What’s the Lifetime Value of Your Monthly Donors?

Last week I had an experience helping a customer prepare some segmentations for an upcoming appeal letter that really changed my perspective on recurring donations.

The automatic recurring donation payment is a relatively new tool in the non-profit development toolbox – at least it seems that way when you’ve been doing this for 35 years like I have. Only in the past decade have enough people in the age-45-and-up demographic been getting used to making financial transactions online, for this approach to start to achieve its real potential.

I spent much of my career in the 1990s and 2000s trying to “train” donors to understand not only “my” organizations’ missions, but also our development plans. I wanted to move individual donors from one-time donors to repeat donors, of course; but I also wanted them to move up the ladder in multiple ways. Typically, it would start with a membership or a registration at a special event; and then move toward ALSO responding to a year-end appeal; and then also to a spring appeal (perhaps funding a specific program). Then I would look for opportunities to encourage event attendees to be table sponsors. I would work to get golfers to also attend galas, and vice-versa. I would try to frame appeals to encourage people to look at their total giving from January through October, and to stretch to reach a higher “giving club” level with their year-end gift. And, indeed, that is still a worthy goal for the life-cycle of a donor.

However, as recently as five years ago I still had some skepticism about the value of getting people to complete an online giving form (or write out their credit card number on a piece of paper and put in the mail!) to become a $10 or $15 per month recurring donor. I had an impression that it was HARDER to get someone who was giving that frequently to consider giving to a second or third appeal, or to increase their year-end gift. And maybe five or ten years ago, that impression had some validity.

Last week, I helped an organization that had only been doing its own individual fund-raising (as opposed to seeking grants and institutional support from churches) for two years. As we looked at their small but growing donor base of 500 people, we decided to analyze the difference between their 30 recurring donors, and their 450 donors who had given one-time gifts to one or more appeals.

Based on a two-year history, what we found was that the average lifetime revenue from all recurring donors (including those who had just signed up this year) was $397. The average lifetime revenue from all other donors was $203.

Obviously, this is a small sample and it only covers two years, including a lot of first-time donors to the 2016 year-end appeal. But the difference was startling – for this organization, the average cumulative revenue from recurring donors was almost TWICE that of other donors.

So what will we do with this information? Well, for one thing, the customer is going to put an extra sentence into their next e-mail appeal specifically encouraging people to consider making a recurring donation, tying the value of such gifts to their ability to consistently meet the needs of neighbors on a week-by-week basis. (The customer is a neighborhood-based human service agency; donors can easily understand the need to have food on pantry shelves next week).

They are also going to segment recurring donors in future appeals, so that the message to these donors starts out by recognizing the consistent reliable support that those donations provide, and then encouraging them to consider an additional gift as well, perhaps for some restricted purpose. It is good to be mindful of the threat of donor fatigue; but donor fatigue can set in much earlier if your communications don’t start by acknowledging that you DO know what they are doing for you. That’s one of the most important things that a good donor management software system can do for you.

What are your experiences with encouraging people to become recurring donors, and then getting them to upgrade and/or give additional gifts as well? Please let us know in the comments section below!

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Ron Newlin

Ron Newlin

Customer Support Specialist at Bloomerang
Ron Newlin is a Customer Support Specialist at Bloomerang. He has been working with nonprofits since 1987 when he became Executive Director of the Indiana Basketball Hall of Fame.
Ron Newlin
By | 2017-08-09T10:37:43+00:00 August 10th, 2017|Monthly Giving|

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