Claire Axelrad, J.D., CFRE recently joined us for a webinar in which she showed how to achieve a goal-oriented strategic donor stewardship strategy – one that incorporates tried-and-true relationship-building principles.
In case you missed it, you can watch the replay here:
Steven: Thanks for being here for today’s webinar, How to Keep Donors Happier Longer: Using Strategic Stewardship to Get More and Bigger Gifts. We all want to do that, right? Of course. My name is Steven Shattuck, and I’m the VP of marketing here at Bloomerang. I’ll be moderating today’s discussion.
Just before we get started, just a couple of housekeeping items. I want to let everyone know that we are recording this presentation. We’ll be sending out that recording later on this afternoon as well as the slides, just in case you didn’t get the slides earlier today. If you have to leave early or if you perhaps want to review the content or share it with someone on your staff or someone that you know, you’ll be able to do that. Don’t worry. Don’t fret at all. We will get that recording via email later on this afternoon.
As you’re listening today please feel free to send in any questions or comments. Right there on that chat box that a lot of you have already been using, that’s great. We love questions. We’re going to try to save some time for Q and A at the end. If not, we’ll definitely capture all those great questions and comments and try to get back to you as good as we can. Don’t be shy about using that at all.
You can follow along today on Twitter with #Bloomerang. Our username is @BloomerangTech. If you’re listening today via the computer, if you have any issues with audio, it’s usually a little bit better by phone. If you can, call in by phone. If that’s something you can do and you don’t mind doing, the audio quality is usually a little bit better. Just look at that ReadyTalk email from earlier today. There should be a dedicated phone number there for you.
Just in case this is your first webinar with us, I just want to say a special welcome. If you’re new to us and Bloomerang, a little bit about Bloomerang. We are a nonprofit donor database provider. If that’s a piece of software that maybe you’re interested in or just want to learn more about us, you can do that. Check out our website. You can even download a quick video demo. You don’t even have to talk to a salesperson if you don’t want to. We’d love to talk to you later on about that if you’re interested.
I want to go ahead and introduce today’s guest. I’m so excited. I was telling Claire earlier when we were talking that this is Claire’s third webinar. She is the most requested repeat guest. We just had to have her back. Claire Axelrad, how’s it going? Thanks for being here.
Claire: Oh thank you, Steven. Are you ready for me to talk?
Steven: I just want to brag on you really quickly. I want you to get to all the good stuff. Just in case you guys don’t know Claire . . . you maybe know Claire. She’s awesome. She’s got 30 years of front line development experience. She’s helped organizations raise millions of dollars throughout her career. You can see she’s a CFRE. She actually teaches some of the CFRE courses to get that certification.
She is a frequent webinar presenter, a frequent contributor to nonprofit publications, speaks at lots of conferences. If you ever see her on a conference agenda, please do attend her session. You’re really going to enjoy what we has to say today. She’s kind of my go-to person for the donor stewardship piece. Claire, I’m going to pipe down. I’ve talked too much already. I’m going to turn things over to you. Why don’t you get us started, my friend?
Claire: Okay. Well, thank you all for being here today. I want to congratulate you for taking the time to learn how to do a better job of keeping your supporters and turning them not just into habitual givers who are just checking you off their list every year for $15, but having them become thoughtful, even passionate givers who make more and bigger gifts in response to your strategic stewardship. In our hour together I want to cover a lot of material. Type your questions in the chat box. We may get to some. I will take as many as we have time for. I’m also happy to answer any we don’t get to after we conclude our session today. Feel free to email me.
Dr. Adrian Sargeant, who is a donor retention guru, has done the research that shows that nonprofits can increase the lifetime value of their current donor base if they can just increase retention by 10%. It’s not that hard, but it won’t happen without your commitment and a plan to do this. I want to launch the first poll right now just to see where your organization is most committed in your work currently. Steven?
Steven: It’s on the screen. Don’t be afraid to click that bubble. Interesting answers, Claire.
Claire: Just tell me when you got the answers, because I can’t see.
Steven: It looks like a vast majority of people are saying they are equal in priority, which is interesting. Thirty-nine percent equal, about 32% donor retention, 12% acquisition, and about 15% don’t prioritize. Equal in priority is the winner right now, Claire.
