Most folks hear innovation and probably think technology or systems.  This is decidedly not a list with that definition in mind.  Innovation is, in our view, about new thinking and new ideas.

The sector must break out of its inductive and deductive mindset.  A mindset that is stuck analyzing the past to produce the future, a formula guaranteed to yield no new ideas, no innovation. And what is worse, if the future is different than the past – and it is – then this approach guarantees failure; not immediate, but nevertheless predictable.

And so in the spirit of doing things differently – to prepare for a future different from the past – we offer up these innovation ideas, not all new to be sure, but certainly not a part of the current method of operation for most non-profits.

1)      Fix the leaky bucket.   The average company has a 60 to 70% chance of selling to an existing customer, a 20 to 40% chance of winning back a lapsed one and only a 5 to 20% chance of acquiring a new one.  The time is now to drastically shift the resources, time and energy to retention.  Any argument against this is massively flawed, both financially and logically.

2)      Recognize acquisition for what it is – lead generation.  Getting a new donor in the door is akin to winning the battle and not the war.  All the metrics are obsessively focused on the battle – e.g. cost to acquire, response rate, average gift – and very few (other than at conferences) deal with the war – e.g. lifetime value, year over year retention rates.  The industry would be far better off if it literally stopped reporting on the battle metrics and only looked at the war ones.

3)      Build donor relationships.  This is the high level answer to retention.  It is not soft and fuzzy.  The commercial sector is way ahead of the non-profit in figuring all this out.  The bottom line?  We know how to define, measure and manage relationship building.

4)      Identify the donor experiences that strengthen the relationship.  A relationship is the sum total of those shared (i.e. delivered and experienced and reciprocated) experiences.  In the non-profit world these include brand, fundraising and donor service experiences.     

5)      Enterprise wide segmentation.  Very few, if any, non profits have enterprise wide segments, groups that are understood and planned against across the whole organization.  These segments differ in their needs, preferences and value.  They require changes to the marketing mix, which includes offer, channel, ask and service in non-profit parlance, to optimize their value.  Doing so will yield enormous and outsized returns and efficiency.

6)      Reorganize around the donor.  Radically so.  Imagine 4 or 5 enterprise wide segments and then staffing around each.  This means a team comprised of all the various functional areas (online, dm, donor service, marketing) charged with driving the size and lifetime value of their donor segment.  Forget departments, these are donor teams.

7)      Collect and act on donor feedback at every touchpoint.  This is common place in the commercial sector.  Think of your personal experience on websites, with hotels or airlines, car dealers, restaurants…All of these sectors routinely solicit feedback post interaction/visit/event. Why doesn’t the non-profit sector do this?  No perceived need?  No perceived upside?  If the International House of Pancakes (IHOP) cares enough (and they do) to solicit customer feedback on the receipt with a simple 800 number and IVR system then shouldn’t we in the non-profit sector be at least as concerned about our donors?

8)      Experiment more. Fail faster.  Think about direct mail testing.  It takes way too long to fail.  And fail is exactly what occurs the vast majority of the time.  Innovation includes risk, risk includes failure.  Failure is more than acceptable if it is done quickly.

9)      Put senior leadership in charge of plotting the new destination, not steering the ship.  Maintaining the current course is fairly easy, at least in the short term.  Consistently high performers are those who plan for change while still successful because they anticipate shifts in demand, needs and preference – not just of the donors but the beneficiaries of the mission.  There are a lot of non-profits in search of reinvention.  Senior leadership of these organizations should focus on better understanding the competition, recognizing when your distinctness is being undercut and recruiting new people relentlessly.  This last piece, recruitment, is typified by Jack Welch who spent half his time recruiting new talent.  Any non-profit CEO come close to this percentage?  You should.

10)   Start treating donor service as profit center, not cost center.   In the commercial sector and among product companies (versus service) roughly half of the reason a customer will stay or go is tied, not to the product directly, but rather, service level attributes.  This means half of your retention battle has nothing to do with the product features and benefits.  This same reality holds in the non-profit sector.  A large part of the reason a donor will stay or go is not mission or message or premium offer, it is how they are treated when they encounter donor services.  The opportunity here is not avoiding bad experiences (that is obvious), the real opportunity is recognizing the service can actually improve the relationship and is a critical touchpoint, one that can help to further monetize the relationship with cross-sell and upsell.  Too few non-profits run their donor services as a profit center and core part of their business.  They should.