The Rest Of The Retention Story
I’m just about finished with my book — Retention Fundraising — that will be headed to the publisher at the end of this week. But some of the key stuff in the book just shouldn’t wait.
Hopefully you can put some of the research and findings to work immediately.
Of course, I’ll flog the book to you when the publishing date is set. Right now it’s more important to share some advance information on what I’ve learned.
Most fundraisers continue to believe that ‘retention’ is some fuzzy, nice-nice concept where prompt ‘thank you’ notes on nice pink or expensive ivory stock will plug the leaky bucket of retention. NOT!
Fact is, the most up to date research clearly shows that fundraisers, at best, don’t know the full story on retention and what to do about it.
Thanks to Adrian Sargeant and Kevin Schulman, two diligent and innovative researchers in the field, there’s now the opportunity to tell you the rest of the story: the other half of retention.
Why should you bother wrapping your mind around another set of at-first-difficult-to-understand concepts?
Money. Pure and simple. Lots of money. As much as $250,000 for every 1,000 donors on your file.
Having spent the last year digging into all this I firmly believe that most nonprofits — especially the big, highly sophisticated direct response driven breed — are leaving literally hundreds of millions on the table.
It’s not that they’re incompetent or lack resources. They simply don’t have the whole picture in their retention and loyalty lens. No wonder they’re missing out.
Let me explain by illustrating current ‘best practices’ and why they’re not even ‘good’, let alone ‘best’.
“Best Current Practices” … Ask most fundraisers and their consultants how to improve retention and the best of these will give you one or more of the following answers:
- Double down on the spending for acquisition;
- Purchase a transactional predictive model to flag/score donors at-risk or good candidates for a 2nd gift;
- Create different messages for different segments;
- Make fewer ‘asks’ or more ‘asks’ (depends on the consultant or fundraiser) and provide more — or less — visual marketing.
While this advice isn’t awful, it’s also not very helpful, and sometimes even very expensive. In short, it provides a very incomplete answer to the issue of retention.
The fact is that research clearly shows that when it comes to improving Lifetime Value — the only true metric that matters — the tactics/techniques/frequency of activity from the fundraising department accounts for less than 20% of the ultimate value on a donor file.
Holy Copernicus!
Lest I be hauled before the AFP/DMA Inquisition of Heretical Fundraisers, let me further add that I’m about to shake you up even more.
It’s not that what you’ve been doing (believing the universe rotates around the Earth) is wrong. It’s just that it’s incomplete.
You have only a half bucket of retention at best.
To put it even more bluntly, fundraisers and fundraising departments count very little where donor retention is concerned.
So, first of all. Thank you for trying your best.
And secondly, here’s the deal going forward.
I’m going to do four more posts and then a Retention Webinar to help all of us get our brains around the current research and what I hope will become best practices.
Over the next 90 days we’ll explore:
- The importance of ‘attribution’ — How and why to assign costs/income to actions the nonprofit organization takes regarding donor experience.
- Why you can and should assign financial value to specific messages, communications, donor services and various engagement activities. And how you do that.
- Why the current segmentation or targeting process based on transactions – selected for ‘efficiency’ – is so foolish. And why ‘’effectiveness’ should become your new, most important metric.
- How you can change all your ‘bad/best practices’ to bring big money to your bottom line.
To prepare for your epiphany, what’s your thinking today on the current limits of retention ‘best practices’?
Roger
P.S. I was struck by the research I’ve seen that fundraising appeals and all the usual stuff that fundraising departments produce is worth only about 20% of the total retention value. Are you?
13 responses to “The Rest Of The Retention Story”
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
I couldn’t agree more that the ‘current segmentation or targeting process based on transactions’ is foolish. What strikes me most is how bad it’s had to get before the sector noticed! Over 20 years ago George Smith wrote in ‘Asking Properly’ “Never let anyone guide a fundraising programme with overdue deference to league tables, pie charts or comparative data” – imagine what the world would have looked like today if more of us had listened?!
I hope you shout this from the rooftops! I spent 8 years running a donor relations shop – I’m not surprised at all to see your 20% statistic on retention value. If institutions want to keep donors, we will have to learn how to build and nurture lasting relationships with them! The most effective fundraisers I know see themselves as long-term relationship facilitators.
I believe retention is fairly-equal parts science and art. The science is easy — knowing how to calculate retention, but the art comes from the ability to move from perfunctory outputs that we’ve hoped for too long “take care if it” (like timely acknowledgement letters, e-newsletters, and annual reports) to outcomes that originate from a relationship — knowing what motivates that donor to support your mission and creating unique tactics and channels to reinforce that motivation.
Great stuff Roger. Also let’s hear more about the donor journey where every donor is treated to their individual timeline and communication cycle as we have developed with our clients. So no more summer special appeals, September upgrade campaign and end of year appeals. All donor financial and non-financial touch points take place according to the point of entry and subsequent actions and characteristics of the donor themselves. This is now commonplace for all our clients in Spain and with many of the largest global INGOs and UN agencies.
Roger, In your upcoming series or as a reply could you please share links to the research you’ve seen re: fundraising appeals etc accounting for 20% of total overall retention value? Does said research delineate what comprises the 80%? Curious. Thanks! Lisa
Lisa. Absolutely. In the series of posts to come and also in the webinar we’ll deal with the issue of attribution: how to measure and how to assign value to it.
Great question. Thank you. Roger
Yay! Thanks a million, Roger…looking forward to more on all things Retention, and her evil alter ego, Attribution. 🙂
Mea culpa: Attrition.
Attrition is Retention’s evil twin. Attribution, on the other hand, is a writer’s friend. That and coffee… which clearly I need. Sorry Roger. Still looking forward to insights.
Roger,
Could you post your experience with increasing donor retention. So many experts these days with zero experience or practical experience. I would not ask some one to perform heart surgery on with who has researched how to do it. I would want real experience. Could you provide specifics?
Dan,
Fair question. My 45 year fundraising background and philosophy is summarized in the ‘About Us’ section the Agitator website. Retention has been always been a key focus of my work. In the past 5 years I’ve devoted most of my time to research, proof and application of new technologies toward increasing retention and lifetime value.
Roger
Roger, having worked closely with both you and Tom in two separate past lives as your creative director, I look forward to seeing your new book as it probably significantly advances what you’ve both preached ever since I’ve known you.
(And Dan, lest we forget, Tom was also a key partner of a Relationship Marketing firm where relationship building and retention was all that he did, talk about real experience.) — Bill
[…] by Brady Josephson on Nov 21, 2013 | 0 comments I was reading about donor retention The Agitator when a provocative thought and idea was presented: The fact is that research clearly shows that […]
[…] was one of them. Look it’s not like you should stop acquiring donors, please don’t, but there has to be a greater effort to keep the donors you’ve been lucky enough to […]