Claire: Okay. That’s really good, actually. Since I first started talking on this subject, a lot more people were prioritizing acquisition. You really do want to prioritize the low hanging fruit. Of course, I’m not suggesting that you shouldn’t ever get out the ladder, go up there, and maybe even plant more trees. If you’re new nonprofit, you definitely need to do this. If you’re at all established you could probably survive for years just picking from what you’ve already got easily at hand, in your own backyard, or in your own database.
The reason I’m spending all this time talking to you about retention is that when I used to work in the trenches, I knew that retention was important, but I never fully grasped how important it was. I didn’t really focus on it. We didn’t have the research that’s available to us now that helps us to benchmark how your retention rates compare to others. I want you to be able to look at that and persuade your powers that be to prioritize what I call the easy money.
Let’s take a look at what’s not the easy money. If you just focus on the new money coming in it can really blind you to the bottom line and make you think you’re doing better than you actually are. Here’s Mary, the annual giving director, saying, “We got 100 new donors last year. We’re raising lots more money.” Then Sam the database manager says, “Open your eyes, Mary. One-hundred and three donors lapsed. That’s negative 3% growth. For every $100 we raised, $95 was lost through attrition. That’s hardly lots of money.” Two perspectives, flip sides of the same coin showing you can’t just look at what’s going in because if you do, you’ve got very warped vision.
Sadly, these are actual average donor retention rates from the 2015 Fundraising Effectiveness Project. Pretty dismal, but you can change them. We’re going to look at some ways to do that today. Here are today’s takeaways. I’m not going to read them. I know you can read and you’re going to get all these slides afterwards.
I want to begin with flipping your leadership’s perspective by revealing to them what’s going on, the big picture, not just how much you raise but how much you lose. If you don’t know that you’ve got a problem, you’re unlikely to tackle it. Let’s face the problem head on and figure out the extent of your problem so you can admit to it.
On average, nonprofits today are losing 81% of donors after the first gift. That’s why focusing primarily on acquisition is such a mistake. It means that you’re keeping only 19% of those first-time donors. Your bucket is a fifth full. All the rest have leaked right out. Of your ongoing donors, you’re keeping just 63%. Your bucket is a little more than half full. Overall, all of your donors, you’re just keeping 43%, 4 out of 10. This compares to for-profit businesses who keep 9 out of 10 of their customers.
Why is there this disparity? Businesses know and have known for years that it’s most cost effective to focus on customer service. It costs a lot more to secure a new customer than to retain an old one. Somehow nonprofits haven’t fully grasped the same holds true with donors and that these one-time transactions don’t get you very far. You need to build a business model that moves your organization steadily forward, not two steps forward, three steps back.
Here’s what I mean. Say you brought in a thousand new donors. That sounds good. If you look at the retention rate, 19%, this is going to shrink to 190 donors this year, and to 120 the next because you’re only retaining 63% of those, and then to 75 the next year, and 48 the next year. After just five years, you’ve got only 30 folks left. That’s just 3% of what you began with.
I’m going to ask you if you know your retention rate. You can see more of the national benchmarks if you go to the Fundraising Effectives Project fitness test. I’ve got the URL up on the screen here: afpfep.org. They’ve got a fitness test you can download so you can kind of see how your rates stack up. I want to look at the Fundraising Effectiveness Project results another way.
Courtesy of an infographic by Bloomerang, you can look at the lower right and see that organizations who are raising $500,000 or more a year are doing better, showing some decent growth in giving. They could still do better. Many of them still are experiencing the losses depicted in the other three quadrants, the ones we’ve already discussed. You can see that those that raised $100,000 to $500,000 or under $100,000 are not doing so great.
If you see your growth pattern here, I have little doubt that you could still do better. Remember, for-profit business do it all the time. They have 94% median customer retention versus our 43% donor retention. Let’s see why they beat the pants off of us.
They’ve got their head in the right game. They develop and implement focused customer retention plans. Their mantra is the customer is always right. How often do you say the donor is always right? If you do, great. I congratulate. More often I hear people complaining about what their donors should be doing, that they should be giving more, that they should be giving unrestricted gifts, that they should just be giving because it’s the right thing to do. They shouldn’t be making us work so hard.
The reality is there is a ton of competition for donor dollars. If you don’t do the work, something intentional to assure your donor’s loyalty, they’re not going to stick with you. They’re going to go someplace else that is doing the work. That’s why you need to start measuring your retention rates because what gets measured gets improved. The greatest losses in gift dollars are coming from lapsed donors (those are the ones in purples), repeat donors (those are the ones in peach), and downgraded donors (those are the ones in light blue).
