Keeping your supporters
Here’s the logic: Retention is the only path to sustainable income growth. Sustainable growth is the only path towards doing more to make the world a better place. So retention and life-time value are the vital metrics for NGOs seeking “the highest returns in the long term”. Close attention to this is essential for your NGO’s long-term income security.
The incredible, magical, wonderful relationships you nurture with monthly supporters soon become “engines of funding” for your NGO’s good work. Engines of profitability. Engines of hope and change and progress and good. But only if you look after and keep these kind supporters.
Stable income growth comes from keeping your existing supporters while getting new ones. Keeping existing ones is the less expensive.
Imagine how much more good your NGO could do if you doubled the lifetime value of all of your current supporters
Tom Ahern in April 2012 wrote: “As Dr.Adrian Sargeant’s research shows, a mere 10% improvement in donor retention yields a 50% boost in donor revenue immediately (not a misprint). And that’s just the beginning, folks, according to Sargeant. Downstream, the cash just multiplies.” Sargeant explains: “This happens because the effect compounds over time. If you have 10 per cent more donors still giving at the end of the current year you have 10 per cent more people giving to the organization through year two. In the second year you’ll lose 10 per cent fewer of these and lose fewer of the balance in each subsequent year. Over time the effect mounts up.”
How much does this compounding add up to? According to Dr Adrian Sargeant …a 10% increase in donor retention can increase the lifetime value of a donor database by 200%
“What Tom Ahern learned in 2013: On the issue of pumping out more revenue out of your current donor base, I learned from Uncle Roger and Tom at The Agitator: On average we have found that if you have 5,000 donors, a 10 point increase in retention could mean $175,000 additional net income … 10,000 donors and you can put an additional $350,000 to your bottom line … 20,000 donors, $700,000 … and so forth”. “Better retention? It could be for fundraising what fracking was for the US oil industry, releasing entirely new reserves.” – Source: www.bloomerang.co
When we increase the lifetime value of supporters by 200% through lifting retention by 10%, it follows that lifetime returns can fall within the range of 300% (relatively easily achieved) and 600% (achievable with a focus on retention). There’s maths that show this if you scroll down to a blue-green excel table in the next section.
Spend what it takes to keep existing supporters
It’s wasteful to spend 6 to 7 times more acquiring a new supporter than you’d spend to keep an existing one. If you’re spending $200 to acquire a new supporter, don’t be penny-wise and pound-foolish in not spending something each year to keep those you already have. Supporter retention is not a cost centre, it’s a profit centre. Think lifetime value, all the time.
At one international NGO I worked with, the monthly giving programme was large, the donor database difficult to use for analysis and there was little time for analysis anyway. I had a graduate ‘Temp’ probe our pledge administration practices. “$50,000 Chris”, as I called him to honour the hidden value he uncovered, taught me the value of a hawk-like oversight of the minutae of practice by busy Co-ordinators.
Supporter retention has a high value, which is hidden, with few time-stretched senior managers prepared to spend sufficient time at the coal-face to fully understand the implications of what is preventable and happening.
How many senior managers, unless they are seasoned fundraisers, would even know what drill down questions to ask if their Co-ordinator said about a supporter “Oh, they cancelled at their bank”? The busy Co-ordinator, who receives little training beyond the basics, knows only what they know and does their conscientious best in the time avalable.
Prioritising cost cutting ahead of growing the income leads to treating supporter care as ‘admin’ delegated down to Co-ordinators. Contrast this to a commercial sector that invests in Relationship Managers who have their finger on the pulse of customers. Decisions can be made with the best of intentions but not the best of judgment.
Consider the sophisticated retention management shown in the screenshot below:
Could and would the sophisticated retention management above happen if your NGO delegates your ‘admin’ down to a Co-ordinator? Would you appoint, train and empower your Co-ordinator to phone those who dishonour for insufficient funds in January and February and explore whether it was due to affordability or timing?
It’s no use pouring in all those acquisition dollars only to have them flow out the bottom of a leaky retention bucket. A supporter who’s given $30 a month with joy for two years may change banks. The busy Co-ordinator sees the Dishonour Code on the bank statement that means Authority Cancelled. It’s up to the Co-ordinator to contact that busy supporter and secure new bank details and authority.
But who, apart from a “$50,000 Chris” mentioned above is going to check that task is indeed fitted in to a Co-ordinator’s busy day? When the follow up of dishonours happens well, retention rates are easily 10 to 20% higher than when it isn’t.
