The Fourth of July is nearly upon us here in the United States. I hope this upcoming Thursday is both a fun and meaningful day to everyone reading this post!
Database/CRM Change Every Seven Years
This season of the year is also when most of approximately 1/7th of the nonprofit organizations using a fundraising database or CRM make the switch to a newer, more-improved product, more often than not from another vendor. The research stating most nonprofit organizations re-evaluate and switch every 7 years was performed by one of the vendors who supply this market. I do not have the exact stats, but in my 30 years of serving this sector, it seems to be right on.
I also point to this time of year since the summer is the most popular time for data conversions to take place. The factors influencing such a flurry of activity are:
- Fundraising for most organizations is slower in the summer
- The Fiscal Year changeover on July 1 frees up new budget
- The end of the previous Fiscal Year provides left over dollars
- For Education related organizations the new school year begins in the fall
- Summer help and interns can assist in a mid-year system switch
Fear of Independence
Unfortunately, the data above seems to not apply to certain organizations and their database systems. There is an unfounded fear of independence based upon the logic that if you spent a large amount of money with a system, (even if it was 8, 9 or even 10 or more years ago), you cannot move to a vastly improved new system. This fear is often based upon the fear of change rather than any prudent logic.
Granted, making the switch can require some time on the part of a few key staff members. However, if as much care, or more, is utilized in verifying the conversion and implementation expertise/experience of your partner as is used in picking the new software/CRM, the time and effort can be minimized. In fact, the entire process can be turned into a rewarding and pleasant experience leading to a multitude of benefits.
The Benefits Can Far Exceed the Fear
A huge factor in accessing the benefits and hence the success of a system change is the concept of “Return on Investment.” More times than not, the small or medium nonprofit organization is not familiar or comfortable with ROI.
This key concept of ROI, especially as it applies to budget exceptions, was explored in this recent post. We discussed the “Overhead Myth” and how it is holding back so many charities. Here is a key paragraph:
Without this declaration of factors besides overhead being important, most of the charities would continue to operate like the majority of publicly held commercial corporations who are held slave to another master, “Quarterly Results.” The quarterly result mindset keeps so many of the corporations from even occasionally “investing” in innovative tools, techniques and staff to accelerate future growth and profits.
A 1% or 2% Increase in Donor Retention Justifies New System Investment
Here is where the proverbial rubber meets the road in regards to ROI and Investment Justification. A small improvement in any nonprofits donor retention rate equates to a large revenue increase over the life of any new database or CRM system. If a 10% increase can double the lifetime value then even a 1% or 2% increase can provide substantial financial reward.
Note in the chart above with just 5,000 donors the lifetime value increased $456,000! 1/10 of that total is still over $45,000, which is more than enough in the small to medium portion of the nonprofit world to justify a system change. This is especially true if you are paying ever increasing annual maintenance fees on the old system in place.
Independence Day Can Arrive in Any Month of the Year
Armed with the information above, just about any nonprofit with a database that is not effective can erase the fear of making such a change. Just think you could be celebrating in November or March as much as you will be this Thursday when you go live with a vastly new and improved system that everyone can use and love. The best part is the benefits continue on for years after the day of celebration!
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