I am focusing today on how you can keep your donors happier precisely so they won’t lapse and they won’t downgrade. If you engage in what I’m calling goal-oriented stewardship, not just random stuff that you do every now and then but having a well thought out relationship building plan with specific strategies that are tied to what drives donor loyalty, and channeling more gratitude across the board, organization wide, what’s often called a culture of philanthropy, then you’re actually going to upgrade your supporters and get additional gifts from the same supports and thereby raise more money.
There are lots and lots of things you can do to retain more donors and upgrade more donors. Let’s begin with the big picture. There’s been a lot of research done by Adrian Sargeant and also by Roger Craver, who is another fundraising heavyweight, and also by the United Kingdom Roger Relationship Fundraising Review. I was a panelist for that. I have taken the top 34 drivers that have come out of all of that research and distilled it down to the top seven key drivers of donor commitment. All of these are within your control.
We’re going to cover how to apply them consciously to your stewardship so you can raise more money and keep more donors. In brief, they are trust. This creates a functional, satisfaction based connection to you, which is the heart of all good relationships, trust. Your single biggest tool to engender trust is thank you so they know their gift was received and it’s going to be put to work. It’s really appreciated. We’ll talk about it more.
The rest are all relationship building connection. They’re all part of the wooing strategy that is essential to all relationships. One is a personal link to you. You have to create these, whether it’s a phone call, or an invitation to coffee, or asking for their advice and feedback. Your performance in accomplishing your mission, you need to give the donor a feeling that they’re part of an important cause, having important impact.
Your choice and the quality of your communication, they have to be donor centered, which is a subject into itself. Penelope Burk’s research in donor centered fundraising, it sort of boils down to the donors saying, “Show me that you know me.” If somebody is supporting your children’s services program, don’t send them a menu for the senior nutrition program. Be useful to them. Always be helping them, not always selling them.
Offering a tangible link to your beneficiary, to the people that your donor’s gift is helping. These are strategies like bringing people on a site visit, a tour, a video, a client presentation. Seeing is believing. Multiple engagements, you have to be in touch multiple times with multiple contacts because it’s the only way you’re going to stay top of mind. Shared belief, this is where you’re making a value match. You’re creating this value for value exchange between your donor giving and what you give back to them.
At the end of today I want you to evaluate your fundraising plan and see, do your strategies incorporate these seven drivers? Let’s begin with the first one, trust. It’s the easiest one to accomplish and it kick starts the relationship and sets up your next gift.
Your gratitude has to be meaningful, not perfunctory. You have to think of the first gift as your opportunity to get the next. Most first gifts are impulse, or they’re like first dates. Think about it. If you have a good first date, what’s the first thing that you do? You start thinking about what you’re going to do to get the next one. It turns out for donations that the first 90 days is critical. If the donor doesn’t hear from you a few times in that time period, you might as well forget that you ever met.
The thank-you process, if you do it well, gives you multiple opportunities to deliver on your promises. You promise. You say, “Yeah, we got the gift. We put it to work.” You’re showing that you follow through. You’re showing you’re efficient. You’re showing you have manners. You’re showing that you’re trustworthy. You’re making your donors really happy. Penelope Burk found in her research, donor centered fundraising, that there are three things that donors want above all else. They don’t want a plaque. They don’t want a fancy gala invitation.
They want a prompt thank-you. Donor etiquette is not wedding etiquette. You don’t have a whole year to get your thank-you out. You’ve got 48 hours. Donors repeatedly report they want these timely thank-yous. If you’re really slow acknowledging them, it makes you feel like, is this how you run the rest of your business? Plus, promptness is not just a nicety. The most important predictor of likelihood to give again is recency, when you made your last gift. If it takes you a month to process a gift, you’re missing out on people most likely to give again, period.
They want it to be personal. They want you to show them you know them. Show them that they really matter more than they even thought that they did. They want to see the impact. They want you to paint a picture of how the gift is going to be put to use. They want to know it’s going to be put to use the way they want it to be. The three miracle strategies for thank-you are the donor centered thank-you letter, the donor centered welcome kit, and a phone call. We can’t get into them in great detail, but let’s take a broad brush look at each one.
