Shoot The Moon
Over at Future Fundraising Now, Jeff Brooks is warning fundraisers about misguided advice to stop acquisition efforts in order to focus on retention. Personally, I haven’t seen much of such advice floating around. I sure hope he was exaggerating … or that the speaker he cites was aiming for dramatic effect.
Because Jeff is dead right when he says: “Stopping your flow of new donors is probably the most self-destructive act you could make.”
And: “Donor retention is bad. It’s a huge problem for almost everyone. It’s worse than it used to be. You should be all over improving your donor retention. But you’re not going to solve it by stopping acquisition.”
Obviously, there comes a time when a further incremental spend on acquisition cannot be justified … when the payback from projected new donors (a function of expected lifetime value) cannot reasonably be achieved in an allowable time frame. Every organization needs to come to terms with that calculation for itself.
And right there is the connection between acquisition and retention. If your retention bucket leaks like a sieve, your lifetime value suffers, and with it your ability to turn an eventual net profit on new donors.
But so long as you can reasonably project that acceptable net profit, you should be investing in acquisition. Indeed, strong retention can fuel more aggressive acquisition.
And of course in those deliriously happy times when acquisition is humming, yielding donors from whom you can readily achieve net profit, then there’s only one smart strategy … shot the moon!
Tom
2 responses to “Shoot The Moon”
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 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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For the Ossining Children’s Center, It’s not an either/or, it’s a both/and. As a small community organization, we have found one of the best ways to retain some donors is to get them engaged in reaching out to their circles of influence to bring new donors in.
Tom, a longish but 100% true story: about five years ago, at almost the same time, I was approached by — and ultimately began working with — two nonprofits. Both wanted (needed) to grow donor base and revenues. Both rightfully wanted to ramp up donor comms programs that were either floundering or nonexistent. What I suggested to them wasn’t rocket science: newsletter, appeals, thank-yous, acquisition. One dove in immediately: two acquisition rollouts every year, with all the other donor comms going on in the background. Later we added and refined more tactics (again, no rocket science: it’s pretty much in every fundraising book out there, from Mal Warwick to Ken Burnett.) And let me stress this was a HUGE investment for them: the head of fundraising routinely had to fight for the program for at least 2-3 years. Then one day, things started to shift. Today they have quintupled the database, seen wild improvements in retention, continue with acquisition, and are working on multi-channel, legacy and major donor improvements. And the other organization? In five years they never mailed more than 1-2 newsletters each year, not always to all of their database. They refused to invest in acquisition, and instead channeled the money to a big, $$$ rebranding. They sent appeals sporadically. And they relegated the oversight of donor comms to folks with less and less relevant experience in (or enthusiasm for) said program. Five years later their direct mail program and response rates still flounder. Their active house file has not grown. So, I respectfully parted ways with them. The point of this is not horn-tooting, because to me it is tragic: the four biggest losers for charity #2 are: 1.) those who would benefit from the services they could be providing if they had more money; 2.) the donors who miss out on a chance to support such a great cause; 3.) the staff for feeling they’re on a sinking ship; and lastly, 4.) donor communications and acquisition, for being treated like an inconsequential afterthought in the life of what could have been a great nonprofit. PS: Needless to say, thanks to the dedication of its team, its head of fundraising, and board members willing to listen, nonprofit #1 continues on its upward trajectory: we are still happily married, and when govt cuts sliced budgets everywhere, this organization was able to launch new programs for those they serve. Acquisition is neither optional NOR an afterthought.