Small improvements in supporter loyalty lead to massive increases in the lifetime value of your supporters. If your NGO’s face-to-face programme is being managed from an admin-cost-cutting rather than income-maximising perspective, this will cost your organisation thousands of dollars each year for many years ahead. The maths that shine a light on this isn’t rocket science:
Everybody knows the bucket leaks; what we don’t see when we frugally shed full responsibility for dishonour management to busy-with-other-tasks-too Coordinators is the degree of preventable loss. It’s a start if we recognise that monthly supporter pledges are not ‘admin’ but an average lifetime value of over $1,000. Knowing this, we’re more comfortable investing time and money in dishonour management and supporter retention.
I’ve heard senior NGO managers say that skilled Co-ordinators are hard to find. Maybe we need to appoint and treat our Co-ordinators as Relationship Managers if we truly acknowledge that retention is fiscally vital to optimising the lifetime value of our wonderful supporters.
In April 2014 an NGO with a huge face-to-face fundraising programme in New Zealand and across the world appointed a Retention Manager to their NZ office. I’d be surprised if the appointee was told what to do, in the way a manager tells a co-ordinator what to do. I expect the appointee was told to work out what to do to keep more supporters, and then do it.
In one of the most renowned management books of our time, “Good To Great”, Jim Collins stresses the importance of getting the right people in the right seats on the bus before deciding where the bus is going. He’s saying that for an organisation to be successful and adapt to change along the way, you first need to have the right people in the right roles before you decide what direction you’re going to take.
Implementers, often co-ordinators, can only be as good as the requirements that are fed to them. To ensure your programme’s success you need to give a lot of thought to who you put in the seat. Will they recognise how to react to change when banks change the way they apply dishonour fees? Will they read widely about retention and have an encyclopaedic knowledge of good practice today?
Make sure your investment in keeping your supporters is ‘substantial’
I didn’t like writing the header above. Like you, I want as much of funds raised as possible to go quickly to those our causes help. However, we must face and accept the reality that by keeping more supporters we can better help those our causes serve. Ann Rand is quoted as saying, “You can avoid reality, but you cannot avoid the consequences of avoiding reality.” You could paraphrase it this way: You can avoid spending substantially on keeping your supporters, but you cannot avoid the consequences of doing so.
“The only way we’ll ever justify today’s donor recruitment costs is if we can inspire more of them to keep giving a lot longer: … So what does it cost these days to acquire a new donor? Two things can be said with certainty. It’s too much. And it’s getting more expensive by the day. Meanwhile … expensively acquired existing donors are leaving all the time. So what can we do? We can get heaps better at acquisition, no doubt. And at communication generally. But the real answer has to be substantial, consistent investment in retention.” – Ken Burnett blog 04.06.2014.
Tom Belford’s blog The Agitator Jan 2015 ended with this sage advice: “Any acquisition strategy should begin with a retention improvement strategy.”
Remembering it is 7 times more expensive to obtain a new supporter than it is to keep the one you already, you could switch 10% of your acquisition budget into supporter relations and likely increase net income if you’ve got the right staff and procedures in place.
Keeping supporters is easier when they give monthly
It’s easier to keep regular monthly supporters than it is to keep occasional one-gift-at-a-time supporters. If you can communicate with someone monthly without asking and receive their gift every 30 days, they’re among the most likely supporters to stick with you. See the following comparison from the USA. It’s not much different in New Zealand.
After you’ve acquired a new supporter, it’s important to start your retention strategy straight away. The process of nurturing a new supporter is one of the strongest indicators you will have as to how engaged this donor is in your cause and how active they are likely to be. The first two weeks after a supporter’s first action is when they are most interested and we need to use this time to start building a relationship that will last, hopefully, a lifetime. Digital fundraising channels offer the ability to plan, sequence and automate the sending of retention communications. Those who excel at keeping supporters take care to make the being-a-supporter experience as awesome as the becoming-a-supporter experience.
The retention rate of monthly supporters is most often calculated from a start point of those who made a first gift. Keeping 70% (of those who made a first donation) after their 12th donation is achievable. Keeping 60% is what three NZ charities included within Pareto Fundraising’s benchmarking achieved. Keeping 56% has been a reported average across Australasia. Keeping 40 to 50% still makes money.
The second year retention rate of those that made a 12th donation is higher, around 80 to 85% after their 24th donation. The third and fourth years are around 90 to 95%.
Compared to acquiring new direct mail appeal donors where on average only 20 to 50% of newly acquired supporters go on to give a second gift, these retention rates are significantly better.
Keeping your retention in perspective – is it really that bad?
Keeping 50% to 60% of your supporters at 12 months still works out well financially. Not as good as 70% which creates vastly more net income. The face-to-face strategy is a real-world one, it doesn’t have to be perfect to be lucrative.