The donor centered thank-you letter, it’s got to make your donor feel good. If the number one reason that folks don’t give is because they aren’t asked, the number one reason they don’t give again is because you didn’t make nice. What is in it, the content? A catchy opening. You remembered because they couldn’t. Thanks for responding to our request for the Dementia Center. Jimmy will go to sleep with a full tummy tonight because you cared. Not, “On behalf of the board and staff of the blah blah blah organization, we thank you for your $25 gift.” It’s just boring.
Also, when you think content, think stories to show the impact. Stories capture people’s hearts. They’re drawn into them. They can be super brief. Mary will be safe from now on because she’ll have help at home. People can now just picture their gift helping Mary in a specific way. Think of the donor’s perspective. They’re always thinking, “What’s in this for me?” One, they can trust you. That’s good. Let’s say you send in your thank-you letter, then in two weeks you’re going to send a welcome package. Then you follow through with that. Or, in two weeks someone will contact them to see if they’d like to come on a tour. Then you follow through with that.
They’re starting to trust you more and more. You’re delivering. That’s a goal of yours, for donors to know what to expect from you, and then to get it consistently. This makes them happy. Forget about using the thank-you letter to puff yourself up, or to make your ED or board members feel good. Invite their involvement. Would you like to join us next week for a tour? Anytime you need help, call Jeff. Jeff is your person here. Yes, the welcome package is included. Give them a personal connection. It makes them feel special. They don’t have to just call the main receptionist line.
Then some insert that shows them how much they matter. Give them a connection to the people. My favorite insert (I’ve got quotes around that) is not even an insert. It’s just on the flip side of the one-page letter, you’ve got some testimonials from people who were helped. You put a PS on the letter saying, “Please see the words of some of the clients who were helped because of your giving. They express more eloquently than can I how much your support means.”
The donor centered welcome kit. For new donors it’s really good to send a welcome kit. There are two different kinds of welcome kits. The one that too many nonprofits send is the “we’re so great”. It’s just a box was delivered on the donor’s doorstep, no person there. It’s a very generic “dear friend” letter in there. There are some brochures, old newsletters, a glossy annual report, maybe a bumper sticker for the car they don’t own, some invitation to a fundraiser they have to pay for. It’s very impersonal, very boring.
You want your welcome package to be the equivalent of a person hand delivering a basket of muffins. It’s very warm. It’s inviting. It’s tasty. Maybe you put in some useful stuff instead of brochures, like 10 ways to childproof your home, or 7 ways to recycle, or rainy day crafts for kids depending on what your organization’s mission is. It’s a nice surprise. It makes the donor feel good about their new situation as a member of your organization’s family.
You don’t want to spend a lot on this. If you do, they’ll get annoyed that you spent that money. By the way, it doesn’t matter if you got it underwritten. The perception is if it looks expense, you did spend too much money. If you want to look at some token gifts that you can put into welcome packages, go to my board on Pinterest. Just google Clairification Pinterest, and I have a board, Nonprofits Say Thanks. That’s the philosophy of the welcome kit.
Then there’s the donor centered thank-you call. If you can manage to work calls into your plan, do it. Penelope Burk’s research shows that 95% of donors said they would appreciate a thank-you call within a day or two of the gift. Eight-five percent said the call would influence them to give again. Eighty-four percent said they would definitely or probably increase their gift. Those are remarkably high percentages.
If you can’t call everybody, at least try to call a subset. I would always call new $100-plus donors. Anybody that gives $100 for a first time gift I’d consider as gold. What Penelope Burk did in her study is she had board members call donors within 45 hours and found that of the donors that were called, they got 42% larger gifts than from the donors that weren’t called, and 39% more renewed their gifts the following year. If you want to learn how to do this more specifically, you can download a free e-book on my website, clairification.com, which is a thank-you call e-book and script.
Now you’re set up. You’ve established trust. You’ve set yourself up for the second gift. People are satisfied with you. Let’s get to setting up your third, fourth, fifth, and beyond with the relationship building trigger. You have to switch your mindset from one of doing stewardship, which kind of gets you into a list checking frame of mind. It’s very transactional. There’s not a lot of heart, emotion, love, or empathy involved in that.
Stewardship, the definition of it, means something you do to your donor’s contribution, how you invest their money. The relationship approach to stewardship is different. You’re thinking from your donor’s perspective. You do it with your donor rather than to them. This attitude of how you connect with folks is really important. It’s a lot like dating. It’s how you relate to somebody that you want to see again.
