Donor retention is generally abysmal. On average, only 23% of first-time donors renew. Only 46% of all donors renew (Fundraising Effectiveness Project).
Why, oh why, is this so?
It’s because too many nonprofits make acquisition their priority and neglect retention.
What’s the situation at your nonprofit?
First, do you know your retention and upgrade rates? If you don’t know what they are, how are you going to improve? Hoping for the best is not a strategy.
In fact, it’s just plain dumb.
Because it’s much easier – and more cost-effective – to renew an existing donor than to secure a new one. For-profit businesses know this, and make customer retention their number one priority. While nonprofits retain an average of two out of ten first-time donors, many businesses retain an average of nine out of ten first-time customers.
And they don’t do this simply by throwing a lot of money at the challenge. They do it by focusing on priority number one: customer service.
Donor service should not be an afterthought.
Not if you want to keep and upgrade your donors.
By now I’m sure you’ve read Dr. Adrian Sargeant’s research showing that if you can increase donor retention by just 10% you can increase the lifetime value of your donor base by as much as 200%. That seems like a pretty good return on investment, doesn’t it?
Today I’m going to show you a simple way to significantly improve your donor retention and upgrading.
You’ve probably heard it before. But hearing and doing are two different things.
Ask. Thank. Report.
Do not ask again until you’ve promptly and personally thanked your donor; then reported back on the outcome of their giving.
First-time gifts are experiments. They’re like first-time dates. If they don’t go well, they won’t be repeated.
So how do you make them go well?
It’s super simple.
Ask. Thank. Report.
Penelope Burk’s research in Donor-Centered Fundraising discovered over 15 years ago that donors care about just three things. And they all have to do with demonstrating gratitude and reporting back. Donors want a thank you that is:
- Powerfully indicative of the impact of their gift.
After the initial thank you, they’d like to hear from you at least one additional time about the impact of their giving before you ask them for another gift.
Donors need to know their gift made a meaningful impact.
They need to feel they can trust you to follow through and put their gift to its intended use.
And they need to feel their association with you is rewarding. Sadly, giving is not always its own reward. Donors need pats on the back. They need you to give back to them something they value (usually an intangible “feel good”) in exchange for the value (money) they gave to you. The foundation of all philanthropy is completing this value-for-value exchange.
How good a job are you doing with this?
Build and Enshrine Donor Acknowledgement Policies and Procedures
If you don’t plan to do things, you won’t do them.
Good intentions won’t cut it. One of my favorite Peter Drucker quotes is:
“The best plans are only good intentions, unless they degenerate into work.”
Turning your plans into real work requires written guidelines. They should be something of which everyone on your team is aware. Responsibility for managing and executing each step of your plan should be assigned, and the timeline for completion should be clear. Continually update your guidelines as your systems change based on ongoing evaluation of what works/doesn’t work.
Acknowledgement Policies and Procedures should cover more than your thank you letter. They are a comprehensive guide to the many ways you acknowledge and show gratitude for your donor throughout the year. Think of this as:
- Acknowledgement Sequence
- Recognition and Cultivation Steps
Populate your plan with action items. Some of these will be “must do.” Some will be “might do’s” that include testing and tracking your results. For example, if you don’t have the bandwidth to call and thank every donor, pick some subsets of donors you will always call (I like $1,000+ and $100+ first-time donors). Then pick a subset of donors you believe are ripe for upgrading; call a random sampling (e.g., one in five) and track your results. If you find those you call renew and upgrade at higher rates than those you do not call, then next year call everyone in that subset.
Samples of things to include in your Policies and Procedures (these are examples, and not an exhaustive list):
**Some community-based organizations have a policy against listing names according to giving level. Others may list only names at higher levels in an effort to conserve resources (not just paper, but the amount of time to assure these listings are 100% accurate).
One of the keys to a stellar donor acknowledgement and stewardship program is knowing what your donors care about. How do you learn more about your donors? Begin by building curiosity into your work plan and daily modus operandi.
Schedule a mailed or emailed survey. Schedule focus groups. Schedule a phone survey where you call random supporters.
Get in the habit of asking open-ended questions every chance you get when you’re face-to-face with your supporters (at events; on tours; at programs; at committee and board meetings; on one-to-one visits).
Some of my favorite open-ended questions are:
- How did you first get involved here?
- What keeps you involved here?
- Why do you give here?
- What do you like most about what we do?
- What do you like most about the information you receive in our newsletter/blog?
- Which of our programs do you believe is most critical?
- Which of our programs do you know the least about?
Conduct simple research.
- Enable Google alerts for major donors and/or their companies.
- Follow your donors on social media (e.g. LinkedIn, Twitter, Facebook, Pinterest and Instagram)
- Like their company on Facebook
- Join a discussion group to which they belong on LinkedIn.
- Examine how they interact with you (articles they open; events they attend; how they designate their gifts, etc.)
See if you discern patterns. For example, I noticed that the most often clicked-on item in my donor e-news was recipes from clients. So… I now knew that recipes were a true “gift” I could send our constituents. At another organization I worked with, the most commonly appreciated item was client stories. So we created a “Story of the Month” to email to everyone.
At the end of the day, donors will stick with you if you meet their needs. If you don’t, they’ll leave.
It’s as simple as that. Simple, yet it requires a plan and a commitment to work that plan.
We know every donor needs a prompt, personal acknowledgement. Every donor needs an impact report. Beyond that, your donors will have their own particular needs. Endeavor to find out what those are; then meet them!
The easiest way I’ve found to think about this is that you’re building a “Donor Happiness Delivery System.” While businesses focus on “customer experience” you must focus on “donor experience,” assuring it becomes a transformative, rather than a transactional, one.
Create written Donor Acknowledgment Policies & Procedures and make it a top priority to follow them. Go beyond the single transaction of the first thank you letter. Start simple; then add new cupid’s arrows to your quiver as you go along.
Send as much donor love as possible!
Come back a year from now and tell us how many more donors you retained, and how many of them increased their gifts. It will happen!