donor is not disloyal…just disinterested. Life tells us that these passions can be reignited. At a rate of better than 9%…not a bad use of resources.

  4. Lisa Sargent says:
    January 30, 2015 at 8:10 am

    Thanks for clarifying Tom. Maybe acquisition addiction is more of a mega-charity phenomenon? This might explain why some of us haven’t experienced it so much. Because the thing I see more often is the opposite: acquisition aversion.

    In fact I can think of a midsize US org whose board, years back, moved to suspend all acquisition. They had a superb retention program, mind you (something that speaks to your fine point about having a back-end retention strategy in place and approved before bringing in new donors then treating them to mission incommunicado).

    We politely told them their no-acquisition decision was the highway to stagnation. But sadly like a lot of orgs they saw acquisition as a tawdry, boorish neighbor, viewed with disdain and called on only in case of emergency.

    It took almost four years before the results proved us right: flat revenue, teetering donor base. I think they use a big agency now and to its credit, acquisition is back on — and ongoing — as it should be. Coupled with that still-solid retention program, their growth has more than doubled.

    Acquisition isn’t dirty. Asking isn’t evil. Donor newsletters aren’t a waste. Thank-yous aren’t superfluous. It’s all good, for good. You just have to do them properly.

    Now… single-sided, sans serif, 9-point, block text boilerplate letters? THAT’s worth a seek and destroy mission! 🙂 Love you guys, as ever.

  5. Erica Waasdorp says:
    January 30, 2015 at 8:37 am

    All great stuff!

    Every time I do a webinar on monthly giving (one of the greatest retention tools ever!), I ask organizations a question: how often do you mail to your donors now. You know what the bulk of the answers say: once or twice a year!

    They are leaving so much money on the table!!

    Never mind acquisition, never mind recapture (or lapsed reactivation as I tend to say)…

    here’s the long and short of it; you have to do it all! Every piece is part of the puzzle.

    Keep your donors, reactivate those you lost (even though in many cases you did not actually lose them, they just have not given in a few years), bring in new donors, ask donors to join a monthly giving program and ask donors to leave you in their will.

    Yes, it’s a lot of work, but when you ask those same organizations if they have a fundraising plan with all of these elements in them, the answer typically is NO…

    so, start with a FUNDRAISING PLAN include all of the elements (acquisition, thank you/cultivation, ongoing donor appeals and cultivation pieces, monthly giving, legacies, lapsed reactivation and major donor activities)

    and no boss is ever going to tell you to go away..
    because you’ve got it covered and you’ll work towards achieving your goal and growing your donor base full of happy donors who love investing in your organization.

    One such plan can fit on one piece of paper, preferably excel… happy to share examples if you ask me.

    Cheers, Erica

  6. Eleanor says:
    January 30, 2015 at 9:38 am

    Erica, I would love to see some samples! My email is Eleanor.finger@gmail.com

  7. Jay Love says:
    January 30, 2015 at 9:54 am

    Oddly enough all of the Bloomerang customers with donor retention rates above 70% do not seem to have much of a recapture strategy…

    Yes, a certain amount of churn is going to happen, especially if you have any events at all. But if the donor retention rate for all of the donors, at or above your average gift amount, is 80% or more, then the DOLLAR retention rate is going to be in place to fund most any mission!

  8. Mike Cowart says:
    January 30, 2015 at 11:23 am

    The sad news is that most of the sector we work in lacks any knowledge of how many donors lapsed. In a room of 90 development professionals, only 5 knew their attrition rate.

    Their basement is filled with termites, their house is going to collapse, and they continue with “same song- second verse”! The industry average for attrition ranges from 60%-70%!

    There’s horrible stewardship of first time donors.

    Apparently, Liz doesn’t have any accountability, or her boss doesn’t care. The boss’ boss is suggesting budget cuts for acquisition and retention..

  9. Mary Cahalane says:
    January 30, 2015 at 3:31 pm

    I’m with Lisa. In smaller and mid-sized organizations, I could usually explain the importance of retention. But acquisition? With its costs and low response rate? That could be a really tough sell.

    Good news is that when you MUST depend on retention – when it’s existential – you may actually do a good job of it. Another bonus of smaller shops is that it’s easier to focus on that smaller number – individually even.

    It’s really all of a piece, though. As Erica says, a good plan includes everything, in the right way and the right order.

    Thanks for your important voice on this!

  10. Ruth says:
    February 2, 2015 at 2:07 pm

    Erica, I would love to see samples too! rfrazier@chimphaven.org

    Great discussion here.

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