You tell them that you’re happy with them. You compliment them. You recognize them. You talk with them. You write them little notes. You invite them to get together. You take them out once in a while. You think of them fondly and let them know now and again. You don’t wait until the next time you want a gift to tell them how you feel. It’s pretty simple, but for some reason most nonprofits don’t do it that well.
Here’s the first of the relationship building triggers: the personal link to you. One of the ways that nonprofits and for-profits differ is the personal connection, the ongoing connection that they have or don’t have with you. For retail establishments, the customer buys a product and is able to enjoy it over time. They buy a 12 pack of cola. They’re reminded daily of how much they enjoy it. They buy a laptop or an iPod. They use it on a regular basis, and so forth.
When your donor makes a gift, however, they’re done. If you don’t make a personal connection to remind them about the impact of their gift and what a hero they are for having made this possible multiple times in multiple ways, they don’t get the enjoyment out of their gift that they deserve. Here on the screen are examples of low, medium, and high touches. These are like moves. They’re ways that you connect depending on your donor’s involvement with you and your assessment of their potential.
Wherever they are, if you want to get more and you want to get bigger gifts, the connection has to be personal. It’s not like a mass Christmas greeting email. It has to be something that the donor is going to notice and think, “Wow, this is nice.” The next trigger, it’s showing the impact of the donor’s gift through little gifts of content that you sprinkle throughout the year.
I would say if you want gifts, you must give gifts. You make this little gift of donor-centered content that’s relevant to the donor’s life and is very succinct because they’re too busy to read lengthy stuff. It’s very useful. As I was saying before, how to keep seniors safe, a reading list of books that are related to your cause, recipes that maybe your clients or your staff created. It’s not about you. It’s not here’s new board member, or we recently rebranded, or here’s a check we received. Certainly not, “We need your help again.”
There’s a difference between viewing the world through a fundraising lens and a communication lens. The former is too much about monetary transaction. The latter channels philanthropy, which, translated, means love of humankind. It’s really about values, emotions, and wooing. You want to have a content marketing strategy. You want to create a content calendar that has these little gifts. Honestly, you should be scheduling about seven of these content laden gifts for every ask. If you look through a communications lens, your supporters feel a lot better. They feel a lot happier. You need to do this frequently because it’s out of sight, out of mind.
I like to drip stories throughout the year that remind folks of the impact of their giving and creates a collective experience. You’re all a part of this. You can have the people that you helped tell their story. You can have donors tell their story. You can have volunteers. You can have staff. Everybody is giving a personal perspective.
You can deliver these through your e-newsletter, your blog, social media, lots of different ways where you’re basically using language that gives donors ownership of the fact that these stories happened. You’re constantly saying you did this. You’re awesome. Let the donors give you some feedback. Let them express back to you the reason that they support you so that they really feel part of a larger community. Then you turn right around and you can share this feedback sometimes in the form of story, including sharing the feedback of your clients, people who you help, taking excerpts of those thank-you letters you receive.
This speaks to the next trigger, which is the quantity and quality of your communication strategy, all the things that you can do to help people feel connected and closer to you. Remember, 93% according to Penelope Burk, will give again, they said, and 64% will give more if you communicate “more effectively”. What does that mean?
It means a lot of things. Donors expect you to pay attention and take care of their needs, just like you were on a date, or just like you would take care of your spouse’s needs or your child’s needs, people that you’re in a relationship with. A few donor centered biggies that you can do to show them that you know them and answer the “what’s in it for me” question are personalize everything you can with them.
That’s why you track stuff in your database, so you can call up and say, “How are Suzie and Mark?” You ask about their kids by name. You add a personal note to a letter that happens to be going out to see if they’re feeling better, or to ask how their vacation was. Ask them for advice. People love that. Make sure that you’re making feedback to you easy. Ask about their preferences. How often do they want to hear from you?
Here’s a big caveat. This came out of the recent Roger Relationship Fundraising strategy. Some folks don’t want all this stewardship. Being donor centered means no cookie cutter approach. For those who tell you they only want to hear from you once a dear, they don’t want newsletters, they don’t want invitations, honor their request. Still send them a prompt and personal thank-you. Still send them an impact report at the end of the year, but no more. You basically have a transaction track for these people.
The rest are in your transformational track where you’re trying to build the relationship and get bigger gifts. Ask them how they’d like their name to appear in print. Ask them where they’d like to earmark their giving. Ask them what their favorite communication channels are. A recent story by Abula