We’d like to keep as many supporters as we can, but we humans are fickle and we need to keep a sense of perspective. Simon Scriver puts it this way: About 45% of gym members quit in the first 6 months, 25% of people give up on New Year’s resolutions in the first week, 88% eventually give up. 91% of Millennials expect to stay in a job for less than three years. The average worker today stays at each of his or her jobs for 4 years. He goes on to say “we are flaky…we are fickle. The banjo, surfboard, pond pump and juggling equipment I have in storage are proof of that. And those are physical objects: I got something in return for my money. The majority of charities aren’t showing donors what their money is doing, and yet we’re still beating so many industries.”
Keep your own people to keep your supporters
If you decide on monthly giving, appoint and keep staff with an experience and skill set for acquiring and keeping supporters. Hold to your monthlly giving course, and hold on to your people because this is a long-term lucrative strategy deserving five years to become institutionally entrenched. If you are a Board Member, try not to allow a growing one to three year capability in monthly giving become a casualty to misunderstandings, miscommunication or a turnover of coordinators, fundraisers, senior managers or your CEO:
Below are the words of an experienced fundraiser, formerly from British Red Cross where face-to-face fundraising is a large part of income. Liz Tait writes of having to have three key factors in place to deliver transformational fundraising: Sustained investment over time, good people and a shared belief in game-changing goals as part of an ambitious strategy.
Guiding your supporters to consider further investment
Supporters want to save lives, make a difference, change the world. Supporters give because they care. How much they give, how long they give and whether they leave a bequest comes down to how they feel about the experience they’re having as supporters. Fundamentally they want to do good, to know they’ve done good and they want to feel good.
To guide supporters towards giving more and for longer and to perhaps leave a bequest shouldn’t be the task of the least expensive co-ordinator you can engage to ‘admin’ your monthly giving programme. A skilled person is worth investing in because better retention has a huge impact on downstream net income.
Supporters who may wish to decrease the size of their gift
When a supporter phones to cancel their monthly giving pledge, it’s better to have your staff ‘save’ them at a reduced amount of $10 or $15 a month rather than lose their $30 monthly gift completely.
Paying close attention to pledgers whose debited gift dishonours due to Insufficient Funds allows fundraisers to check with the pledger whether this happens for affordability reasons or because of the timing of the debit date. Giving should be a joy and not a burden and the fundraiser should offer to reduce the level of gift if it is an affordability matter. This helps the supporter and the charity, it avoids outright ‘cancellations’.
Supporters who may later wish to increase the size of their gift
If the supporter gains confidence that their gifts are achieving the good they intended, it is natural that they will be open to an invitation to increase the size of their monthly gift. Well-made conversational telephone calls, most often made by specialist fundraising call centres, can achieve this. These conversations with your wonderful supporters are along the lines of “thank you for your generous regular gifts. Your gifts are achieving [the good work your NGO does] and with the help of our supporters we’d like to be able to achieve [this for those your NGO helps]. Discussion and exploring the shared values of both parties. With help, we’d like to do this and this. Are you able to consider increasing your gift by just $10 a month? Would that be possible?” Around a third of people say yes. That’s a phenomenal number of extra dollars over the course of the supporter’s lifetime. In addition to that, these increased gifts are in many cases able to make up for all the money lost by people dropping out.
The importance of the telephone
There are few communication channels for the courtesies of letting a supporter know what their gift is achieving: letter writing, special events, newsletters and emails. However, relationship building is difficult through these methods. The phone is vital, it enables a true two-way conversation during which listening gives the supporter a chance to share their story. Listening builds relationships and puts you on the same page. Magic happens when a supporter starts to tell you their story of giving and why your organisation is important to them. Continued loyalty is a likely outcome, an increase in the size of the gift may be another.
We all know how expensive it is to find a new supporter … but how expensive is it to lose them after too few gifts? It’s better to arrange a telephone call. There are specialist fundraising call centres who do just this work, very courteously, very professionally.
How else, other than the telephone, can we build relationships with supporters?
If we are not talking on the phone with, or otherwise communicating with, our supporters, what else are we doing to give them reasons to stay? Letter writing, special events, newsletters and emails. All have their place and the results will reflect varying degrees of quality of execution. Emails with links to short videos is a particularly strong means. By short videos I mean less than 100 seconds in most instances.
Ready and want to get started?
Go to the right-hand main menu item of Services for my recommended five next steps.
John Barnett MFINZ (CFRE, 2010-2016)
+64 (0) 21 063 1590 mobile