As you can see from Tom’s post yesterday, when it comes to fundraising planning and budgeting, The Agitator clearly believes the most important questions should focus on boosting retention and increasing lifetime value.

Tom phrased the ‘Boss’s’ key planning questions this way:

• “I read The Agitator, so please bore in a bit on retention for me. What is our retention profile (did it get better or worse in 2013) and program? What improvements do we plan to make in 2014, with what projected outcome?

• “What did we test/innovate in 2013 and what did we learn?”

• “What will we test/innovate in 2014 and expect to learn?”

Most important of all as far as I’m concerned:

• “If I could authorize an extra spend of $XX for fundraising (make this a hefty increase, but proportional to your current budget … say 25%), how would you allocate it … with what measurable outcomes?”

These key questions come at a time when more and more organizations, their consultants and fundraising agencies are awakening to the problem of retention and the importance of monitoring lifetime value.

Over the past two years this budding awareness has given me the opportunity to ask fellow fundraisers and their consultants, “What are you doing differently today than you once did to improve retention?”

Here’s a representative sampling of the answers given:

• “We’re going to do a test with content marketing — no ask, more visuals, fewer touches or contact with the donors.”
• “We’re appending loyalty tags to change the way we do file selection.”
• “We’re doing a big push on acquisition to build momentum for file growth.”
• “We’ve identified who is likely to give, upgrade, lapse, etc. We know who is best to pursue for conversions to monthly giving and who is the most predisposed to lapsing”

All of these answers or approaches have some traits in common:

• All are likely to result in throwing money at the problem in a scatter shot manner.
• All are focused exclusively on activity in the fundraising or marketing department. No mention of ‘program’, ‘donor services’, ‘publications’, etc.
• All are examples of winning the battle only to lose the war, because…

None of these approaches is rooted in what causes loyalty and boosts retention and lifetime value.

Here’s an example of an answer I wish I’d have heard, but didn’t:

“We have identified five changes we are making that we project will add $374,000 in retention-boosting revenue, at zero additional cost. These include:

1. Focusing on our two core messages that matter most to retention; not the other four.
2. Eliminating two publications that add no value to our donors.
3. Improving our first-call resolution in the donor services department.
4. Setting up a donor feedback program on our website and in donor services to mitigate problems when they occur and build relationships in real time.
5. Creating a meaningfully different experience for our most loyal donors and deriving significantly more revenue from them with no mid-level or major gift officer required.”

Fanciful? Hardly.

The fact is, this response reflects the reality that, when it comes to meaningful action around the issue of retention, you can’t use a conventional A/B split to test your way to an answer … you can’t willy-nilly throw money at the problem to get an answer like this … and you certainly can’t target your way to these answers through file segmentation.

The only way to arrive at an effective, results-producing answer to your boss’s questions on how to best spend time and money to improve retention and donor value is to change how you view the world of retention, the world of the donors.

You won’t find the answer looking at RFM or other metrics that define who. The answer will come from understanding why donors stay or leave and what specific actions the organization can take to keep them.

Tomorrow some thoughts on why metrics like RFM are flawed when it comes to improving retention, and why you might want to rethink the definition of ‘loyalty’.

What steps are you taking to eliminate the guesswork from your approach to retention?

Roger